Car rental firms bank on new law

The Thai Car Rental Association is pushing for legislation to regulate the local car-rental business to ensure quality services and fair competition, said president Nathee Vadtanakovint.

The legislation, currently in the stage of hearings among the parties involved, was aimed at improving car rental services to acceptable quality and standards to lifting confidence among customers, tourists and investors. It also aims to protect the operators who run businesses on ethical principles.

Once the legislation comes into force, all car rental operators will be required to register their businesses with a regulatory body required to be set up by law to ensure they are qualified.

Currently, the association has 24 members, most of which are involved in the car rental business. Many insurance, finance companies and car distributors are increasingly interested in joining the association.

However, Mr Natee said other operators which are not the association's members, numbering around 200 countrywide, are running businesses with being bound by any commonly agreed rules and regulations. Many of them are in the provinces and some have caused troubles and tarnished the industry's image.

For instance, some operators do not have their cars insured, which causes trouble for customers who have accidents.

In other cases, some operators had colluded with crime rings to deceive gullible new-car buyers into leasing the cars to the ring in the hopes of earning extra income. They have no idea their cars are not leased out but instead become part of the financial pyramid scheme. The new vehicles were later resold in neighbouring countries.

"With the legislation in force, these problems can be solved effectively," said Mr Nathee.

He also said the car rental business had been hard hit by the slowing economy and political instability that have continued to impact foreign investors' confidence and the local tourism business.

As a result, the industry's growth is expected to contract by 15-20% from the total market value of 15 billion baht this year and next year. Growth is unlikely so long as the lingering political troubles remain unsolved.