Fleet News

Hard-bargaining fleets drive down lease rates

HARD-bargaining fleets made the most of intense competition among fleet suppliers in the contract hire and leasing market to keep prices static or even drive them down last year.

Figures from the British Vehicle Rental and Leasing Association Industry Review 2002 show that fleet buyers were effective in keeping down vehicle lease and contract hire costs. While the size of the fleet run by BVRLA members jumped by more than 5%, from 1,618,516 vehicles in 2000 to 1,711,447 last year, revenues are not keeping up.

The BVRLA report said: 'Overall revenues for long-term car and light commercial vehicle rental have fallen slightly to an estimated £5.84 billion, from £5.92 billion in 2000 and £6.61 billion in 1999.

'The indications are that increased competition is continuing to place pressures on revenue. Added to continued reported increases in staff and maintenance costs and continuing concerns on vehicle resale values, it is obvious that profit margins remain slim.'

Research by the BVRLA shows that shopping around is vital for fleets to take advantage of the contract hire rates battle.

Figures show that 42% of long-term rental (contract hire) suppliers reduced their prices, with 18% cutting rates by more than 5%, despite tumbling residual values inflating holding costs.

Companies which reduced their lease rates said falling new car prices had made it possible, despite lower residual values off-setting any reduction in list price. However, 45% of leasing companies managed to increase their charges, with 15% of those imposing rises of more than 5%, while 12% kept their rates static.

This is in stark contrast to 2000, when 82% of members increased their rates, with more than one-third raising their prices by more than 5% to take account of higher depreciation costs amid falling residual values.

The cost of the other element of contract hire, service and maintenance, has also remained static, the survey showed. Overall, the three-year/ 60,000-mile contract term remains the norm, although longer warranties and service intervals are gradually extending average contract lengths.

Vauxhall takes No1 slot from Ford in leasing league

VAUXHALL topped the charts as the largest supplier to contract hire and leasing customers during last year, accounting for 21.8% of sales.

The contract hire and leasing market accounts for more than half of fleet sales and is a key segment for manufacturers.

Vauxhall swapped place with 2000's chart-topper, Ford, which took second placed with a 17.7% market share. Volkswagen came third, with 8.9% of the market, while BMW enjoyed a bumper year, up to fourth with 8.8% of the contract hire and leasing market.

Renault fell back to fifth (4.6%), down from 5%, while Audi in sixth (4.3%) beat Peugeot, significantly down to 7th, with a market share of 4.3% down from 12.7%, as buyers held off awaiting the new 307 model.

Mercedes-Benz (3.4%), Toyota (3.1%) and Volvo (3.1%) occupied the rest of the top 10 places.

Share of the leasing market
Manufacturer 2001 2000 1999
Vauxhall 21.8% 16.1% 17.4%
Ford 17.7% 17.7% 18.2%
VW 8.9% 8.2% 9.8%
BMW 8.8% 6.1% 5.7%
Renault 4.6% 5.0% 6.4%
Audi 4.3% 3.1% 4.1%
Peugeot 4.3% 12.7% 12.6%
Mercedes-Benz 3.4% 3.0% 2.5%
Toyota 3.1% 4.3% 2.7%
Volvo 3.1% 2.9% 2.0%
Rover 2.7% 5.4% 5.6%
Nissan 2.5% 4.0% 2.6%
Citroen 2.3% 1.6% 1.6%
Saab 1.6% 1.9% 1.6%
Land Rover 1.4% 1.2% 1.2%
Honda 1.3% 2.2% 2.0%
Fiat 1.3% 1.5% 1.1%
Mitsubishi 0.4% 0.5% 0.4%
Mazda 0.2% 0.4% 0.6%
Hyundai 0.1% 0.2% 0.2%
Running hard just to stand still

DAILY rental companies boosted their fleet sizes to record levels last year, but were 'running hard just to stand still' as hire rates slumped to their lowest level for a decade.

The fleet size of BVRLA daily rental companies grew from 255,174 to 315,786 vehicles between 2000 and 2001, breaking the 300,000 barrier for the first time. The car fleet grew 8.5% from 202,347 to 219,978 during the same period. But despite the growth and the effects of inflation, revenue dropped for car and van rental fleets to £1.1 billion last year, compared to £1.2 billion for the year before.

This was due to lower rental rates and shorter hire periods.

The average transaction value for cars fell from £119.64 in 1999 to £110.04 in 2000, the first time in a decade it has fallen below £111. For 2001, the value has slumped further to £104.84.

'Based on inflation as measured by the Retail Price Index, the average rental transaction is now worth a third less than it was a decade ago,' the report said. 'This is clear evidence that the high level of competition in the market is continuing to keep hire rates low.'

Rail fears turn travellers towards car rentals

A LACK of confidence in the rail network tempted an increasing number of people into rental vehicles, the BVRLA report reveals.

Although corporate travel-based rentals fell following the tragic events of September 11, they were offset by business people looking for alternatives to rail transport.

The report said: 'The increased utilisation of vehicle rental may reflect the chaotic state of the railway communications during the period. The Hatfield train crash and the collapse of Railtrack affected the confidence of travellers in the service.'

But while drivers moved away from the railway, the report noted: 'Business users have increasingly taken advantage of budget airline services with one or two-day airport rentals at their destination.'

This has led to reduction in the average length of rentals, from 6.2 days in 1999 to 4.8 days in 2001, the shortest duration since 1991.

On average, vehicles are rented for 217 days per year, a 60% utilisation rate, down from 291 days and 79% in 1998.

The report said: 'This is a clear indication that more variable customer requirements and competitive pressures are requiring members to hold larger and less effectively utilised fleets.'

Peugeot streaks ahead in rental league

MANUFACTURERS are using the daily rental market to increase their presence on Britain's roads, latest figures from the BVRLA show.

While Ford has dominated the sector for years, accounting for 26.5% of the short-term car hire market last year, other manufacturers are taking large swathes of rental business. Peugeot jumped into second place last year, with 21.2% of the market, an increase from 11.6% in 2000.

The surge in sales came as Vauxhall cut back volume from 23.9% in 2000 to 16.9% last year.

Fiat has enjoyed growing presence among daily rental suppliers, with sales up from 8.8% to 9.2% in 2001, while Mercedes-Benz sales leapt from 1.6% to 4.8% in the same period on the back of the Easycar contract.

By contrast, Renault sales fell back, from 7.7% to 3.6% in 2001, while other manufacturers with lower volumes included Rover, Volvo, Mitsubishi and Honda.

Short term rental acquisitions
Manufacturer 2001 2000 1999
Ford 26.5% 25.2% 22.8%
Peugeot 21.2% 11.6% 7.3%
Vauxhall 16.9% 23.9% 17.4%
Fiat 9.2% 8.8% 11.8%
Mercedes-Benz 4.8% 1.6% 1.8%
Renault 3.6% 7.7% 8.0%
VW 3.4% 3.8% 7.9%
Toyota 3.1% 2.7% 2.0%
Nissan 2.8% 2.1% 6.3%
Rover 2.4% 4.3% 5.6%
Volvo 1.2% 1.4% 1.0%
Citroen 1.1% 0.8% 1.5%
Mitsubishi 0.4% 1.0% 0.3%
Honda 0.1% 0.8% 2.1%
BMW 0.1% 0.7% 0.2%
Audi 0.1% 0.3% 0.4%
Land Rover 0.1% 0.1% o.1%
LDV 0.1% 0.1% 0.1%
Saab 0.1% 0.3% 0.1%
Daewoo 0.0% 1.7% 0.4%

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