Thailand: Car rental market recovers as firms look to cut costs
The vehicle rental business recovered in the first half of this year as private companies and government units opted to hire vehicles, instead of making purchases or using hire purchase, to reduce their costs.
According to Deputy Commerce Minister Sinit Lertkrai, flourishing delivery services have also stimulated the growth of the vehicle rental business, as self-employed workers rented cars and motorcycles rather than using hire purchase vehicles to deliver goods, food, and passengers.
“Through rental, users do not have to pay maintenance and repair costs as well as annual car inspection fees. This helps a lot to cut expenses among the users, particularly during the current economic difficulties,” said Mr Sinit.
According to the Business Development Department’s latest report, new vehicle rental business registrations rose by 40.7% year-on-year to 76 in the first six months of 2022, with new capital of 132.9 million baht.
Mr Sinit said the figures reflected investors’ increasing confidence in the country’s economic recovery, boosted by the government’s supportive policies and economic stimulus measures.
According to Mr Sinit, electric vehicle (EV) rental services have also increased due to rising energy prices and growing environmental concerns.
The business growth was in line with the number of charging stations, which rose significantly this year.
According to Sharge Management Co, a provider of charging systems for battery-powered vehicles, approximately 6,000 charging outlets currently serve around 40,000 EVs.
If the government can increase the number of EVs in the country to 300,000, the number of charging outlets must increase to 100,000 nationwide, according to a Sharge Management prediction.
As of June 30, 2022, there are 2,045 vehicle rental service providers still operating, mostly in the country’s key tourist destinations such as Bangkok, Chon Buri, Phuket, Chiang Mai, Surat Thani and Samut Prakan.
The vehicle rental business generates an average of 46.5 billion baht in revenue per year. Nevertheless, the business reported a revenue drop of 9% in 2021, to 39.9 billion baht, from 44.1 billion baht in 2020 and 55.3 billion baht in 2019. This was primarily blamed on the impact of the Covid-19 pandemic.