Rental increased during the recession.
According to figures from business analyst Datamonitor, the UK’s corporate spend on car rental was up last year by almost 3% on the £1.3 billion in 2011.
Uncertainty over employment contracts and redundancies fuelled by the recession and slow recovery forced public and private sector organisations to consider alternatives to the company car, not least as stop-gap measures while the economy settled down.
Will this be sustained as growth picks up and recruitment begins in earnest? Certainly pricing continues to intensify, making car rental a more competitive offer against more traditional funding methods – in the right circumstances.
It is also increasingly being considered as a cheaper, safer and more efficient option to pool cars and the grey fleet.
However, for rental to occupy a position of continued growth in the fleet sector, it will require improvements to services.
Fleets commonly complain about inconvenient collection and delivery times, poor condition of rental cars and being re-charged for fuel or damage at what they believe are unacceptably high rates.
Rental companies recognise these issues and have started to implement initiatives intended to improve customer satisfaction levels.
They are also widening their service offerings by launching (or in Avis’s case buying) car share operations.
So-called car clubs enable rental companies to extend their hire proposition from current one-day contracts to one-hour arrangements, boosting flexibility for fleets.
They are also utilising technology which could improve the rental service to fleets. Avis-owned Zipcar, for example, uses black box technology which shows fuel use, mileage, accidents and collection times, all of which can be integrated into a fleet’s management system to improve its effectiveness.
Here we look at how rental might offer an alternative solution to a range of vehicle needs within a company.
An alternative to pool cars
Pool cars can be a headache to operate. They depreciate in the same way as any company car and are often poorly managed and, therefore, under-utilised. They also cost a lot to maintain – even if they’re not being used often they will need regular servicing.
Rental offers an alternative to the admin cost and expense of owning and running pool cars, according to Adrian Bewley, director of business rental at Enterprise Rent-A-Car.
“Some of these costs are hidden, such as the cost of the space needed to park them or ensuring they are serviced and repaired on a regular basis, during which time the vehicle is also out of use,” he says.
“By using rental, businesses can be sure the cars are properly maintained at all times.”
Rental companies can offer a ‘virtual’ pool car fleet.
Policies can be drawn up to ensure staff have access only to the right types of vehicles, so junior employees don’t drive off in an unnecessarily high-CO2 vehicle because it’s the only pool car available.
Bewley adds: “Rental cars tend to be newer and are thus usually more fuel-efficient than older pool cars. Rental also helps with sustainability, as you have vehicles only as and when you need them. If the vehicle isn’t always there, employees need to think, do I even need to make that trip?”
Pool cars are often an effective way to reallocate ex-company cars if staff leave a business, rather than facing costly early-termination charges from the leasing provider.
Some companies also opt for low CO2 pool cars which saves money on fuel bills, while those with staff regularly using their own cars for business can be directed to a pool car, keeping utilisation levels high.
A fully-utilised pool car will be cheaper than renting a vehicle 24/7. Rental is most justified where usage is more ad hoc.