But before fleets decide to abandon the pool car, the case for choosing rental must be clear cut.
TLS Vehicle Rental has produced a set of guidelines designed to help fleets determine when rental should be the preferred choice.
According to Sean Welham, the group’s marketing director, it all boils down to whether companies and fleet operators are confident about their business in the future.
He said: ‘There are factors which affect the market and are there good and bad times for rental.
‘Fleets need to ask how confidently they can predict the future? If companies have a low confidence in the future then rental is a good option. If confidence is high and it is a predictable business then rental is not for you.
‘Fleets need to look at the overall economic climate. Inflation, employment, house prices and interest rates all affect confidence.’
If the economy is unstable, rental is a good choice s its flexibility gives a fleet manager the chance to react quickly to changing market conditions.
Welham said: ‘Fleets should look at the balance sheet and see how they will be able to absorb the negative impact of economical changes on the business. The lower the risk and confidence in the market, the better rental is as a business proposition as it offers flexibility and can act as an insurance premium.’
But there are also times when rental is probably not a good idea. If a company is certain the future is rosy then it may be wise not to rent.
An example is business dealings. If a company has just won a five year contract, company confidence in the future will be high and it can plan with certainty.
Welham said: ‘Every business has its own particular impacts. Companies need to look at how secure revenue streams are and then they will be able to predict revenue accurately from the contracts secured. A buoyant economy is good for business but not so good for rental. A buoyant economy lifts business, investment decisions are brought forward, low interest rates and inflation make buying decisions simpler.’
It is imperative that fleets look at the bigger picture before deciding to rent as the flexible option may not always be the right one.
Welham added: ‘We are challenging people to think more about funding choices. If you are going to use exactly the same type of vehicle every day for three years and can predict the nature of your business, then there are options such as contract hire. But many businesses aren’t like that. If you are not sure how the market will perform in the future, or what your transport needs might be, then long-term daily rental makes sense.’