subject: Effects of recent fuel increases on car rental in South Africa [print this page] Effects of recent fuel increases on car rental in South Africa
Car rental in South Africa it seems is in for a hard year. The new budget hasn't come into effect yet and already the country has had two fuel increases with yet another on the way in April as a result of the new national budget. This is going to have a huge effect on business in South Africa. The fuel price has a knock on effect that affects the price of everything else. The most worryingaspect of this is perhaps the negative impact it will have on the tourism industry. Airlines have already announced fuel levy increases with some predicting fareprice hikes. The other sector of tourism that will take a serious knock is car rental in South Africa. The unreliable public transport system in South Africa has always been a reason for visitors to choose car rental over public transport in South Africa.Once the petrol price matches that of the United Kingdom,an overseas visitor that has already spent a substantial sum on airfare will no longer consider car rental in South Africa a viable option.
The car rental industry in South Africa is fiercely competitive, as a popular tourist destination many of the international companies have joined the South African market. As well as this many local entrepreneurs have started up smaller local car rentals in South Africa all fighting for a share of the market. Rising fuel prices will cripple this lucrative and growing business. Fuel prices in the UK hover around one pound a litre when converted, that is about eleven rand. South African fuel price currently sits at nearly nine rand a litre and is due for another increase within a month. This will take it to the same level as the prices of the UK. This does not help South Africa's image as a cheap world class holiday destination.
The recent fuel price increases are blamed mostly on the unrest in the Middle East and North Africa particularly Libya which is the seventh largest oil producer in the world. It is however fairly obvious that the price increases are partly due to the engineering of the government, we have been lucky that the petrol price has been subsidised for a long time meaning that our petrol price, although high, is actually unrealistically low. It is understandable that the government needs to claw back some of this money by increasing fuel prices gradually but this can't be done to the detriment of business' like car rental in South Africa from which much foreign revenue is gained.
A competitive fuel price is one of the major draw cards for foreign visitors that are aware of the poor state of the public transport system, and when planning their holiday will rely exclusively on car rental in South Africa. If car rental is their chosen mode of transport then they are reliant on the petrol price staying low. If the cost of their transport while they are on holiday negates the money they had planned on saving by visiting South Africa, they are left with only two options. Choose another mode of transport, which South Africa can't really provide. This means we will start losing tourist revenue and all related business will suffer, most obviously car rental in South Africa.
