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Baht/$ 34.95/00 (Bid/Ask)
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12450
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Market value set to slide by 25% in 2008
SANTAN SANTIVIMOLNAT
The local automobile rental industry will slump dramatically this year, for the first time in 12 years, due to the uncertain political and economic climate and volatile oil prices, said Nathee Vadtanakovint, president of the Thai Car Rental Association.
The industry's market value, he said, was expected to decline by up to 25% this year from an estimated 16-18 billion baht in 2007.
Total assets for the industry in term of cars and trucks for rent are expected to decrease by 5-10% this year from a total fleet of 150,000 vehicles worth 150 billion baht in 2007.
Local operators invested 10% less this year to buy vehicles for their businesses. They are cautious about increasing fleets when the tourism outlook is uncertain, especially as global financial turmoil mars vacation plans.
Mr Nathee declined to offer a forecast for 2009 because the global economy could heal or worsen depending on the ability of US president-elect Barack Obama. Also, local politics must stabilise to restore investor confidence and effective tourism promotions are needed for growth next year, he said.
To cushion the blow, operators have been urged by the association to take part in developing approaches to efficiently serve their customers and strengthen their businesses.
However, Mr Nathee said more businesses are switching to car rental services to cut substantial budgets for buying and maintaining car fleets.
"Car rental is much cheaper than managing a fleet: [companies] do not have to find manpower for maintenance and other expenses such as car insurance are the rental companies' responsibility," he said.
According to Mr Nathee, car rental businesses owned by foreigners have an advantage to those run by locals due to their worldwide networks and stronger brand images.
But local players have an edge in securing long-term fleet rental contracts from their corporate customers, which account for 70% of the total market. Foreign-owned businesses have the remaining 30% from short-term customers who are mostly foreign visitors.
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