Feb 17 2012 |
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Qatar: New rule hits small car rental firms
DOHA: Small car rental companies that were largely relying on older cars to carry out their businesses are in trouble as the traffic authorities have barred them from using vehicles older than five years.
The traffic department's move is actually aimed at raising road and passenger safety, but it has led some small rent-a-car operators to shut shop, market sources claim.
In line with the new directives, a number of car rental firms have been forced to replace their old cars with new ones. Some of these companies recently held public auctions offering their old fleet for sale.
Narrating his woes, a small car rental company operator told this newspaper yesterday: "We had a few cars that were of 2006 model. After the new rule came into force, we changed all of them. Now we cannot use any car that is older than the 2008 model".
"They check road permits of all cars offered for rent. If a company is found violating the rule, it is temporarily closed down and given time to replace all of its old cars," he added.
Rent-a-car companies have been mushrooming in Qatar as a growing population led to increased demand, and a majority of the firms are small players operating with limited number of vehicles.
They bought new cars on easy monthly installments as a result of which they usually made profits from a car only after the loan repayment tenure was over.
But now, for a new car bought on installments one cannot hope to make a reasonable profit because one needs to repay the loan in four to five years, said a market source.
"So, we would incur huge losses, also as there have been a sharp rise in the prices of new cars. In fact, their rates are increasing every year," he added.
On top of it, rent-a-car companies are also required to take a special licence from the Traffic Department, along with the commercial registration they must seek from the civic authorities and commercial license they must get from the Ministry of Business and Trade.
The special licence to be had from the traffic department has also been made mandatory for garages, shops selling cars accessories and spare parts, according to industry sources.
© The Peninsula 2012
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