Car rental business booming due to higher COE

car rental singapore

Higher COE prices are driving people to cheaper and more flexible options.

Among them — car rentals and car sharing.

The higher COE has been good for car rental firm “Popular Rent A Car”.

It said business is up by about 20 per cent from a month ago.

“We understand that they have put their plans to buy a car on hold, or if they have booked a car and they are unsuccessful in the COE , they do not want to top up the price. So they are basically coming to rent a car instead,” explained Ho Kok Kee, GM of Popular Rent A Car.

Despite the expected Lunar New Year boom, the company has put expansion plans on hold.

Ho said capital and operating costs will go up by 30 to 40 per cent if he acquires new cars with the higher COEs.

Kah Motor is another company that’s not adding new cars to its rental fleet despite better business.

For the Lunar New Year, all of its small cars have been booked.

Choong Tat Soon, head of Rental & Leasing at Kah Motor said: “When COE started going up mid December, enquiries (for car rental) increased by as much as 10—15 per cent. And by January, a lot of them wanted to book a car, to make sure they have a car for (Lunar) New Year.

“Chances are, perhaps they are customers who have given up (getting) their own cars because of the high COE.”

Unlike last year, more are also renting for longer periods.

“With the COE going up, there are more enquiries for long term rental in terms of weeks or even for a year. We have customers coming in… They take up a rented car for months until new cars become affordable,” said Choong.

Besides renting, it seems that more people are now more open to the concept of car sharing.

Industry players that Channel NewsAsia spoke with said they have seen a 15—20 per cent increase in membership applications in the last two months.

“When we launched the car sharing scheme at Treelodge at Punggol, there were quite a lot of enquiries. With this awareness and the high COE, more people tend to move over to car share, especially those who have two cars,” said Choong.

One of those who has given up his car is Mr M Richard.

He said: “My car is a Nissan 1.6, and I’ve already used it for three years. Now I intend to do some business myself, so I want to trade—in to a van — a small mini van.”

With higher value for used cars, trading—in has also become popular.

Raymond Tang, Honorary Secretary of the Singapore Vehicle Traders Association said: “When they sell, they get back a lot of money so they can afford to change their cars… and also upgrade to a newer model.”

Tang said he has seen a 70 per cent increase in trade—in now compared to two or three years ago.

Adapted from CNA.

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