Better regulation required in UAE vehicle rental sector
The car rental industry is certainly highly competitive; customers have high expectations from rental firms, and there’s a plethora of options to suit every budget.
Rental companies face numerous challenges on a day-to-day basis, in terms of both customers and regulatory matters.
Sometimes, even a small dispute with the customer over minor damages during collection of the vehicle can have an effect on the choice of rental company the second time around. A great way to tackle this is to have digital check-outs with photographs for records, a system in which the rental agent marks the condition of the car along with any previous damage. If the vehicle’s condition can be captured digitally through photographs, then they can act as proof of the condition of the rented car. If damage occurs, the photographs can be retrieved and compared, thus ensuring customer satisfaction and retention.
Another major challenge is that there is a high accident rate of 40-45% of the fleet. This has an overwhelming effect on profits, as a fleet goes standstill until claims and repairs are resolved.
In an ideal situation, customers would be more careful and observant on the roads. However, it would also be beneficial for rental firms to reward clients for safe driving. One suggestion is implementing a no-accident bonus to control accident rates.
Other issues facing rental firms are from a regulatory perspective. When a customer commits a traffic violation on one vehicle, it results in the entire company account being blocked until the penalty is paid, hence preventing the firm from conducting any transaction on the car during that period, be it a vehicle registration or renewal. This becomes taxing for the company.
In case of property damages, it takes even longer, and this results in a loss of revenue as the vehicle cannot be in use until the case is solved. This also applies in case of accidents involving drunk driving, hit and run, driving without a licence, theft and so on, as the judgment takes a longer time, resulting in loss of revenue during the interim.
In such cases, perhaps a legal document stating that the case is in progress can be provided to resume business transactions. This acts as a guarantee pertaining to the pending penalties and damages and also ensures that business is not affected.
Another issue that arises is the lack of uniformity in the rules and regulations across the emirates. This becomes a matter of concern when a traffic violation or accident occurs in another emirate. To tackle this, a framework of regulations can be implemented at the federal level to overcome such issues when two or more emirates are involved.
Ashish Nanda is senior general manager of Shift Car Rental, a member of the AW Rostamani Group.
