Rental companies represent about seven per cent of all new car sales – but not this year.
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A 40 per cent decline in rental car sales has contributed to dwindling overall vehicle sales in Australia, as rental companies slow the expansion of their fleets and sell off their vehicles amid a sharp drop in demand from tourists and business travellers.

Providers Thrifty, Hertz, Avis and Budget all told CarAdvice their businesses have seen a decline in bookings as a result of coronavirus lockdowns, with Hertz revealing it had hit pause on fleet expansion and even begun selling unused cars during the downturn.

In the first five months of 2020, rental car sales represented just 15,569 of the total 332,181 new car sales across the country – or roughly 4.6 per cent of the market.

That compares with 25,995 – or almost 6 per cent of the market – in the same period last year and 7 per cent in last year's annual tally.

According to the most recent data, rental car sales in 2020 are down 40 per cent compared with last year, while the month of May 2020 saw a dramatic 80 per cent decline compared to April 2020.

The downturn in rental bookings followed interstate and overseas travel bans imposed by both state and federal governments in Australia as a result of the coronavirus pandemic – some of which have begun lifting as infection rates decline.

Subsequently, airports – one of the major marketplaces for car rental companies – have become ghost towns, with only 2250 international visitors in total arriving into Australia in April 2020, according to Business Insider.

An April 2020 report published by market research firm IBIS World predicted revenue for the rental car industry would decline by 6.4 per cent this year, due to the Australian bushfire season and COVID-19 outbreak.

"However, as more people are observing social distancing measures, many are using rental cars as an alternative to public transit. This trend has somewhat constrained the decline of industry revenue," the report said.

In a statement, Hertz Australia told CarAdvice the company has been "greatly affected by the pandemic across all segments of the business" but "continues to operate normal services and customers can expect the same high level of service and reliability".

In order to mitigate the effects of the pandemic, Hertz Australia said it had also slowed the purchasing of new vehicles, begun selling unused vehicles "as required".

"As always, Hertz buys vehicles to meet fleet demand and, as in the present circumstances, if demand is low we do not need as many vehicles. We have de-fleeted vehicles that are not required across the network and de-registered unused vehicles," the statement said.

"Since the pandemic began, we have undertaken a range of measures to reduce costs and ensure we keep the business as robust as possible. We have cut discretionary spending, reduced operating costs where we can and sought new rental agreements with landlords. We have also been de-fleeting our network and de-registering unused vehicles.

"Thanks to the Federal Government’s Job Keeper program we have been able to retain our workforce."

In the United States, the effects of the lockdown culminated in Hertz's North American arm declaring bankruptcy after racking up more almost $US20 million in debt, simultaneously announcing that some of its 700,000-strong would go up for sale at strongly discounted prices.

The company's stock price saw an astronomical rise after the decision – increasing 10 times in value – possibly as a result of retail investors buying up stock in the hopes the company would eventually rebound, leaving analysts baffled.

While fellow major provider Thrifty was unable to provide specific numbers as to their exact decline in revenue and bookings, a spokesperson confirmed the company had seen a drop in demand.

"The car rental industry in Australia has certainly felt the impact of COVID-19 restrictions, particularly those outlets located near airports. With people unable to travel even locally, the demand for rental vehicles understandably dropped," the spokesperson said.

However, bookings have begun to "surge" in June, the spokesperson said, as states lift border restrictions and travellers are allowed to venture out a little closer to home.

Thrifty hasn't put a pin in fleet expansion plans despite the downturn, the spokesperson said, explaining: "We are always looking to ensure our customers are in the most modern, up-to-date vehicles, and will be ready to add to our fleet when the need arises."

Similarly, the Avis Budget rental car group reported that while times had been tough, signs of improvement were emerging.

“We have of course seen a difference in bookings this year when compared to previous years, however, looking forward we are optimistic," Tom Mooney, Managing Director of Avis Budget Group, Pacific, told CarAdvice.

"We have already seen domestic demand increase, and in light of international border restrictions still in place, we expect this year will be focused around domestic travel, rather than international.”