Less then 15 years ago only a handful of businesses offered car hire and car rental services in Iceland. I didn''t experience it myself but I hear from others that it was the golden age of the Icelandic Car Hire Industry (yes, that was a joke).
But things changed. Iceland became a popular tourist destination, insurance fees and government licence became easier to obtain, and other industries in Iceland became less rewarding which made a lot of people change their business direction. It is a fact that every Icelander has a entrepreneurial spirit. In other words: there seems to be a lot of people wanting to be their own boss (maybe it's got something to do with our inability to be bossed around).
Anyway, a lot of new companies, franchises and people, started their own car rental business, bought a couple of cars and started renting them out to tourists.
Some of these businesses had the licence needed for running a car rental operation. Other's didn't.The increase in competition was perhaps no-greater in any sector of the travel industry in Iceland as in the car hire biz. Competition is healthy and good for the most part. It helps the consumer get better prices for products and services and keeps the businesses on their feet with regards to quality and service standards.
However, the disappointing thing was, and still is, the governments lack of action against those who hadn't obtained the required licences and paid their rightful dues. Competition is all good, as long as it is healthy.
Healthy competition, simply put, is when competitors within the same industry share a common legal infrastructure. They have to pay for their licences, their insurance and of course, pay their taxes.
Unhealthy competition is exactly the opposite, or where competitors operate outside the legal infrastructure, don't pay for their required licence or insurance fee's, which is essentially only in place to protect the consumer and the company.
What this means is that the alien companies can offer the same service at a much cheaper price, whereas their competitors have to keep their prices at a certain rate to make a certain profit after the traditional licensing and insurance costs.
As well as being unhealthy competition, it is of-course illegal and ultimately, it will be the customer who pays the price.
You hear these stories about travellers who are happy to rent cars from business who run car rentals on the side (such as hotels, tour operators, hell even ordinary citizens!).
But when push comes to shove and the car breaks down in rural South Iceland with more than 90km to the next village, you will regret not going for the safe and legal option of renting a car.Let this be a lesson for every industry and every consumer: when you take these types of shortcuts, the good guys get hurt.
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