Long-term rental car companies are aggressively seeking to attract individual customers by launching services that competitively maximize convenience. (image: Lotte Rental Co.)
SEOUL, May 11 (Korea Bizwire) — South Korean car rental firms are enjoying an unexpected boom, benefiting from the supply shortage of new cars resulting from the semiconductor chip crisis.
Lotte Rental Co., the No. 1 player in the nation’s car rental market, reported record first-quarter results, posting sales of 648 billion won (US$507 million) and operating profits of 70.5 billion won, up 10 percent and 43.4 percent, respectively, compared to a year ago.
The industry’s No. 2 player, SK Rent A Car Co., chalked up sales of 310.9 billion won and operating profits of 22.9 billion won in the first quarter of this year, breaking the 300 billion won mark in quarterly sales for the first time in its history.
The main driver behind the strong performance of the car rental companies is the long-term car rental business, which accounts for about 60 percent of their profits.
Since car rental companies contract with customers after securing cars in advance, their delivery time is very short.
When it comes to popular models such as Kia Corp.’s Carnival minivan and Hyundai Motor Co.’s Grandeur sedan, customers have to wait for 14 months and 6 months, respectively, to take delivery of new cars.
The delivery of rental cars, however, requires only two or three days.
Compared to the purchase of new cars, leasing is more expensive. However, users can replace the vehicle whenever they renew their annual contract, and have maintenance covered by the rental company.
Kevin Lee (kevinlee@koreabizwire.com)
