Car rental firms expect 30% growth

(AFP)   

Abu Dhabi is also experiencing increased demand, and rental companies, including Hertz, have been lining up expansion plans.

“Our profits are expected to grow by 30 per cent this year, but what would make this year and maybe the coming years is the effect of the dirham’s peg to the dollar for our operations,” said Robert Farrow, UAE general manager for Hertz.

Hertz uses a fleet of cars mostly imported from Japan so profit depends heavily on currency fluctuations.

“Our profit doubled three times in 2006 and tripled in 2007. We will still be expecting a growth of 25 per cent for 2008, but the currency’s burden will have its effect,” said Farrow.

Vijay Kumar, general manager of Europcar International Car Rental in Dubai, said the car rental business would be among the sectors to sustain its growth due to expansions in the commerce, finance and tourism sectors in the UAE. He predicted his company would experience 25 per cent growth for 2008.

The dirham’s peg to the dollar, Kumar said, has not hurt his business since Europcar buys cars directly from dealers in the UAE. Despite the growth, operating costs are rising. Inflation is forcing companies to pay their workers more.

Housing is a major problem, said Hertz’s Farrow. “When we bring staff, they ask about their accommodation status. People are reluctant to share accommodation with six or eight of their fellow workers.”