Vans are at the sharp end of the fleet market, acting as pure business tools that must deliver low-cost transport and bullet-proof reliability to directly support the running of a company.
But if they aren’t needed – for example because of an economic downturn – they are often the first port of call for companies looking to cut costs and free-up cash. Renting vans avoids this cash being tied up in the first place.
Currently, a range of economic factors is pushing up demand for rental among van users – but fleets need to be sure their specialist requirements can be met before signing up to a supplier.
Experts believe that a wave of conflicting news about the UK economy will promote a shift to rental as an alternative to purchase or leasing.
Current economic signals are mixed, with a rising number of business insolvencies in 2006 forecast recently by Experian, while the first Chartered Institute of Purchasing and Supply index for the New Year showed that the 700 companies surveyed are seeing their highest level of business activity since April 2004.
Sean Welham, marketing director at van rental specialist rental firm TLS, said: ‘There is an uneven picture across different industries. For example, the service sector is doing unexpectedly well, while manufacturing is suffering in comparison.
‘This means that a large number of companies are seeing steady expansion but are still not necessarily feeling confident about the future. However, these growing businesses need vehicles – and rental allows them to meet that need without entering into a long-term commitment, such as outright purchase or contract hire.’
In addition, TLS has seen rocketing demand for van rental driven by the boom in online shopping.
Figures from market analyst Verdict recently showed that £8.2 billion of goods were bought online in 2005 – up 28.9% on the previous year.
Welham explained that business from these fleets has been rising for some time, with customers attempting to balance their short-term need for more vehicles with a cautious view of medium to long-term economic prospects.
Service and support can count for more than a rock-bottom rental price
SO what services should commercial vehicle fleets be on the look-out for when they turn to a van rental supplier?
According to leading van rental firm Northgate, service and support are vital areas to consider.
Phil Moorhouse, managing director, UK Rental, said: ‘Fleet decision-makers should look for a combination of local quick service with national back-up.
‘In addition, a company that can provide a range of services to the customer is a big bonus and even more so if those services can be tailored to meet the customer’s exact needs.
‘Commercial vehicles differ from car fleets because they are a working part of the business. They are like a piece of machinery within a manufacturing business. Without them, the business could not function properly. High levels of support are therefore needed to keep the vehicles on the road at all times.’
Issues to consider are whether the rental firm can supply in-house servicing and maintenance, ensuring that vehicles spend the minimum amount of time off the road.
Flexibility is also a key factor because with fluctuating business demands, the size of the vehicle fleet will also change.
Customisation is also a major factor, according to Moorhouse, as vans will probably need specialist equipment fitted to them to meet a company’s particular needs.
Northgate offers inclusive in-house servicing and maintenance and a mobile servicing facility. This means that the customers’ vehicles can be serviced at a time and a place convenient to them.
Branch network and size need to be looked at, according to Simon Reeves, director, van business development at National Van Rental.
He said: ‘These services should be supported by reservations via a choice of routes most convenient to the customer, online management information and e-billing.
‘Van rental that starts as a week’s requirement can often develop into a much longer term rental and a business should know that its supplier has the capability to service that demand and offer a rate that becomes more competitive, the longer the rental.’
Fleets should also look out for young, leading badge vehicles, experts believe.
Assets should be young in age to avoid mechanical and electrical issues that can cause breakdowns. Stuart Gent, managing director of Avis Rent A Car, said: ‘Well-recognised badges are a must, as end-users need the confidence in product type to feel safe they can deliver against their own targets.’
To meet the varied demands of drivers, Europcar will supply basic panels and then seek to ‘outsource’ more specific vehicles.
Mark Brooker, sales and marketing director, Europcar, said: ‘There is an increasing demand for vans and to meet this demand for larger vehicle rental, Europcar has launched a new van rental service branded with its distinctive Europcar 4 Vans logo.’
Finally, and most importantly, experts say fleets should demand ‘hire management’ as well as just ‘hire provision’.
A spokesman for Budget added that availability of the latest technology was also becoming an issue. This includes being able to rent additional services such as GPS navigation systems which help to avoid errors and save time.
Vans inspire the mid-term option
VAN fleets were the inspiration for one of the most important innovations in rental services in the past few years.
The service has many names, but is commonly called mid-term rental, or flexible leasing. Put simply, it is a hybrid service based on the concept of providing a rental vehicle for the medium term for a price that is midway between the price of a rental van and leased van.
Experts suggest that it was first introduced because of the demands of the supermarkets which needed to respond to short-term demands on their delivery fleets by increasing their fleet size, without committing to a long-term lease.
Daily rental was deemed too expensive, so long-term rental was born.
This demand has been driven to new heights by the impact of the internet and online shopping, which is now a multi-billion pound market that relies on home deliveries. For example, a massive increase in the number of people buying presents online at the end of last year had a major impact on short-term van rentals.
Parcel delivery and retail firms have been increasingly using the rental sector to meet this demand and also because of caution over the medium to long-term economic prospects.
The trend has been noted by executives at TLS Vehicle Rental who say latest figures show that the amount of money spent on online goods rose 50% year-on-year in November 2005.
Welham said: ‘Van delivery fleets are being pulled in two directions. There is increasing demand for their services because of the growth in online shopping which became even more noticeable towards the end of 2005 – but at the same time there is a reluctance to buy more vehicles to satisfy this need, largely because there is a lingering suspicion that the overall retail picture could change. This is a scenario in which van rental makes absolute sense and we have seen fairly strong year-on-year increases in demand from delivery fleets for this reason.
‘Hiring vans gives these fleets the flexibility to meet short-term demand such as that seen over Christmas, but also provides breathing space to take stock and wait until they feel the confidence to buy their own new vehicles.’
One of the biggest flexible rental suppliers in the country is Northgate, which offers its pioneering Norflex service to companies. This allows a fleet to rent a vehicle for the medium to long-term at reduced rates, but hand it back without notice if business suddenly becomes slack.
Customers benefit because they don’t have to make a large financial commitment to fund the potentially short-term expansion of their fleet and they don’t have to pay penalties if they have to hand them back because of a sudden downturn.
A wealth of information awaits you
THERE is a wealth of useful information available to van fleet operators on our website, which has just been updated and relaunched.
If you log on to our old website – www.fleetvan.net – you will be redirected to the Fleet News website.
When you have accessed the home page, you can click on a button on the left hand side of the page which says ‘Fleet Van’ and then a sub-menu appears which offers either a ‘running cost’ or ‘news’ search.
The news section includes all our road tests so say, for example, you wanted to read about the new Volkswagen Crafter, simply type ‘Volkswagen Crafter’ into the search box and everything we’ve ever written about the vehicle will be brought up.
Under the ‘running costs’ button, you will be given the chance to ask for details about thousands of vans on our database. Simply select the manufacturer, model and operating cycle you want and you’ll be given instant details about the model’s price, power, specification and its pence per mile running cost figures.
This service complements our running cost tables in the back of the magazine but has many more models than we are able to carry there. Pence per mile running cost figures are the only true way to compare the merits of different vans against each other.
FNN also offers a huge amount of information about cars, so log on now – you’ll be amazed.