Fleet News

BVRLA chief hits out at 'short-sighted' lease firms

LEASING and rental companies have been attacked for being short-sighted as they fail to turn fleet business into profit. The parting shot at the UK's contract hire and rental industry came from Simon Kerr at the British Vehicle Rental and Leasing Association's annual dinner on Tuesday where he stepped down after two years as chairman.

He called on companies to take into account costs - particularly in light of residual value losses over the past year - and 'truly reflect them' in what is charged to fleets and 'get a true return for the services provided'. Suggesting that the BVRLA was the UK's largest charity with a collection of £10 billion through the supply of products and services to fleets, Kerr told guests: 'We gave away in excess of £400 million - £200 million in losses, £200 million in desirable profit that we should have made.'

And in a veiled attack on the dotcom companies, he told leasing and rental chiefs: 'Are we practising to join the dotcoms who have measured success by their burn rate, which talk of profits in future tense?' Suggesting the lack of profit being faced by rental and leasing companies was their own fault, Kerr said: 'For a dozen years we have acted as processors of secondhand vehicles for a profit. Now we cannot make that profit and we are whingeing about it. And this is even more relevant to contract hire members whose residual losses will take up to three years to crystallise.'

As a consequence he called on members to 'take proper account of costs and truly reflect them in what you charge and get a true return for the services that we are providing'. 'Selling it a few shillings cheaper in pursuit of growth is a short term fix, satisfying ego only. Volume is vanity, profit is sanity,' said Kerr. He said firms which 'stole' businesses through cut-price strategies would fail to turn it into profit.

'Growth should come because the reassurance that our product gives a transport solution,' he said. 'Refine it, develop it, embellish it. Make it even more desirable. But, please don't sell it cheap. It is demeaning to you, your staff, your shareholders and our industry. There is enough growth available to satisfy us all.'

Kerr, managing director of Eurohire, is replaced as chairman by Peter Grime, managing director of London-based daily rental and chauffeur drive company Miles and Miles. Grime was vice-chairman for the past year.

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