Car rental, one way to drive away high operational costs

Burhanuddin Abe, Contributor, Jakarta

Transportation is vital to professionals in major cities like Jakarta but buying an automobile is not the only option. With a flourishing rental industry offering good service and affordable rates, renting a car is now an option.

Car rental businesses in the country are currently booming, thanks mostly to the support of large companies, which rent the cars for long-term periods of two to four years. Individuals, of course, are also renting cars for personal use -- but generally for shorter terms.

Many big companies have decided to rent because it is more efficient.

A mid-sized industrial concern in Cikarang hires cars for its managers; they drive 1996 Toyota Kijangs rented for Rp 4.5 million a month. Meanwhile, a telecommunications company in Jakarta prefers new Mercedes for its directors, which are hired monthly at Rp 30 million each.

Car rental rates, depending, among other things, on the types of the cars, the length of the rental period and the number of cars hired. However, the competitiveness of the industry means that rental rates differ little from one company to another.

Prior to the Muslim post-fasting Lebaran holiday or other long breaks, rental companies often raise their rates for individuals as the demand remains high.

"Toward Lebaran, it is often hard to find a car to rent. Most of the cars have been hired by the second week of the fasting month," said an employee of the mid-sized Cipaganti rental company with many branch offices.

This company is unlike others in that it will rent cars from individuals and then sub-let them to its customers.

Larger companies with fleets of 400 to 11,000 cars include, TRAC (Astra Rent-A-Car), Indomobil Car Rental, Blue Bird, Tunas and Orix.

Prodjo Sunaryanto, TRAC managing director, said that many companies had become their customers because renting cars would save them on maintenance costs.

"As transportation management is not the core business of these companies, matters related to cars should be left to specialists like us," Prodjo said.

Established in 1987, Toyota Rent A Car, better known by its acronym "TRAC" started with only six automobiles. This year, the subsidiary of PT Astra International, operates about 11,000 cars, including sedans, jeeps, station wagons, minibuses, trucks and pick-ups from Toyota, Isuzu, Daihatsu, BMW and Peugeot. However, "most of our cars are Toyota Kijangs," Prodjo said.

In addition to providing qualified drivers, the company is also supported by 250 workshops and service centers across the country, all under the management of PT Serasi Autoraya, which holds the sole license from TRAC and boasts over 10,000 corporate and retail customers.

TRAC's corporate customers include BCA, Bank Mandiri, Avon Indonesia, Adidas, Multi Bintang Indonesia, Sucofindo, Garuda and Semen Gresik.

And car rentals are a lucrative business. In 2002, TRAC booked turnover at Rp 353.6 billion.

Indomobil Sukses International Tbk, a major automotive group in Indonesia, has also developed its car rental division, Indomobil Car Rental, to tap into the growing rental business.

Holding on to its vision "to be the best car rental service company in providing Indomobil products", Indomobil Car Rental uses the vast network of Indomobil Group, the sole agent of nine famous automobile names -- Audi, Hino, Mazda, Nissan, Renault, Suzuki, Ssangyong, Volkswagen and Volvo.

Indomobil Car Rental has a maintenance service network of more than 200 workshops spread throughout 78 cities in 28 provinces. These workshops belong to the branch offices of Indomobil Group across the country and to official dealers.

One feature worth noting is the company's Mobile Platinum package, in which a car can be rented daily or weekly (but for less than three weeks) along with a professional chauffeur. In October 2004, this Mobile Platinum package began with a Volvo S40 and S80. Later, it also included cars of other makes.

Mobile Platinum provides services for special guests and special events like wedding parties, conferences and celebrations. People using this package are usually executives, businessmen, government representatives, domestic and foreign guests and wealthy individuals.

While TRAC and Indomobil Car Rental are established by leading automotive companies, Japan's Orix is a car rental company developed originally from a car leasing company. Orix provides automobiles ranging from sedans to light trucks. There is an option for the rent period ranging from one to four years, while the rent is paid monthly.

This company takes care of everything related to the car you rent, including its vehicle registration certificate, motorized vehicle inspection, all-risk insurance, spare parts, a towing car in case the car breaks down, a replacement with the same type of car in case the one you rent gets into trouble, security and round-the-clock assistance.

This operating lease division has 10 branches in several major cities in Indonesia and cooperates with more than 300 authorized workshops across the country. Therefore, it can claim nation-wide operation, although about 80 percent of its customers are in Jakarta and its surrounding areas. These customers are made up of large companies and multinational or publicly-listed firms from countries like Japan and the United States.

At present, Orix rents about 1,200 automobiles to more than 300 companies. "By the end of 2005, the number of automobiles will have risen to some 2,000," said Jimmy Ronald H., the accounts assistant to Orix's marketing manager.

The car rental business has good prospects. As this business is highly lucrative, it has attracted not only automotive companies, which basically wish to promote the image of their products, but also non-car firm.

While they have many different packages, all the rental companies agree on one thing. That good service, rather than low rates, is the most essential part of their business.