Mary Hanafin (Dún Laoghaire, Fianna Fail)

I am aware from my initial contacts with tourism industry interests of potential difficulties in the availability and pricing of car hire during the peak summer period.

I understand that a number of events have brought about the contraction in the car hire fleet. Traditionally, car rental companies bought new cars from dealers. They required the dealer to agree a price at which he or she would buy the car back at a later date. This facilitated dealers and car rental companies to secure credit to make their purchases. Falling prices in the second-hand car market and overcrowded forecourts in 2008 meant that dealers made significant losses on the arrangement. I understand that, following that experience, dealers are no longer prepared to enter such agreements and, therefore, are supplying fewer cars to the rental industry. I have been advised that the problem is compounded by the levels of credit available in the economy and the trend by domestic motorists towards smaller, more carbon-efficient cars and away from the larger, automatic transmission cars more popular with many overseas visitors.

My officials and representatives of the tourism agencies have been in ongoing discussions with the tourism industry to help identify solutions that will ameliorate potential difficulties in 2010. I am open to considering any proposals that the industry may now wish to put forward in the light of the outcome of the debate on tax-based solutions during the passage through the House of the Finance Bill. It may well be that the existing car hire business model which is dependent on a high turnover of new car sales is no longer appropriate in the current market and will have to adapt to changed circumstances.

Accordingly, I would hope that the wider market would respond to the commercial opportunities arising. I would also be concerned that the car hire sector would exercise restraint in any scope for car hire rate increases arising from potential shortages, on the basis of the medium to longer-term damage that this would have on Irish tourism and, indeed, their own businesses.

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