Avis's Cape Town International airport car rental office set a record in March this year. Its 738 check-outs in one day were the best ever for a single SA outlet. Surprisingly, though, it had nothing to do with the cricket World Cup. Most customers were heading for the city's North Sea Jazz Festival.
Last summer was a bumper one for SA's car rental companies. In the 12 months to end-February, bookings increased from 1,25m the previous year to 1,4m, and total rental days from 5,9m to 6,9m. At Avis, rental days in March were 23% higher than in the corresponding 2002 month. At one stage, the local market leader's fleet hit a record 13 000 cars.
Much of the industry growth came from overseas visitors as a tourism drive was aided by the weak rand and SA's reputation as a relatively safe destination in a world worried by terrorism threats.
Budget MD Tony Langley predicts no let-up in this demand, despite the rand's recent strength.
Avis CEO Grenville Wilson notes: "Positive foreign tourist perceptions will continue to sustain the growth in long-haul visitors to the country."
As long as it lasts, the rand's recovery should help car-hire companies by keeping prices of new vehicles in check. The currency's previous weakness led to substantial price increases which, Langley says, rental companies had to mostly absorb. Allied to interest rate rises, stock holding costs last year climbed a daunting 27%.
Langley says companies would like to increase rental rates at least 15% this year to improve what some call "unrealistic" margins. That need could intensify if, as predicted, prices in the used-car market - where rental companies dispose of their vehicles - weaken in coming months. Realistically, though, market competition will probably keep any rates rise to single figures.
The SA car-hire market is a lopsided one, with Avis and its main competitor, Imperial, well ahead of the chasing pack in terms of market share. Smaller companies see little likelihood of that changing in the foreseeable future. Third-placed Budget, on the other hand, is in the sights of those behind it. Jebb McIntosh, whose Combined Motor Holdings group brought the National Alamo franchise to SA, says third spot is his long-term aim. But the same holds true for Hertz and other companies overpopulating the market.
Langley, meanwhile, says there are no plans for local control of the Budget franchise to change hands. Avis Europe recently spent US$20m to buy the Budget trademark and name in Europe, Africa and the Middle East. Langley says Budget SA, which is owned locally by McCarthy, is an independent licensee and unaffected by the overseas deal.
