Fleet News

Rental industry is set to become leaner and fitter

Europe's daily rental industry is set to emerge 'leaner and fitter' after suffering a downturn in business following the September 11 terrorist attacks on the US.

And rental companies are in a stronger negotiating position they have ever been with manufacturers, claims daily rental consultant and Fleet News Europe contributor David Willsher.

Willsher, speaking at the Fleet News Europe Congress in Barcelona, described how the industry was affected by the terrorist attacks. 'Literally overnight demand for flights slumped,' Willsher said, 'and the effect on airlines and car rental companies was highly negative. Rental companies found themselves with too many cars and downward orders.'

For the future, Willsher said manufacturers are likely to find themselves facing tougher negotiations. In the past manufacturers have limited the share of vehicle production that they were prepared to sell to the rental industry.

As profit margins were relatively poor, manufacturers feared that excess numbers of ex-rental cars hitting the used market would undermine residual values.

At the same time, the rental industry was growing consistently and sourcing adequate supplies of new cars became a constant headache. In this scenario, manufacturers were able to negotiate terms that left them with improving profit margins.

'Rental companies are now in a strong negotiating period,' Willsher told the Congress.

He also highlighted the fact that low cost operators have continued to expand both their networks and fleet sizes.

Willsher said that initially, these companies focused their marketing efforts on the leisure and insurance replacement rental segments but they are now starting to make their presence felt in corporate accounts.

'Traditionally, the major players have handled a large majority of this business but now find their position under threat from these 'new kids on the block' who are prepared to compete at aggressive rates,' Willsher said.

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment

Comments

No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee