Salik impacts car rental

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Salik’s introduction has caused car rental firms an administrative nightmare.

Car rental companies in the UAE have taken steps to cover the administrative costs of implementing and maintaining Salik across their fleets, but remain unsure of the real impact on their bottom line.

RTA stated that any vehicles passing under the gate from July 1 without a Salik card would be fined AED 100 ($27) the first time, increasing by AED 100 ($27) every time thereafter, but many companies were unable to get enough cards by the time the system was implemented.

"We eventually got most of the tags on July 8 or 9. About 80% of the fleet now have them," Hertz Middle East general manager Bob Farrow told ATN.

"At the moment their system isn't working very well so we don't know if they are charging us or not. We have told them that we will not accept any fines because the administration of this has been ridiculous."

According to Farrow, the initial purchase of Salik cards for its 6000-strong fleet cost AED 300,000 ($81,700).

"Then we have had to employ three guys to handle the administration, which is probably costing around AED 20,000 ($5446) per month, and we will eventually end up paying a pre-paid deposit of around AED 750,000 ($204,000) to the RTA," he explained.

Hertz charges short-term holiday rental customers AED 5 ($1.36) per crossing, compared to AED 4.4 ($1.2) for long-lease customers.

Most firms are charging clients AED 4.4 to 5 (US $1.2 to 1.36) to cover the administrative costs of purchasing, installing and maintaining the cards.

"The reason is that there is a cost associated with running these cards," said Peter Blott, managing director, National Alamo. "The card is topped up automatically by our staff, and if there are any fines it is not [the customer's] responsibility, so it is a turn-key solution."

National Alamo charges all customers a flat admin fee of 10%, equal to AED 4.4 ($1.2) every time a customer passes under the tollgate.

Thrifty Car Rental charges holiday rentals AED 5 ($1.36) every time cross, and AED 4.5 ($1.2) for long-term leasers, but assistant general manager Rajesh Arora said customers were happy to pay the fees to avoid congestion.

Holiday Autos managing director Naz Musa said the problem for his company was a matter of principle: "We sell the concept of fully inclusive car hire, but we can't include Salik because we don't know how many times a client will go through," he explained.

"We have to accept that there are some tolls and indirect taxation that we can not include in our rate."

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