Long-term car-rental prices have increased significantly over the past two years, potentially making it more affordable for international visitors to purchase vehicles rather than lease
Digital parking platform, ParkUpp, highlighted that rental companies' rates had quadrupled over this time period.
Tourism Update spoke to Umar Obaray, ParkUpp’s Business Development Manager, who said: "Motor dealers in and around Cape Town will tell you about the growing number of foreign car buyers. If you spend a lot of time here, local car ownership makes financial sense.”
ParkUpp is a provider of monthly parking solutions, who offers unutilised parking to individuals and corporates on a month-to-month basis or for longer term contracts, depending on preference.
High prices
According to Obaray, during the COVID pandemic, car-rental companies reduced their fleets by selling off substantial portions of their rental stock, then with the reopening of tourism came increased demand for car rentals.
But the hire companies were not able to replace their fleets due to supplier stock shortages.
“The usual supply-demand dynamics resulted in increased rental rates amid short supply. Regular annual visitors to almost any destination for more than a couple of months a year will have realised significant savings in buying a car rather than renting over a period of time,” Obaray explained.
According to Sandile Ntseoane, GM of the Southern African Vehicle Rental & Leasing Association (Savrala), agreed that car leasing prices had surged.
“It is purely driven by the depreciation in the rand against the overseas currencies, and the increase in imported inflation on parts/tyres sourced from foreign countries.”
Addressing high rental prices
When asked how high rental prices could be addressed, Ntseoane said Savrala was trying to reduce operational costs, and that cheaper vehicle brands were being considered.
“We always try to reduce operational cost and review cheaper vehicle options without compromising customer experience. The increase in cheaper vehicles brands should help this, e.g. Haval, Suzuki, Chery, Proton and Renault.
“From a leasing perspective, as this is driven by currency movement and foreign inflation, Savrala has no control over it,” said Ntseoane.
“We have, however, advised our customers to either extend existing leases (where possible) thereby reaping the benefits of vehicles purchased at lower prices. In these cases, the pricing would by tied to the year in which the vehicle was bought.
“If a customer is not able to do this, a new more expensive lease is an option.”
Filling a gap
Seeing the increased demand for purchasing cars, ParkUpp began offering long-term parking for foreigners who are considering purchasing a new vehicle for their regular visits to South Africa.
The company has secured parking in convenient locations across the country, offering a solution for those who want to own a car but do not want the hassle of storing it when they are not using it.
"We are aiming our service at foreigners who visit SA regularly or own holiday homes in South Africa, by offering them long-term parking for when they are back home,” Obaray said.
ParkUpp offers a secure basement bay at Cape Quarter, with bookings available through the company’s website.
Foreign visitors can also speak to the company's business managers about a ‘Swallow Valet Service’, which offers services such as starting the car every month, arranging for maintenance, and providing keys on the owner's return.
“The valet service is a fledgling offering to further assist foreign parkers whilst back home. Cars need to be started regularly and how convenient to have services and maintenance undertaken while you are away. Parkers return to serviced cars for undisturbed use during their South African holiday. We will also accommodate any other reasonable requests travellers may have," Obaray pointed out.
Industry weighs in
Tourism Update recently ran a poll on the trend of repeat visitors opting to purchase vehicles rather than renting them.
The general consensus seems to be that it will be a trend to watch out for in the future, with 23% of respondents saying they had noticed an increase in enquiries from repeat visitors wanting to buy instead of rent.
But while rising car-rental prices may make the purchase of vehicles a more attractive consideration for some, the majority of respondents (42%) still said they had not noticed this playing out in their dealings with tourists. The remaining 35% said they were uncertain on the issue.
