Hire market makes for higher sales

The hire drive market masks the true sales figures of top car brands – and alters Ireland’s top 10 table

WHILE THE top-line new car sales figures catch the eye at the start of each month, between 10 and 13 per cent of these cars are not going to either private or company car buyers, but instead join the hire drive market through rental companies like Hertz, Avis and Enterprise.

Supplying the rental market helps distributors and dealers to meet quotas for new car sales on certain models or to make up ground on competitors. It is a way for local distributors, especially those run by the manufacturer, to meet top line sales targets.

One industry executive told The Irish Timesthat if you want to get a true idea of the retail behaviour of the Irish private and company new car market "you need to strip away the rental figures".

When you do so, the top 10 models sold this year are quite different. VW’s Golf is no longer the number one seller, falling 515 units behind the new leader, Toyota’s Avensis. Even if you take out the 150 or so Avensis which made their way into the Garda fleet, the Toyota would still be the runway leader. The Ford Focus, which lies in third in overall figures, drops to fourth with the Corolla rising to third.

So which brands dominate the rental car segment in 2011? Nissan have registered the largest amount to the rental market so far this year, with 1,115 new cars. This is followed by VW with 1,076 units, Renault with 717 units, Opel with 630 and Ford with 560.

As a proportion of their total sales, Nissan again lead the way with 24.78 per cent of all their new cars sold this year going for rental, followed by Fiat with 23.37 per cent, Peugeot with 22.72 per cent, Seat with 19.93 per cent, and Suzuki with 19.62 per cent.

In terms of favourite models for the rental market, the Volkswagen Golf, Ireland’s “best-selling car”, leads the way. Some 550 Golfs have gone to the hire drive market, 22.2 per cent of the total sold so far this year. This is followed by the Nissan Micra, where a significant 43.3 per cent of this model’s overall sales this year are to rental companies.

Nissan’s Qashqai is in third place, with 22.2 per cent of its overall recorded sales actually being rental cars. The Opel Astra and the Renault Mégane are the fourth and fifth most popular cars when it comes to car rentals.

Premium brand Audi has been a surprisingly strong player on the rental scene this year. From having no real presence in the rental fleet before, they registered 120 rental cars in February, 65 in March and 104 in April. A sizable proportion of these were of the new A1 model, a car which was launched with considerable fanfare, but which has so-far failed to sell strongly to the private market. Hertz now offers the A1 as part of their “Fun Collection”, costing around €209 per week to rent.

In line with the overall new car market, the rental market has recorded a similar downturn in recent years. Compared to 2000, when 23,000 to 24,000 cars were registered to the rental market, figures for new cars in the rental market stand at just 6,359, but it still represents a sizeable 11.2 per cent of overall new car sales.

According to Paul Redmond, chief executive of the Car Rental Council of Ireland, the rental market is only really returning to normal after a significant low in 2010. “There were only around 3,000 new cars registered by the hire drive market in 2010,” he said. “There were funding issues and there was little confidence in the market. We had predicted that there would be shortages, but this turned out not to the case.”

Things have been looking up so far this year though. “January and February were a little weak but Easter was good and there are relatively positive signs that the year will be good,” he added.

The percentage of cars entering the rental sector is also significantly smaller than in the UK. Tony Poston of the British Vehicle Rental and Leasing Association says that some 20 per cent of new cars in the UK are sold for rental.

Car rental companies keep some of the cars for two to three years, but many are bought in on three-to-six month buyback schemes with a designated dealer committed to take the car back at the end of this period.

For the dealer and the distributor there is a two-fold benefit. One is that it gets to record a new car sale. The second is that it provides the dealer with relatively low mileage stock to sell later in the year when traditionally they might be left with little to retail.