Jucy has around 600 motorhomes in New Zealand and expects demand to rebound soon. Photo / Provided
Jucy warns that the shortage of vehicles could drive up rental costs and slow the recovery of international tourism.
The company has retained most of its fleet of cars and vans after being decimated by the pandemic over
two years ago, but says new vehicle imports are delayed for months and the broader rental vehicle industry could be hit even harder.
Supply chain issues of the past 18 months and now Russia’s war in Ukraine have affected vehicle component sourcing and deliveries worldwide.
New clean car requirements for New Zealand coming into force this year have also caused uncertainty in the rental vehicle market, said Dan Alpe, chief executive of Jucy.
He said global shortages of new cars and industry rationalization will leave the country’s rental inventory at about 30-40% of what it was before the pandemic and rental prices will rise in the short term. .
“The asset rationalization we’ve seen in the vehicle rental business has provided a lifeline for some of the bigger players, but some of the second and third tier companies have exited an unsustainable market.”
As a result, when the country opens up to international tourists over the next month, New Zealand will lack a vital part of its infrastructure.
“Rebuilding this fleet will take us at least two years and in the meantime we can expect prices to rise,” he said.
Vaccinated Australian visitors will be able to enter New Zealand without isolation or MIQ from next week and those from most key markets in the country will be able to do the same from early May.
Alpe said many rental operators sold most of their fleet when supply chain shortages increased the resale value of used vehicles.
The company’s main business is two- to four-berth motorhomes, of which it has around 600 in New Zealand and 700 in Australia. Many are built on second-hand chassis, but delivery times for new Toyota Hiaces have dropped from around two to five months.
Uncertainty surrounding the reopening of borders has further complicated vehicle ordering schedules.
Jucy has around 550 rental cars in New Zealand and around 800 in Australia, where rental rates have skyrocketed.
Average daily car rental rates in Australia increased by 95%, reflecting the shortage of car rental supply and bookings for March were 115% of 2019 volumes for the same month.
Alpe said Australia had opened up faster, had more relaxed testing requirements and, crucially, was doing more to attract visitors on working holidays than New Zealand.
There was a danger that this country would miss the recovery of tourism.
The government here could do more to support the sector, the biggest foreign exchange earner before the pandemic.
”Australia is burning us right now. I wouldn’t want to be in any position in government but now is the time for the rubber to hit the road, we need to market New Zealand and tell the world we are open,’ Alpe said.
The experience of operating in the Australian market when it reopened to tourists last month also provided several insights.
Its Australian operation had about three weeks’ notice before borders reopened in February – similar to what New Zealand tourism businesses have had.
“What we saw was a significant government investment to encourage aviation and bring capacity back in time for the end of their summer season. Additionally, the Australian government was well organized and able to deploy tactical tourism campaigns aggressively targeting the working holiday market in the first place, with great effect.”
This means there was no gradual accumulation and leisure travel rebounded immediately.
The immediate response from the market was much faster than expected and the company has already started to develop its New Zealand call centre.
He said with Australian school holidays coming up, self-drive tourism figures are expected to be high for the South Island.
“The country’s tourism operators are going to take a leap of faith at this time – investing in staff and equipment resources at a time when their cash flow has been stretched to the limit – the challenge at this point is that revenues will only reach not their accounts until the visitors arrive.”
Jucy’s workforce had grown from around 450 in New Zealand before the pandemic to 120 now. The company was rehiring but, like all employers, faced a labor shortage, which in the past had been alleviated by working holiday visa holders who were good for the wider economy. because they also traveled and spent here.
Despite some sticking points at the border, bookings from Europe – Germany, France and Britain – for the coming summer have also been strong.
“Our European distributors tell us that interest in New Zealand remains strong, however, we do not expect significant volumes of long-haul travelers from the northern hemisphere to arrive until October,” Alpe said.
When Covid hit about 95% of Jucy’s market, it disappeared.
” It was devastating to watch a business that I had spent 20 years alongside my brother [Tim] building falling all around us because we lost our income overnight.”
The business was bought by Polar Capital, Colin Neal’s investment company, with a minority stake in fellow local David Cushing. Its lodging and cruise business was not part of the deal.
Jucy Snooze is now owned by Australian company Event Hospitality and Tim Alpe runs the business.