Used car rental

Used car rental

A “Cheap rental car” business with around half the price of the existing prices has started. The secret of the low prices is that they are drastically cutting costs by using used cars, not the latest models and tying up with petrol stations who are struggling to stay in their business. Pushed by the slow economy, the numbers of the cheap rental car outlets are rapidly increasing.

One of the used car rental outlets opened in July last year. At the beginning, their turnover per month was only 300 -400 thousand yen but by December, it went way over 1500 thousand yen. The rate of operation of the cars was “less than 50% at large rental car companies but they maintained around 60%” and it is looking good. The main thing is of course the price and it is 2525 yen for half a day to hire a compact car like a Nissan March, which is about half the price compared to the price at a large company.

The reason they can do this is that they are cutting the cost of the car purchase and employment costs. Large companies normally use brand new cars for rental but these used car rental places use 5-7 year old cars, which are used and around 200 thousand yen on the market. There are some scratches inside and outside of the cars but even with a new car, it will get scratches after 1 year, so customers are quite happy to rent these cars. Of course there are some standards: 1) no problem in safety, 2) the mileage under 50,000 km, 3) no major scratches on the body and 4) no big scratches inside or offensive smells.

Unlike large companies, the main outlets for these are petrol stations. Because their existing employees can do all the necessary work of renting & returning, cleaning & maintenance when they are not helping with the customers to fill up their cars, so there is no added cost for the owners. They also have similar insurance as large companies.

Since July 2006 when newcomers started the cheap rental car business, there are more & more companies starting the business as their new venture. One of the large trading company, ITOCHU Corporation started this business in April.

Behind this rapid growth was the fact that the young generation has a detachedness from cars. Because of the sudden recession since last autumn, many people have got rid of their cars when it got too much for them to pay taxes, Shaken (Warrant of Fitness) cost, car parking fees, etc. However, people still use cars occasionally and some clever people thought there might be more people who want to hire cars. So the current situation is providing a “leading wind” for them.

Used car rental outlets are all linked up with petrol stations. Most petrol stations in the country are making losses as the consumption of petrol keeps dropping after the year 2004 when it reached its maximum. Petrol station owners are looking for ways to make money apart from sales of petrol, car maintenance & wash, so I think this business will expand even more.

Large companies are not thinking about dropping prices because “there are some who are after comfort in cars and there are some who are after the prices, so they should not lose their customers yet”. The power of used car rental outlets might push large companies into price wars but for people who care about the price, used car rentals should be convenient.


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(Editor)
JPC TRADE CO.,LTD.
3B YS-Building, 1-2-2 Botan, Koto-ku, Tokyo, Japan
Japan Used Motor Vehicle Exporters Association (JUMVEA)
TEL : +81-3-5245-7731
FAX : +81-3-3643-4955