Jakarta car renters drive a hard bargain

By John Aglionby

CAR hire firms usually thrive in times of economic slowdown. People cannot afford to buy but they can stretch to renting a vehicle as and when they need it.

Indonesia's economy has not slowed down, however, it has ground to a complete standstill --if the economic growth predictions are to be believed.

And the car-hire industry has mirrored this, all firms contacted had put expansion plans on hold and many were struggling just to stay alive.

"Our business is down 60 percent," said Dodi from Pratama Rent a Car.

"Most of our clients were contractors whose staff were here short term. The projects have stopped and so has the demand for rented cars."

Ati, who runs Astro Rent a Car, is slightly happier because she only has three of her 15 vehicles unrented. But she is worried about the future.

"We cannot make any predictions about how long the crisis will last and the real problem is spare parts," she said.

"Prices have gone up by up to 300 percent and we have to pass some of this on to the customers. If we don't raise prices, we can't continue, we can't make any money. "

Rental price increases are not matching the soaring cost of spare parts however.

Most firms have raised prices by between 10 percent and 20 percent in the past few months.

Ati's prices are typical. A 1996 Kijang cost Rp 1.7 million (US$170) a month last year and she is currently offering the same vehicle for Rp 2 million.

"The customer is king," said Nazar Hasibuan, who has run his own rental company for 17 years and now has 60 vehicles on his books.

"Whatever he says we must say yes to or else they'll go to another company."

And there is plenty of choice for those looking for a good deal. There are about 40 companies listed in Jakarta's yellow pages and on top of that, there are many individuals who are leasing out their own personal vehicles.

"We are really short of money at the moment so my husband decided to rent out our car," explained a Kebayoran Lama housewife who asked not to be named.

"We are only doing it month by month, however, so that if the economy improves we will be able to get our car back quickly."

But, according to Naxar, this is a risky venture because people want good service, which includes not having to pay for repairs.

"If you go to a nonprofessional company, the price will be less but the vehicle is more likely to break down. You get what you pay for. If you don't pay, you don't get the service."

This means offering attractive deals has become more important than ever.

"We offer people a one-month trial with a driver," said Sugeng S., the manager of Tango Rent a Car.

"If the vehicle is OK then we discuss a more permanent contract."

Drivers usually cost about Rp 300,000 a month before overtime, which is about Rp 5,000 an hour.

Prices are unlikely to come down again, even if the economy recovers, Nazar reckons. "It's a free market and people will try and make as much money as they can. However, it's a crazy one at the moment where anything goes."