As the 'car+inflation' phenomenon, in which new car prices rise sharply, intensifies, share prices of rental car-related stocks are showing strength.  (Maekyung DB)
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“I don’t buy a car, I rent it”… Singsing, a rental car owner in ‘Carflation’

As the ‘car+inflation’ phenomenon, in which new car prices rise sharply, intensifies, share prices of rental car-related stocks are showing strength. (Maekyung DB)

Car rental stocks are strong as the ‘car+inflation’ phenomenon, in which new car prices rise sharply, intensifies. Automobile prices are steadily rising as it becomes difficult to procure auto parts due to global supply chain issues and the Ukraine crisis. According to the industry, the average price of a passenger car sold by Hyundai Motor in Korea last year was 47.59 million won, up 13.8% from the previous year (41.83 million won). The Mercedes-Benz C-Class rose from 55.1 million won (based on the lowest trim) to 61.5 million won this year.

The rise in new car prices and delays in shipments have brought relatively vitality to the rental car market. This is because the supply of small and medium-sized cars with relatively low prices has further decreased as automakers concentrated on producing high-end cars. The proportion of consumers with increased burden using used cars or rental cars instead of purchasing vehicles has increased. In addition to the carflation, the increase in domestic travel has been added, and car rental companies have been showing good results since last year. In addition to the recent endemic expectations, the earnings improvement is expected to accelerate further.

In fact, as more and more consumers are looking for rental cars, the rental car industry is experiencing the greatest boom. Lotte Rental achieved an all-time high of 245.5 billion won in operating profit last year, up 53.5 percent from the previous year. During the same period, sales jumped 7.6% to 2.42 trillion won. SK Rent-a-Car also recorded KRW 1.369 trillion in sales, up 20.1%, and KRW 79.1 billion in operating profit, up 11.7%.

The domestic car rental industry is a two-way structure between Lotte Rental and SK Rent-a-Car. According to the Korea Automobile Rental Business Association, the domestic rental car market share as of last year was ▲Lotte Rental 21.6% ▲SK Rent-a-Car 18.5% ▲Hyundai Capital 12.7% ▲Hana Capital 3.4%. As of last year, Lotte Rental and SK Rent-a-Car owned 234,010 and 208,811 vehicles, respectively. The number of vehicles owned by Hyundai Capital and Hana Capital is 143,434 and 38,392, respectively.

Kim Min-seon, an analyst at Kiwoom Securities, said, “The perception that a car is rented when necessary, rather than viewed as a concept of ownership, has contributed to the boom in the rental car market. did.

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Reference-www.mk.co.kr

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