Car hire sector puts local government in driving seat

The Balearic car hire sector has revealed that it is already starting to feel the pinch this season on the back of low hotel bookings and yesterday the car rental companies looked to the local government for help. During its general assembly, members of the association of Balearic car rental businesses (Aevab) unanimously agreed to lobby the Balearic government over the introduction of a moratorium to help regulate the sector and prevent it from over-extending itself. At the moment the association represents 286 companies in the Balearics with a fleet of 50'000 vehicles, but what is making life increasingly difficult is the large “illegal” car hire business and the association and its members are becoming increasingly frustrated. So much so that its president, Manuel Jiménez, announced yesterday that he is stepping down, primarily because of the lack of attention given to the predicament of his members by the local authorities. The Palma City Council was accused of “doing nothing” about the illegal car rental sector. The association said that the illegal sector “lacks the adequate infrastructure, uses rural land for its fleets and does not pay the corresponding VAT.” Manuel Jiménez said that the local councils do not have the power to act so the onus is on the Balearic government to step in and introduce a moratorium to protect the industry. The association wants to see a freeze on new car hire companies while existing ones can increase the size of their fleets. The government is also under pressure to tackle the illegal companies, such as the foreign number plated cars which are rented out along with private house and apartment rentals. The association also wants a business park for the car rentals companies set up near the airport “which will provide enough room for everybody and ease the pressure of rural land being used as giant car parks,” Jiménez said. He added that every year, his members spend 40'000 million pesetas on upgrading their vehicles, every year half of the fleet is renewed. But with the combination of illegal competition at rates which undercut the recognised rental companies and a drop on business since last October, many of the companies are feeling the pinch and having to decide whether to renew their fleets or wait until business picks up.