Car rental companies to gain from new vehicle law and metro – Emirates 24|7

Asaad Al Taher (XAVIER WILSON)
Although Dubai's market for rent-a-car companies is competitive, almost all players are operating to their full capacity and there is great scope for growth, said the head of a major car rental company.

In an interview with Emirates Business, Asaad Al Taher, CEO of Discount Rent A Car, said the company's fleet of 1000 cars is overbooked by almost 50 per cent and he sees great scope for expansion.

He also said his company has become an exclusive agent for a GPS car tracking device in the emirate that will reduce car thefts.

Can you tell us about the company and your current fleet size?

The company started in Dubai two years ago with around 23 cars. Our fleet today comprises close to 1000 cars, which will rise to 1500 by the end of the year to meet the increasing demand for car rentals.

What were factors behind the growth of your fleet of cars in this short time? Is the market growing by a similar rate?

The growth and development in the UAE, especially in Dubai, is unprecedented in any other city in the world. This is reflected in the development of many sectors, including the rent-a-car market. We are keen to offer Dubai the best services in the car rental sector. We have established the necessary infrastructure, such as workshops, to keep our cars ever ready to satisfy our clients.

What is the volume of investment in your company and what are your plans to meet the growing demand in the market?

Our investments range between Dh50 million and Dh60m. We are looking forward to doubling our investments, and our fleet to around 4000 cars, by the end of 2009. We will also rent another three premises to house and maintain such a big fleet.

What is the operation rate of cars in the sector? How do you rate the profits in the car rental market?

The operation rate of fleets in the sector is 100 per cent. In our company, with a total fleet size of 1000 cars, there is still a waiting list of around 450 clients. As for the profits, I estimate it to be at least at 50 per cent.

What do you think is the size of the rent-a-car market in the country and how much is the total investment in it?

I do not have an accurate statistic about the number of companies in the market, but I think they are in the thousands. The total investment in the sector, in my estimate, is in the billions of dirhams. And I'm speaking here of only the major companies that have a big fleet, are well known in the market and have their own workshops and systems of work.

What is your typical customer profile?

We are a big company and we deal only with big establishments and hotels. I personally know more than 90 per cent of the clients since my brother Muraid and I run the company ourselves. This is a rare case, as you seldom find the owner of a rent-a-car company working in it just like other members of staff. I think the secret of our success lies in the open door policy that we apply with our clients, along with a website that allows clients to write remarks or post a complaint.

Are there seasons in which there is a more demand for cars in the market?

Yes, there are. These are primarily the tourist seasons when even the smallest rent-a-car companies benefit. Our company does not wait for the tourist season and depends on long-term clients, like big companies and establishments.

How do you explain the taxi crisis in Dubai, even though there are so many rent-a-car companies?

You are talking about one of the world's most important cities. It is natural to have a taxi crisis in Dubai. Whatever plans the Roads and Transport Authority makes, they are not enough to meet the increasing demand from tourists, conferences and exhibitions.

We are working hard as a car rental company to alleviate the taxi crisis in as small a measure as we possibly can. We provide a long-term rent service, from one month to one year, for a rent not exceeding Dh900 a month – less than Dh30 a day, which is a small sum of money even for most single taxi rides.

Is there a big demand for long-term rentals? And, if so, from whom?

Yes, there is a big demand for the service. Most of those who ask for long-term rentals are big companies that want the service for their staff. There are also some individuals who request for it.

Also, so far as overall demand in the market is concerned, I think the current number of companies does not meet more than 50 per cent of it. Therefore, we need double the number of companies and fleets.

What are the risks you face in the business, such road accidents and car theft – and how do you tackle them?

We insure all our cars according to laws stipulated by the General Administration of Traffic. To tackle car theft, we have got the exclusive agency of a device called Tracking System GPS, which when installed in a car allows for it to be tracked to identify its location. We are now trying to distribute it, in co-operation with Dubai Police, to all car rental companies. The price of the device will not exceed Dh1000, for each vehicle that needs to be tracked.

The government has decided to retire 20-year old vehicles. Even 15-year old vehicles will be taken off the roads by 2010. How do you see this affecting the rent-a-car market?

I think it will benefit car rental companies, as owners of old vehicles will be in need of alternative means of transport. I think tens of thousands of vehicles will be retired and everyone would not be able to buy new car.

How will the metro railway and the decision to operate more buses in Dubai and Sharjah affect the car rental market?

The increase in public transport buses will not affect us, as the passenger of a public bus is not a prospective client for rent-a-car companies. On the contrary, I think the Dubai metro will have a positive impact on the rent-a-car market, as it will alleviate traffic jams.

Asaad Al Taher
CEO, Discount Rent A Car

Asaad Al Taher graduated from the University of Jordan in 1996 with a communication engineering degree.

He turned round the fortunes of Discount Rent A Car in 2006, establishing a reputation for high levels of service, stabilising sales and then achieving rapid growth.

In 2007 Al Taher developed the company's service centre to provide prompt servicing of the fleet.

He set up MAC Commercial Brokers in Dubai in 2004, MAC Trading Sarl in Switzerland in 2006 and Al Taher Autoshowroom Freezone Zarka in Jordan in 2008.

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