Dáil Éireann Debate, Wednesday - 19 May 2010
44 Deputy Pádraic McCormack asked the Minister for Tourism; Culture and Sport if she has had contact with representatives from the car rental market relating to the adequacy of the capacity of the car rental fleet to meet the requirements of the tourism market; and if she will make a statement on the matter. [20622/10]
View answerI have received a number of representations from the car rental industry seeking support for the provision of additional car hire capacity in 2010. The matter was also raised with me at meetings with the Irish Hotels Federation and the Irish Tourist Industry Confederation on 1 April and 13 April, respectively. The concerns expressed to me relate mainly to the availability of automatic transmission cars in the traditional summer peak season, chiefly with the American market in mind.
From a tourism perspective, the main concern is the availability of cars and the price consumers must pay. In that regard, my Department and the tourism agencies have been monitoring the situation closely with regard to its possible impact on visitors from overseas. Tourism Ireland has examined the situation and advises me that tour operators in Great Britain, France and the Netherlands have reported no concerns regarding availability of automatic or manual cars for hire in Ireland for the summer season. In Germany, I understand that tour operators such as DerTour, which have reported a rise in car rental bookings compared to last year, have been advising consumers to book the car hire element of their holiday early. One smaller tour operator has reported a drop in car rentals booking this summer, citing high prices as a reason. In the United States, where the availability of automatic cars is particularly important, I understand that tour operators that have long-established relationships with car rental companies in Ireland have to date reported no problems in respect of the availability or price of cars.
As part of its own monitoring exercise, the Department conducted a web-based survey of car hire on Tuesday, 11 May, which examined the availability of cars for rental in July and August. The key finding in the survey was that every car rental company with one exception had several types of auto transmission cars available for rent for every week in July and August. In all cases except one, there were three to four types of auto transmission car available. While the survey concentrated specifically on data on automatic transmission cars, every one of the companies researched also had a wide selection of manual transmission cars during the weeks in question. Prices in the May survey did not vary significantly from an earlier similar survey carried out by my Department in March. While I accept that as the summer peak season approaches, the position may change as regards availability, it is difficult at this stage to gauge the precise market outlook given uncertainty as regards supply and demand.
Additional information not provided on the floor of the House.
Although I have received representations urging Government intervention, I have also received a number of approaches, both from within the car hire industry itself and the wider tourism sector against such a course of action. In these cases, the view is that the potential shortages may not be as extensive as suggested and the market should take its course. As I have stated previously, it may well be that the existing car rental business model, which is dependent on a high turnover of new car sales, is no longer appropriate in the current market and must be adapted to changed circumstances.
Taking all this into account, I continue to consult with the Minister for Finance regarding the options open to the Government if State intervention is considered necessary. For State intervention to be warranted, there would have to be clear evidence of market failure and the prospect that any intervention would result in incremental hire vehicles coming onto the market, and remaining in place, to deal with potential peak demand in 2010 and later years. I will continue to engage with the sector and monitor developments closely with a view to taking a very early decision on the issue.
The price to hire a car here is twice that which obtains in Scotland. There is a shortage of cars. I will not spend too much time on this subject because I realise it was discussed the last time, when the Minister suggested that second-hand cars might be used. However, it transpires that as a result of the scrappage scheme, there are not that many second-hand cars available at present. I do not know whether the Minister has had the opportunity to read the report by Mr. Jim Power. He made two suggestions, one of which involves a subsidy, which could only be considered within the context of a budget. It would be, if one likes, a self-financing subsidy that would only be paid if visitors actually arrive and spend money here. The other suggestion he made and which could be implemented quickly with a small legislative change is to allow cars registered in Northern Ireland and Great Britain to be rented here by rental companies that have offices in both jurisdictions. Would the Minister considers such a measure if the position becomes extremely tight as the summer season approaches?
I am considering a number of different issues. In the first instance, groups within the tourism industry have been telling me that a subsidy is required while other groups demur. On the other hand, I am not completely sure that the business model which has been used for a number of years by car companies remains appropriate.
We must ensure we have availability this year. Unfortunately, the possible dip in the number of tourists that we have seen in the last months would lead to a lower demand.
I have spoken to some of the car hire and motor import companies to see how we can address this issue. There is no easy answer but I have been in discussions with the Minister for Finance to see what we can do. There is an issue with automatic cars because American tourists will not drive anything else. We are keeping a close eye on the numbers.
A subsidy was considered under an economist's report which I considered to be the easy answer. I have put to the industry the idea of importing from the North or using relatively new second-hand cars, although there are issues there related to warranties and maintenance. Cars now, however, are more likely to last for many years. There are other options but we have engaged fully with both the tourism industry and the car hire industry to see what can be done.
The Minister is right that the car hire model that has been used to date is defunct by now. A subsidy could only be seen in the context of a transition period and that transition might be quicker if there was no subsidy. Would the Minister examine the possibility of allowing cars in from the North and Britain for hire because that would give some increase in capacity while the industry is in transition?
Having checked, it does not even need a change in legislation; it could be done by regulation. In the event that is an acceptable solution to the problem, we might be able to do it.
