SINGAPORE - Fuelled by private-hire demand, Singapore's rental car population had been growing exponentially since 2014. But the coronavirus put the brakes on that trend.
With economic and leisure activities hampered by the outbreak, the rental car population shrank by 1.4 per cent in April to 76,312. It was the second consecutive fall in two months, bringing the population - which had been growing almost continuously in the last six years - to its lowest in six months, according to latest Land Transport Authority statistics. The figure consists of 54,545 private-hire cars and 21,767 self-drive rentals.
Industry watchers reckon the figure will continue to shrink, as more players pare down fleets in response to lower demand, especially in the private-hire segment.
Private-hire drivers unable to make ends meet because ridership plunged by up to 60 per cent have returned their cars to operators.
An estimated 20,000 cars are unhired now, many gathering dust in carparks across the island, including Turf City, Textile Centre, Carros Centre and Sports Hub.
This is affecting not only private-hire operators such as Grab and Gojek, but also vehicle dealers who took out loans to supply these vehicles to them.
Mr Vincent Tan, president of the Vehicle Rental Association, said: "All areas of the car rental business have suffered from the pandemic."
These, he said, ranged from private-hire cars, limo services and minivans for business travellers, to short-term rentals used by tourists and locals.
While the outbreak has affected almost all businesses, Mr Tan said vehicle rental is "a capital-intensive industry... with high operating costs such as car loans, insurance, depreciation, road tax and maintenance".
"Jobs will be lost if companies cannot sustain these high fixed costs," he said, adding that "despite government assistance, we may still see more companies at the risk of closing down".
Mr Tan said the association will "continue to approach the relevant authorities for more government assistance".
Mr Neo Nam Heng, chairman of diversified motor group Prime, said the company's self-drive rental car business had fallen by "at least 30 per cent" even before Covid-19.
He attributed this partly to more expatriates leaving Singapore on account of cutbacks in several sectors, including oil and gas.
"With Covid, it's worse," he noted, estimating that "for every 10 who leave, two arrive".
Demand from local motorists has also fallen, which Mr Neo attributed to the halting of cross-border travel between Singapore and Malaysia.
Mr Ng Lee Kwang, general manager of Goldbell Car Rental, said the number of new orders had dropped by about 50 per cent since January.
That notwithstanding, Mr Ng sees areas of growth, notably in higher-end cars. He said the company is working on tenders for such cars now. He said more companies and business people could move from Hong Kong to Singapore, which would spur demand for rental cars.
"There is still interest for a dedicated mode of transportation at the moment as compared to public modes," he said.
Indeed, electric car-share firm BlueSG said business is starting to pick up after dropping by 40 per cent during the circuit breaker period.
Meanwhile, Hertz franchisee Sime Darby Services claims its business has not been affected significantly by the coronavirus crisis nor by Hertz filing for bankruptcy in the United States. The Wall Street Journal reported last week that the century-old rental giant had accumulated debts of US$19 billion (S$26.7 billion).
"Leasing and rental business is part of Sime Darby Motor's core business in Singapore," a Sime spokesman said. "Our plan is to continue with this business regardless of the Hertz development."