As the country gets closer to Election Day, the business of vehicle rental is booming.

While it is hard to quantify the boom as estimates differ among dealers, a consensus hints at an increase of around 70 to 100 per cent compared to the last elections.

Car dealers identify two new trends, particular to the current elections, in their business: an exceptionally high dependence on four wheelers and Pakistan Teheerk-e-Insaf (PTI) candidates leading the charge in hiring vehicles.

While it is hard to quantify the boom as estimates differ among dealers, a general agreement hints at an increase of around 70-100pc compared to the last elections

“Over 95pc demand is restricted to three brands — double-cabin Vigo (commonly known as daala), Prado and Land Cruiser jeep — as they have emerged as a symbol of political and financial power,” explains Samad Hussain, a dealer who has been in the business for the last two decades.

Small vehicles — such as 1,300CC cars — are almost out of vogue these days as they have no electoral appeal.

Rental rates of flashy brands have doubled, even tripled, in the last two months.

For example, a double-cabin Vigo, which was available for a rent of Rs250,000 per month in May, has currently gone up to around Rs840,000 per month (Rs28,000 per day) while the rent for a Prado has increased from Rs450,000 per month to approximately over Rs1 million per month (at Rs35,000 per day).

Land Cruiser, however, is leading the way at Rs1.5m a month (Rs50,000 per day) — up from Rs750,000 per month in May.

“Over 70pc of this demand in Lahore has come from PTI candidates,” claims Shamraiz Hassan, who has also rented vehicles to election contestants. He gave the example of one rich PTI candidate, contesting through many constituencies in the city, as being primarily responsible for this spike in Lahore business.

“Secondly, the PML-Nawaz people are old hands at electoral politics and mostly have the vehicles they require during electioneering. They are not falling over each other for vehicles like the PTI candidates, but they have certainly driven the demand up by around 20pc,” Shamraiz continues.

One can say that independents are making up the left over 10pc of the demand. There are certain parties who have not approached the local market to rent any vehicles. These parties may be using self-owned vehicles or they may not be using any big vehicle at all, either way they have not been out there in the business of hiring so far, he concludes.

“Lahore has a very limited number of big vehicles and the gap in demand is being met by vehicles coming from other parts of the country, especially KP,” Sheikh Shabir tells Dawn. The city dealers only had 120 such loaded vehicles (Prado or Land Cruisers) because very few people can afford massive rentals.

Supply during the polls comes either from some relatively less-endowed candidates who sell their vehicles to fund their election campaigns, or from KP where such vehicles are available for a relatively cheaper rate because of low demand.

Dealers from Punjab hire these vehicles for a longterm well before elections. This year a major supply of the double-cabin jeep came from Lakki Marwat, where it was available for Rs150,000 per month as compared to Rs250,000 per month in Lahore — dealers therefore made around Rs100,000 per month in May, which has skyrocketed to around Rs800,000 per month, he reveals.

Comparing rents this year with the 2013 elections, Samad Hussain says “we used to charge Rs170,000 for the double-cabin vehicles back in 2013, Rs370,000 for a Prado and Rs650,000 for a Land Cruiser. Now, they have jumped to the levels quoted earlier.

“Apart from a rise in business, there are a number of other reasons for the increase in rentals: general inflation, continued slide in value of rupee as compared to the dollar and the resultant increase in cost of vehicles.

He, however, does not think that people in the car rental business make any fresh investment on vehicles especially for the elections.

“The price of these vehicles goes up by 20pc to 30pc as elections near and settles back down once they are over. The difference between pre- and post-elections prices is large enough to neutralise potential profits.

On top of this, renting vehicles out during elections is not a smooth proposition. The use of vehicles is so rough that it not only multiplies the maintenance cost but later repairs also cost a fortune.

Retrieving money from the candidates after they have won the elections is also a herculean task, and almost impossible if they lose. It was for this reason that this year it was decided at the level of the dealer’s association that payments would be charged in-advance to minimise the risk of sinking rentals.

Published in Dawn, The Business and Finance Weekly, July 23rd, 2018