Pushing for Stable Rental Car Rates Amid "Rip-Off" Controversy
Reporting Rental Fees Reflecting Companies' Business Conditions
Jeju Province has decided to introduce a new method for calculating rental car rates in order to address recurring consumer complaints during peak seasons. This move comes in response to ongoing criticism that the price fluctuations are excessive, with rates for compact cars like the Ray ranging from 10,000 to 20,000 won during the off-season but soaring up to 200,000 won during peak periods.
From Arbitrary Pricing to Accounting-Based Calculation
According to Jeju Province on December 1, rental car companies will now be required to set their rates based on objective grounds that reflect their business conditions, such as accounting records, when reporting rental car rates in the future. On November 30, Jeju Province announced that it would improve the system in this way to stabilize rental car prices.
Currently, rental fees are set based on the vehicle price when registering a new rental car. However, once the new rules are implemented, companies will be required to report rental fees based on their financial statements and overall business situation. Jeju Province conducted a preliminary simulation using this new approach and found that rental fees could drop by up to 50% compared to current rates.
Under the current rate reporting system, rental car companies report their rental fees once a year. Companies tend to report the highest possible rates in anticipation of the summer peak season, making the reported rate effectively the maximum rate charged.
Average Rates Could Drop by Up to 50%... Ray Expected at 100,000 Won per Day
For example, in the case of the Ray, a compact car, companies have reported daily rental rates of 200,000 won and actually charged this amount during the summer peak season, leading to complaints about "rip-off" pricing. Conversely, during the off-season, rates are dropped to the 10,000 to 20,000 won range, resulting in criticism for "rollercoaster" pricing. Jeju Province believes that applying the new pricing formula could lower the maximum daily rental rate for Ray vehicles to around 100,000 won.
Before establishing the relevant regulations, Jeju Province plans to partially revise the "Jeju Province Passenger Vehicle Transport Business Ordinance" to provide a legal basis stating that "details regarding rental fees, discounts, and additional charges based on cost calculation will be stipulated in the regulations." This amendment will be submitted to the Jeju Provincial Council in February next year. Once the related regulations are established, the new rate reporting system is expected to be implemented before the National Sports Festival in October next year.
However, concerns have been raised that lower rates could negatively impact the management of small-scale operators. To address this, Jeju Province plans to introduce a cap on discount rates to prevent excessive price competition among companies. Currently, some companies offer discounts of up to 90%, but the province is strongly considering limiting this to 50-60%.
A Jeju Province official stated, "If the reported rental fees are significantly lowered, introducing a cap on discount rates will not pose a major burden on consumers, and it should also resolve the structural issue where excessive off-season discounts lead to higher peak season rates."
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