In a bid to increase profitability, Sixt Kenning has introduced a surcharge on one-day rentals of £5. The controversial move follows an analysis by the firm of the rental duration of its fleet vehicles. Bruce Howard, managing director, said: 'Our rates are partially determined by the average length of rental transaction, which is typically in the region of 41 days.
'However, this masks the fact that more than half our corporate account transactions were one-day rentals, which widely differed from customers' forecasts. We cannot sustain that frequency with existing rental rates, bearing in mind that every rental transaction requires the same level of service and overhead recovery.'
Longer rentals may help subsidise the short term ones, so having too many one-day rentals can upset the balance, and Howard revealed that the firm was prepared to lose unprofitable contracts in the battle for more profitable business. He said: 'There is nothing wrong with one-day rental if it is priced correctly.'
Much of the problem comes because customers predict a high demand for long-term rental, to keep rates low, but in reality, the business is not there. By the time it becomes clear, however, the rental firm already has the vehicles to meet the business it expected. Howard added: 'In these circumstance, we simply cannot continue to absorb or offset additional staff costs for delivery and collection of vehicles.'