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Uber’s Lion City Rentals to lease cars to public, dismisses suggestion it is a desperate move

SINGAPORE — Ahead of more upheaval to the ride-hailing scene in Singapore, Uber’s car rental arm Lion City Rentals said on Thursday (Oct 25) that it is leasing its cars to the public.

Uber’s Lion City Rentals to lease cars to public, dismisses suggestion it is a desperate move

Lion City Rentals was set up in 2015 and remains an Uber subsidiary. To lure casual drivers, the company is offering rental rates about S$20 to S$30 lower than other dealers per day.

SINGAPORE — Ahead of more upheaval to the ride-hailing scene in Singapore, Uber’s car rental arm Lion City Rentals said on Thursday (Oct 25) that it is leasing its cars to the public.

Its rates are among the most attractive in town and come with various rebates and incentives, but general manager Pascal Ly dismissed the suggestion that its latest business decision was borne out of desperation.

“We are not in a desperate situation. We’re not saying ‘Oh, Grab didn’t buy us, we are sad about it’. We are taking care of ourselves and ensuring that we are moving forward as we should be,” said Mr Ly, a 38-year-old French national who was previously Uber’s general manager in Cambodia.

Ride-hailing giant Grab acquired Uber’s South-east Asia operations earlier this year and Uber exited the Singapore market in May. Lion City Rentals’ latest move comes a month after the Competition and Consumer Commission of Singapore (CCCS) ruled the Grab-Uber merger to be “anti-competitive”.

Among other conditions set to level the playing field, the competition watchdog barred Uber from selling vehicles from Lion City Rentals to Grab without its approval and required Uber to sell the vehicles to any potential competitor that makes a reasonable offer based on fair market value.

Mr Ly, who took on the role at Lion City Rentals two months ago, said the firm now has an “independent voice”, with its management team having the mandate to decide on the firm’s direction forward.

Lion City Rentals was set up in 2015 and remains an Uber subsidiary.

It plans to grow its current staff strength of 130, said Mr Ly.

He said Lion City Rentals’ fleet of cars has decreased in recent months but declined to provide figures. As of December last year, the firm had a fleet of about 14,000 cars.

According to recent reports, its fleet size is about 10,000.

To lure casual drivers, the company is offering rental rates about S$20 to S$30 lower than other dealers per day. For instance, its most expensive car to rent is the Honda Vezel Hybrid, which costs S$65.30 a day; other companies would charge about S$90.

Among the cheapest car to rent is the Toyota Vios, which costs S$53.10 a day, lower than about S$70 charged by other dealers.

Other perks include flexible car rental periods of a week, three weeks, three months and six months as well as a loyalty scheme for top hirers.

Mr Ly could not reveal the breakdown of cars set aside for its private-hire business and casual drivers, saying that the figures will change based on demand.

Lion City Rentals' new strategy also comes before Indonesian ride-hailing firm Go-Jek’s anticipated entry into the Singapore market next month.

Asked how Go-Jek’s impending arrival might affect his firm, Mr Ly said there “would be a market uplift and people will be looking for cars”.

“We want to be sure that then people will be thinking of Lion City Rentals,” he said.

Mr Ly was coy about plans to grow its fleet of cars, saying that its “fleet inventory is constantly being reviewed as part of efforts to keep the company nimble”.

At the same time, it is open to selling its cars. This, however, depends on a green light from Uber.

“It depends on who comes and knocks on our door, and says they’re interested… we’re not closing any doors,” he said.

Asked if Grab had offered to purchase its fleet, Mr Ly cited confidentiality reasons and said the firm receives regular offers for its cars.

AN INTERIM SOLUTION?

Transport analyst Park Byung Joon from the Singapore University of Social Sciences (SUSS) said that while desperate “might be too strong a word” to describe Lion City Rentals’ new pivot, “it is not far off from the situation”.

“When you have a situation where your fleet remains idle, then you have to find a way to make money. If it means renting to the public, so be it. Better to get the cash than not getting it at all,” he added.

Renting out cars to the public is more of an interim measure, with the company adopting a “wait-and-see approach” to see how the private-hire market evolves.

Even if Go-Jek and Lion City Rentals collaborate, the negotiation process might take some time, said Associate Professor Park.

Renting out its cars would be a sensible decision in the short-run, said Assoc Prof Park. “The company needs to stay afloat during that period.”

Dealers, who also rent out cars, said they do not see Lion City Rentals’ move to target casual riders heating up the already-competitive market.

Cartimes managing director Eddie Loo said it also remains to be seen how long Lion City Rentals can sustain its low rental prices, given that the vehicles were purchased when Certificate of Entitlement (COE) premiums were much higher.

“Currently, COE prices are low, so we will be able to give (buyers) a better price,” he said.

But Lion City Rentals’ relatively large fleet might cause a supply imbalance and force dealers to reduce prices, said Assoc Prof Park.

“It might not be good news for existing firms,” he said.

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