Northgate Vehicle Hire is set to expand heavily in London next year.

The company’s expansion within the London area has already commenced, with the opening of two new sites in the final quarter of 2013’s financial year, and the launch of six to eight new depots is planned over the next 12 months.

The new openings in Luton and Brent Cross, coupled with those planned to launch over the next 12 months, form the initial stages of a wider UK based branch expansion plan which will add up to 20 new depots to the company’s existing network over the next four years. 

New sites will take three years to reach maturity and, at this point, will operate a fleet of approximately 500 vehicles per site. Financially, new sites are estimated to break even in their first year with overall return on capital employed exceeding current levels.

Northgate is hoping its new London sites experience the growth rate of its Irish operation, currently 20% per annum.

Bob Contreras, CEO of Northgate Vehicle Hire, said: “Over the last six months we’ve launched new depots in Luton, Brent Cross and Huddersfield, and all to great effect. Our focus will now shift to the London market due to the demand for flexible hire in the capital. Each new site will have an initial set up cost of £200,000, covering property, personnel and marketing costs. If the new sites perform in line with our expectations, they should break even in year one and by year three have a ROCE in excess of 16%.

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