Nigel Schroder, managing director of trg Vehicle Hire, offers his predictions;
Traditionally, many vehicle hire companies have made good money disposing of their fleet – providing regular lump sums to the business and supporting the true rental side and the rates they charge. But, I believe the hardening of pricing by manufacturers as they have less excess stock issues and a fragile used market will no longer make this an option. The business model for rental companies will have to change and the rental side will have to generate higher levels of profit in order to sustain the overall business. This has to mean the consumer will be paying more, and I believe we will see a rate increase throughout 2013.
In an ideal world, a hire business will want to hire a vehicle between Monday to the following Monday – where it earns money every day, as opposed to regular turnarounds (with higher operating costs). In order to do this, companies will need to offer flexibility, for example offering a free day, or five days for the price of three. I don’t believe some of the smaller, local vehicle hire businesses will be able to support this type of model, and it may not be cost effective for the very large players.
The sector is woefully behind when it comes to IT. I believe many businesses will need to place real focus on technology to improve customer service – primarily in the check-in and check-out processes. At the end of the day, it is about improving the customer experience.
I don’t believe we will see a great number of acquisitions during 2013, but some of the smaller players, unable to meet costly insurance demands and with a lack of cash available, will either be taken over or will downsize yet further consolidating their sites.