Fleet News

Take-over rumours in air as operators feel squeeze

TAKE-OVER fever is gripping daily rental companies as residual value losses and cut-throat pricing - with Ford Mondeos available for as little as £12 a day - hit the limited resources of smaller operators. Falling new car prices have hit the nearly new-car market hard as manufacturers including Ford and Rover have wiped thousands of pounds off their price lists, which has a direct knock-on effect on the values of six-month-old cars.

For example, CAP Black Book lists a six-month-old Vauxhall Vectra with 15,000 miles on the clock at £8,325 - a £1,675 collapse in value compared to an equivalent car in 1997. But while the normal business reaction would be to increase rental rates to cut losses, competition among daily rental companies is so fierce that imposing higher charges on customers could mean losing business to rivals.

As losses take their toll throughout the industry, smaller players are beginning to fall victim to larger rivals which have the resources to ride through the short-term increase in costs they are facing. Jasmor Rent A Car's 2,400-vehicle fleet was acquired this month by Budget UK as Jasmor appointed the receivers. The acquisition was similar to Enterprise Rent-A-Car's purchase of the trading name, contracts and certain assets of hire firm Churchfields, which appointed liquidators at the start of this year.

Another small player in the daily rental market is expected to be sold within the next month as it struggles to cope with the current financial climate. This week, daily rental giant TLS warned that a gulf was forming between the mammoths and the minnows in the industry and admitted that it too was on the look-out for potential targets.

TLS chief executive Peter Roberts said: 'A number of smaller players don't seem to be able to price vehicles according to what they cost. If you rent a van at £50 a week that costs £50 to run, then there is no point. I think the large players will get bigger and the smaller players will be under pressure. We are looking at a different company every couple of weeks. For rental firms looking for fast growth in their fleet sizes, it is not possible through organic growth. They will have to buy.'

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