Singapore car rental market revenue valued at US$154 million (S$ 210.46 million) in 2018 and is projected to expand at a CAGR of 7.4% over the forecast period to reach US$205 million by 2022. The retail industry has raised its bar in the car rental industry. The customers in Singapore are expecting alike experiences in other services as well. The car rental industry is on the significant ridge of transformation or disruption; the consumers are waiting for app-store speed and seamless experience service.
Trends in Singapore for Car Rental Services:
In Singapore, the cost of owning and maintaining a car is rising; an increase in the demand has been seen for more affordable ways to drive your own car. The popularity of car-hailing mobile apps services has seen a significant shift in car supply in the country. In 2013, when Uber first penetrated in the Singaporean market from then to till now there are more than twice as many private hire cars and for every taxi 1.5 private hire cars are available. Most importantly, the experience of customers remained the same during the rental and post rental phase.
Car rental services are expected to see a gradual decline over the period and the survival solely depends on the car rental providers how persistently they identify and respond to the changing demand between increasingly competitive and evolving environment. It’s time for the car rental service provider to uplift their business designs to improve, invest and make pro-active engagement over the horizon proposals to stay relevant with the right partner. Entry barriers for the car rental service providers, such as Uber, Lyft have been lowered and some new business models also recognised entering the market, such as Easy Cars, Zip Car, Silver Car, etc. With the increasing service provider in the space of car rental give customers a plenty of options to select a one from. Considering the fact it is high time for the car rental providers for improvising their services.
Singapore’s Local Taxi Fleet Stood on the Verge:
According to the latest statistics of Land Transport Authority of Singapore, as of Dec 2017, the taxi fleet has seen a 19% down from 2014 at peak stood at 28,736 and now at 23,140. Singapore’s market leader ComfortDelGro has seen a 22% decline from its December 2015 fleet size and stood at 13,244, whereas blue Comfort-branded cabs plunging down below 10,000 for the first time since 2005. The Comfort-branded cab fleet has shrunk to its smallest size in more than a decade and the numbers stood at 9,825 and its CityCab taxis stood at 3,419. Also, it is expected that Comfort-branded cab and Uber alliance with each other by Feb 2019. Another major brand of the country, Trans-Cab has seen a decline of 19% to its fleet 3,686 cars.
The traditional car rental companies facing a stiff competition from the car-hailing and ride-sharing mobile applications service providers. Uber and Grab are the alternative transport options for tourists but the industry player is finding it difficult to operate their business in this space before the market entry of the cab-hailing service provider in the market. The competition is always been spectacularly high in car rental space because there are many small players available in the market which are serving to a small category. Also, Singapore is not an attractive place for renting cars as the driver’s ancillary fees have always been high, the major reason behind the lagging of the market.
Singaporean Government Co-ordinating the Car Rental Service Market:
Singaporean car rental markets structure belongs to the Oligopoly market as the model of the rental car and price leadership is regulated by the government and it is favourable for both the customers and the service providers. The price of the services is the same regardless the market share that the company holds. In this launching more varieties of car rental services in Singapore gives the customers to choose the preferred taxis according to them. Also, the government has reduced the chances of the monopoly and pushes the provider to provide affordable services.
Car rental services slightly grasping the alternative transport system in Singapore and the Land Transport Authority (LTA) is helping in increasing the supply of car rental services to cater and in increasing the demand and also ensuring focussing on the fares will remain competitive. There is a chance that Uber and Grab would be to establish a monopoly or duopoly in the Singaporean market. Once a company establishes a dominant market position, it is likely that they will seek to use that position to generate profits. In such a case, only the threat of market entry, or the threat of regulation, will restrain them.
Field where they can perform and Progress:
As the user penetration is expected to hit 7.2% by 2022 and the current is 6.4% in 2018. Adopting a mobile-first approach helps the car rental service providers to encounter the hurdles which are faced by the customer. Similarly, through video technologies and beacons, the provider could inspect the car return and damage and can easily review and send the invoice to the customer via email. Now it times to adopt the concept of self-checkout by the car rental providers which have already been adopted and used in the retail sector. The automating checkout and return processes reduce customer wait times, boosts bottom-line performance and also enhances the customer experience.
Reward to loyal customers could be a great idea to create a great customer base. The car rental service providers can easily identify their super customers (customer segmentation analysis) and reward them by running upgrading offers around the year and also through the personalised campaigns and incentivise bookings. These campaigns help customers to remain loyal to the company and also they will act as the brand ambassadors. Currently, the average revenue per user (ARPU) amounts to US$ 417.85 (S$ 572.67). According to a stats, it is revealed that the 20% of existing customers of the car rental service providers help the company in generating 80% of the future revenue.
For customised market research reports for any kind of startups and business in any industry, you can contact Craft Driven Market Research team here directly.Tags: Air Cargo, Car Rental, Car-hailing Services, Craft Driven, Grab, Land Transport Authority, Lyft, market research, Singapore, Singapore Market Research, Uber