Fleet News

Guest opinion: rental clarity called for

MARK Graham, product development manager for vehicle rental at Arval PHH, argues that fleet managers should have a clear policy on daily rentals.

'All fleets will need daily rental vehicles at some point. No matter how many vehicles a company owns or has on contract hire, there will come a time when an employee needs a short-term car.

In addition to providing replacements for cars under repair, the increasing demand for short-term rental has been fuelled by a number of factors including changes to company car policies, an increase in temporary jobs and the growth of fixed-term contracts.

According to the British Vehicle Rental and Leasing Association, the business rental market grew from 41.5% of total UK rentals in 2001 to 61.8% in 2002. Given the fact that vehicle rental is part of every fleet's operational needs, some businesses do not pay it as much attention as they could.

Many companies are paying over the odds because of unnecessary charges – costs that can and should be avoided by introducing a clear policy on vehicle rental. This will define who can hire vehicles, the type of vehicles that can be hired and how the policy is managed.

The value of this is immediately apparent. We have found that a number of rentals where the company's policy is not set in stone can run into problems.

There can be confusion over the type of vehicle hired, the duration of hire and how it is authorised, leading to fleet managers questioning certain rental charges. By developing a policy in conjunction with their rental provider, companies solve these problems and can manage unnecessary costs.

Policies can cover a wide range of options. For example, a company might wish to stop drivers from taking a vehicle with an engine size larger than 1.6 litres, or limit the duration of the rental before obtaining further authorisation. By cutting out the more expensive vehicles and by controlling the requirements in line with company policy, it can drastically reduce its rental costs.

Of course, the reasoning behind an individual short-term hire policy is not just about reducing costs but about making sure the chosen method fits in with the company's business requirements and the journey to be undertaken.

This is where some rental providers can add value by assisting in the development of a policy and managing it on the company's behalf. The provider can do this by taking the time to go through all the pitfalls and potential cost-saving areas with a client prior to setting up the company-specific policy.

This can be as bespoke as each individual client wishes and will ensure that authorisation for any requirement is obtained prior to any booking.

The need for a rental policy can be driven by internal controls as well as by business demands. There are employees who have more freedom in choosing a rental car than in picking their company car, so they may try to obtain a car from the next group up, or be inclined to hold on to the car a day or so longer than necessary. A policy will help to identify any areas of concern and control these costs.

There are other issues. Every fleet has to contend with fuel costs and this holds true for rented vehicles as well as the main fleet. Many drivers do not remember, or cannot be bothered, to refill the tank before handing back the vehicle, despite the higher costs this entails for their employer. A rental policy that spells out the importance of refuelling prior to returning the car can help to keep it in the minds of drivers and reduce those costs considerably.

The need for a service that bridges the gap between daily rental and contract hire has led some fleet companies to offer short-term leasing options. The intention is to provide contractors and temporary staff with suitable cars for periods that sit somewhere in between daily rental and traditional leasing.

Most rental providers now also offer an online service, but by making rentals easier, it can lessen the control exerted by fleet managers.

An online rental service that is policy-compliant and only allows for predetermined users and vehicle types is the obvious solution. It makes sense for fleets to demand the same benefits from their rental provider that they require from their leasing company.'

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