Tuesday, July 24, 2012

Auto-linked firms launch 'super discount' rentals

A growing number of gasoline stations, used-car dealerships and auto repair shops have begun offering "super discount" car rentals to offset falling sales as car ownership declines.
Auto-related businesses can offer cheap rentals by making use of existing staff, repair facilities and, for used-car dealers, vehicle inventories to maintain a fleet of vehicles.

Discount rental operations are meeting strong demand from those who choose not to or can't afford to own a car amid declining incomes and rising fuel, insurance and maintenance costs, in addition to the threat of higher taxes.

A gas station in the western Tokyo suburb of Kunitachi is one business involved in the trend.

"We managed to avert closure thanks to the rentals," said station head Toshiaki Akuzawa, 46.

Revenue from rentals has grown over the three years since it began and now accounts for about a third of overall sales, Akuzawa said.

The rental business has allowed the service station to increase revenues in all sorts of ways.

"Selling used cars to customers in the rental business, repairing the cars and helping with vehicle inspections have become the pillar of our revenues," Akuzawa said.

For Carbell Co., a Tokyo-based car dealer, running a discount rental chain has become a way to actually sell more cars. Carbell runs about 170 franchises nationwide, mainly at used-car dealerships.

"Discount rental is a tool to attract customers. It may earn little, but we expect it to result in an eventual increase in car sales, which is our core business," a company official said.

Carbell rents compacts with engines up to 1,500cc for ¥100 per 10 minutes for up to three hours — and customers get even lower rates if they rent for longer periods. A one-day rental would cost ¥4,200, about half the rate offered by major car rental firms.

One customer, Kumi Negishi, 40, said the service is a boon.

"It's economical as I can rent for whatever hours I need and whenever," she said.

Negishi, president of Kikunoya, a traditional restaurant in Tokyo's Nihonbashi district, used to own a car to fetch supplies, deliver food and do family chores. But keeping the car at a nearby parking lot cost her nearly ¥40,000 a month.

Three years ago she gave up her car when a Carbell franchise opened across the street from her restaurant.

"I need a car only for about an hour at a time. If I take a taxi, it would cost me several thousand yen, but Carbell costs me less than ¥1,000," Negishi said.

Rentas Co., based in Yokohoma, is another discount car renter, offering automobiles with engines smaller than 1,350cc for about ¥2,100 for up to six hours. An all-day rental is ¥3,360, the industry's lowest rate, according to the company.

Rentas operates more than 900 outlets, mainly at gasoline stations and repair shops, and expects the figure to reach 1,000 by the end of this year.

A Rentas official said that opening a franchise at these shops doesn't involve any initial investment, enabling the company to provide attractive pricing.


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