ComfortDelGro hit by rapid growth of rental cars

Private hire cars soar 48% in August.

ComfortDelGro's (CDG) taxi earnings growth is expected to slow or remain flat as Grab and Uber take greater market shares, said OCBC Investment Research.

Compared to end-Dec 15 data, car population in Singapore as at end-Aug 16 fell 0.2% to 955,550 vehicles, but rental car population jumped 48.0% to 43,462 vehicles.

OCBC Investment Research believes that the surge in rental car population is largely driven by the rapid expansion of the private hire car service providers, mainly Grab and Uber.

"We believe their emergence and expansion have also led to 19 consecutive months of decline in average daily number of taxi trips made by one- shift taxis," it said.

The brokerage firm added that with Grab and Uber still engaging in activities to gain market share, rental car population is likely to continue its growth in the near-term. As a result, it sees CDG's earnings growth to moderate as it attempts to slow down its fleet growth to prevent idling fleet, and possibly increasing incentives to retain/attract existing or new taxi hires.