More than half of the companies surveyed reported rate increases of 1%-6% during 1998, while a further 18% achieved increases of up to 16% in an attempt to offset projected shortfalls in residual values. But these gains in revenue were cancelled out by escalating depreciation and increasing maintenance expenditure: 45.6% of contract hire companies experienced increases in their maintenance budgets of between 1%-6%, and 61.4% predicted further increases.
The silver lining for contract hire companies is the growing demand for leasing and fleet management services, with year-on-year volumes up by 11% and 31.5% respectively. The BVRLA's review says UK plc is still concerned about the prospect of a boom-bust economic cycle, leading more companies to focus on their core business and outsource fleet management.
But this does not spell the end of the in-house fleet manager, according to Norman Donkin, director general of the BVRLA. He said the outsourcing of routine functions could enhance fleet managers' position within a company by freeing their time to become more strategic in outlook.