In January 2014, Avis Cambodia launched operations in Phnom Penh, leveraging the experience and brand recognition of Avis Rent a Car System, a US-based vehicle rental franchise with 6,000 locations worldwide. Khmer Times sat down with Meas Tola, Operation Manager of Avis Cambodia, to discuss the company’s business model and growth prospects.
KT: Avis was the first international rental car franchise to open in Cambodia. How is the business going so far?
Tola: Our company originally launched in early 2010 as Asia Vehicle Rental (AVR), one of eight subsidiaries of RMA Cambodia Group. We became a licensed franchisee of Avis in January 2014 and began operating under the brand name that same month. We have three offices – one in Phnom Penh’s Boeung Keng Kang 1, one in Phnom Penh international airport and another in Siem Reap – with 31 full-time staff and chauffeurs, and 50 reserve drivers.
The business started with a small fleet three years ago and now has 82 vehicles, including sedans for city tours, SUVs for business and trips to the provinces, and pickups for the adventure trip. Currently, 43 of our vehicles are for long-term leasing of six months and above, and 39 for rentals from one day to three weeks.
KT: How does Avis differ from existing car rental agencies in Cambodia?
Tola: In Cambodia, the majority of car rental companies are family-run businesses, which do not have proper policies or full-range customer services. Most of these local companies use second-hand vehicles, which are usually over 10 to 20 years old. In addition, many of their vehicles run on LPG (liquefied petroleum gas), which is very dangerous and a risk to customers. We do not use second-hand or modified vehicles; we only use brand new vehicles that are regularly maintained and serviced with genuine parts.
KT: What are the requirements and differences between your chauffeur-driven and self-drive vehicle services?
Tola: For our chauffeur-driven vehicles, all our drivers are professionals who have completed a “defensive driving” course. We conduct these courses twice a year. We have two kinds of drivers, those who speak only Khmer, and those who also speak English. The cost difference is just $5 per day extra for English-speaking drivers.
The other service Avis offers is self-drive rental. Cambodian nationals only need to show their ID card, residential book and a valid driving license to rent our cars for up to three weeks. Foreigners need to show their passport and an international driving license (IDL), but if they don’t have an IDL we can process a temporary Cambodian driving license for them within 24 hours.
KT: Which is more popular with customers?
Tola: Renting a car with a chauffeur is more popular than self-driven, and about 70 percent of our rentals are done this way. One reason is that traffic accidents are common in Cambodia, so many of our customers – especially tourists who are not used to the road conditions here and don’t know their way around – are afraid of driving by themselves.
KT: What challenges do you find operating a car rental company in Cambodia?
Tola: Avis franchises that operate in the United States and Europe allow their customers to rent a car in one city and drop it off in another. All transactions are secured by a credit card, which leaves the customer liable.
Here we have many challenges because we assume all the risk. We require only an ID card and residency documentation, and sometimes this isn’t enough. For instance, an individual may rent a car and sell it to a pawn shop, which in Cambodia will accept a car without title or registration documents that would identify it as stolen. This has happened to us four times since we opened this year, and though occasionally we can identify the customer and get the car back, I still don’t understand why pawn shops accept cars that are obviously stolen – or why the government doesn’t better regulate them.
KT: What are your future plans for expanding Avis in Cambodia?
Tola: We have expanded to include an office at Phnom Penh international airport, which opened in October. We will set up two more offices in 2015, one in Poipet on the Thai border and the other in Bavet, on the Vietnamese border, so that customers can drop off their Avis car at the border at the end of their trip. We will also add more than 40 vehicles to our fleet in 2015 to fulfill demand.
KT: Can rented vehicles be taken across borders?
Tola: Of course. We are a subsidiary of RMA, which has offices in three other Southeast Asian countries: Thailand, Laos, and Myanmar. So you can cross the border, but there is an additional fee to process the border documentation. We also have a transfer service with our Avis partners in neighboring countries, who can prepare another car and come to pick you up at the border. If you want the same make and model vehicle, we can arrange that too.
KT: How cost-efficient is leasing a vehicle compared to buying?
Tola: I believe leasing is better than buying. In Cambodia, people buy cars with cash, usually with a down-payment of 20, 30 or even 50 percent of the total price and then making monthly payments at high interest rates. This is different than in other countries where most people use credit, such as a bank loan, with a low interest rate. With leasing, all the customer needs to pay is the monthly payment. So they don’t have to spend a lot of money upfront.
Many international companies operating in Cambodia consider that they can either buy a vehicle and pay a down-payment of at least 50 percent of its value, or lease the vehicle and pay only the monthly rental fee. Leasing helps these companies to manage their cash flow.