Fleet News

Wage inflation set to push daily rental rates higher

ONE in four rental companies will not be able to afford salary increases this year which could force them to push up rental rates for fleets. The findings were revealed in a Plimsoll Portfolio Analysis Vehicle Rental Report for Autumn 2000 that claimed 166 companies in the rental industry may have difficulty with salaries next year.

Plimsoll studied industry salaries against a each company's ability to pay and said that the problems would occur for the more than a quarter of the 429 firms surveyed, if rising costs continued against zero sales growth.

The analysis predicts that average salaries are likely to rise to £19,000 in the rental industry, up from £18,400 last year, a 3.3% rise.

Overall, the average profit margin within the industry was measured at 1.8%, but the poorly performing companies were making losses, while those which could afford pay rises had 4.1% profit margins, still far below the average of many industries.

The figures show the stark choices facing the rental industry, as they call for rental rates to increase from the current cut-throat levels being charged in the industry, which are pegged back because of the intense competition in the market.

The report makes clear that many firms in the industry are trading unprofitably, using low rates, simply to win volume business.

A spokesman for the firm said: 'Currently 32% of the industry had zero growth in their latest performance. Plimsoll has revealed that last year 18 companies within the industry managed to increase their number of employees and increase sales while managing to stay financially secure'.

Copies of the Plimsoll Portfolio Analysis: Vehicle Rental, Autumn Edition 2000, containing full details on 789 companies for £305 are available by calling 01642 257800.

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