Car rental companies want ‘investment’ exception in loan

Aysel YÜCEL / AUTONOMI

In the car rental sector, which has been shrinking in recent years, the appetite for investment in the fleet has increased in line with the increasing customer demand. With the effect of the relaxation in the supply crisis and the contraction in retail sales, the lessees who partially overcome the problem of vehicle availability, this time stuck to the financing. Companies that have great difficulty in accessing credit want the Central Bank, which excludes the purchase of passenger cars from the scope of ‘investment loans’, to grant exemptions to leasing companies in this regard.

TOKKDER and ITO took action

In the letter of instruction sent to banks in the past weeks, the Central Bank determined the content of investment loans extended for at least two years within the scope of the Investment Incentive Certificate, in order to meet the investment expenditures of the enterprises related to the invoice. In the related article; “Land, building, etc. Loans extended for real estate acquisition, financial investments and the purchase of passenger cars, investment loans are not acceptable. Heavy commercial vehicle loans are considered as investment loans. The fact that passenger cars were not included in the scope of investment loans created a great disappointment for businesses whose main field of activity is car rental. Since passenger cars are an investment tool for these businesses, it is requested that an exception be granted to car rental companies in the relevant article. TOKKDER and ITO conveyed the issue to the relevant ministries.

“Banks Are Confused”

Speaking to the WORLD, the officials of the Association of All Car Rental Organizations (TOKKDER) emphasized that they have conveyed their demands on this issue to the relevant public authorities, but they have not yet received a positive result. Sector representatives underlined that it is an investment period for fleet leasing companies and emphasized that the support on this issue has gained urgency. İlhan Yılmaz, Chairman of the ITO Vehicle Rental Professional Committee and Member of the Assembly, said, “The vehicle purchase of the sector, whose main field of activity is car rental, should not be removed from the investment status. The banks are confused, the industry is too. This development put dynamism in the development of the fleet leasing industry. In fact, many bureaucrats agree with us on this issue, but the issue cannot be resolved.”

Why do they want privilege?

So, why was the car rental industry not included in this scope? Speaking to DÜNYA, a car rental company manager made the following statement on the subject: “The legislator wants to lower the interest rates and make the loan cheaper. Of course, this is unfortunately not possible in real life without inflation. Another motivation factor is to try to suppress the exchange rate by making these loans, which are sometimes forcibly cheapened, used mainly by exporting sectors. Since more than half of the vehicle purchases are imported, they are trying to reduce the demand there. In companies that are not engaged in automobile or leasing, the purchase of a vehicle is an investment tool and foreign currency Since they started to evaluate their position as a hedge, they are trying to prevent this by increasing the required reserves. Businesses such as automotive and mobility should naturally be excluded from this scope. Since leasing and mobility companies are also included in this scope and no exceptions are made, companies cannot rent a car and have to buy cars using their own capital, which further reduces their appetite for investment as they reduce their cash.”

“Let the 48-month rental limit be lifted”

In car rental agreements, businesses can rent a car for a maximum of 48 months. Especially during the pandemic period when the supply crisis was experienced, there was a great increase in the 48 rental preferences of the customers in the contracts. However, industry representatives demand that this 48-month limitation in contracts be lifted. Officials state that removing the 48-month limitation will significantly reduce the need for fleet companies to purchase new vehicles. It is emphasized that this situation will also contribute to the reduction of imports. On the other hand, it is emphasized that companies will be able to use their cash in their own business in this period by continuing to use their existing tools.

The hope of the automotive manufacturer is in the fleet

speaking to the world automotive brand representatives stated that the vehicle demand of their customers in the fleet rental sector has increased, but they have heard that companies have great difficulties in accessing credit. Fleet sales are of great importance for the shrinking automotive market. In addition to the supply crisis, the contraction in the automobile and light commercial vehicle market accelerated due to rising vehicle prices and difficulties in accessing credit. In August, automobile and light commercial vehicle sales contracted by 17.3%, and the automobile market contracted by 21.3 percent. Thus, the Turkish automobile and light commercial vehicle total market decreased by 8.5 percent in the January-August 2022 period compared to the same period of the previous year, and amounted to 458 thousand 446 units. 40% of total automotive sales are made in the last quarter. The vehicle renewal period of fleet companies is the last quarter. Therefore, the hope of automotive manufacturers, who have suffered a great loss in retail sales, is in sales to fleet customers.

“Short-term rental demand increased by 28% in 9 months”

With the decrease in the effect of the pandemic, the number of tourists visiting Turkey increased by 128 percent in the first 8 months of this year compared to the same period of the previous year, which also increased the demand for short-term car rentals. The sector is also hopeful about the winter season. Şafak Savcı, General Manager of Garenta & ikiyeni.com, one of these companies, stated that 2021 was a year in which normalization started for the car rental industry and made the following statement regarding the increase in demand: demand increased by 28 percent compared to the same period of the previous year. Demand in June, July and August increased by almost 10 percent compared to the same months of the previous year. There is also an upward momentum in the number of rental days. The number of rental days in the first nine months of this year increased by almost 50 percent compared to the same period of the previous year. It is pleasing that demand has increased after two difficult years. I think we will catch the pre-pandemic period with autumn and winter tourism in the last quarter of the year.”