By Mohammad Shoeb
DOHA: Some car and light motor vehicle leasing companies are planning to downsize operations, or shut down some branches more exposed to oil and gas companies due to lower demand and stiff competition among rental companies.
The clients of these rental companies are mainly associated with the oil and gas sector.
Enquiries with senior officials of car rental companies suggest that there is cut-throat competition to sustain business due to several new developments in the market such as falling global oil and gas prices, restructuring in organisations, recent hike in retail fuel prices and finding drivers with valid GCC licences.
“An oil company, which was a client, has completely suspended operations,” said Ziad Usman, Assistant General Manager at Al Muftah, a leading car rental company in Qatar.
Ziad added: “A couple of other companies working for the local oil and gas industry have requested reduction in prices (rentals) and fewer vehicles. In case the prices are very competitive and cannot be reduced anymore, they are asking for lower-end car models.”
He explained that if a company was hiring Toyota Camry or Avalon, it is now asking for Honda Civic or Honda City to reduce costs. “In such cases, we are compelled to reduce the rental of that vehicle further instead of buying new vehicles of lower segment.”
He suggested that such moves will definitely have an adverse impact on revenues and profit margins but did not say by what percentage. He said it was too early to give estimates about the impact, but his company is moving strategically, “playing safe”, and has shelved plans to expand operations at least for this year.
“Some major companies involved in producing and transporting oil and gas have started rightsizing their staff. If my company has two branches in Ras Laffan and Al Khor, it makes you think whether to continue with those branches”, said Ziad.
A top official of a yet another car rental company said that car rental companies in Qatar were already facing tough competition in the market as some companies have started leasing out their vehicles at lower than the break-even prices aiming to retain market share, which according to him, cannot continue for long. But the decline in demand and recent hike in retail fuel prices have added to his worries.
“ With some of the major oil and gas companies involved in production and transporting downsizing their staffs, having an outlet or starting an outlet in those areas raises questions as to its viabilities to operations ,” he added requesting anonymity.
The Peninsula
