Fleet News

Daily rental: small fleet focus

New research shows that more fleets use daily rental during their day-to-day operations than not.

But why has it become so popular? And if it’s so great, why doesn’t everyone use it?

Some 54% of fleets use daily rental, but that means 46% still don’t.

According to the Business Car Perceptions report, it’s the larger organisations that are most likely to view rental as a viable alternative to a company car or similar.

Less than half of fleets with fewer than 50 vehicles use it, but most fleets with more than 50 do.

And 92% of businesses with between 500 and 999 vehicles and 86% of fleets of 1000-plus integrate rental into their transport mix, compared with just 39% of fleets with 10 or fewer vehicles.

Two years ago, only 47% of all fleets employed daily rental, but according to Business Car Perceptions author, Professor Peter Cooke, the rise in use is set to continue.

“The daily rental car can be a huge benefit as it can offer a substitute for the employee’s own car on an occasional or ad hoc basis,” he says.

“The daily rental car has the advantage that it offers a clear audit trail and, if a professional rental company is used, vehicles should be in an appropriate condition, taxed and insured. Equally important, it is possible to establish a clear rental procedure within the organisation, and costs can be established in advance.”

John Lewis, director general of the British Vehicle Renting and Leasing Association (BVRLA) says: “The use of privately owned vehicles is now such a potentially high risk that many companies are banning it altogether, preferring instead the security of a rental car.

“That message has not yet fully percolated down into smaller companies and it is these that have not faced up to the risks they run. The risk of the employee having insufficient insurance or an unroad-worthy or unsafe vehicle should be enough to make anyone think twice.”

Fleet consultant Colin Tourick believes smaller companies often think daily rental is too expensive.

“It’s a shame because car rental can actually work out the cheapest form of transport for a driver who only requires a car for occasional business use,” he says.

“The numbers are compelling: if you have an office-based employee who only needs to take a couple of business trips a month for business, you could give them a company car and bear the cost of depreciation, interest, rental, road tax, servicing and maintenance, or just pay a fixed daily cost for a hire car and leave the hassle to someone else.

“And you would get peace of mind from knowing the car is taxed and roadworthy.”

Caroline Gallagher of Thrifty, says sometimes rental appears to be more expensive than it needs to be.

“The fact that we often receive rentals via web-based brokers suggests that smaller fleets may consider themselves too small to negotiate a competitive price directly with a rental company.”

Of course, larger firms have much more administrative manpower than small firms, which can make a difference according to Lorraine Farnon, National Car Rental’s UK sales director. “Smaller businesses operate in a very different way to larger concerns,” she says.

“It’s unlikely they will have a fleet manager or transport manager. As a consequence, they will use what they perceive as the easiest to manage and most cost-effective solutions for transport such as pool cars and car sharing of company vehicles.”

Not helping is the fact that many leasing firms focus on larger fleets because they are easier to deal with centrally, according to Rob Ingram, UK business development manager at Enterprise Rent-A-Car.

“The SME market is an area of real opportunity for rental companies, provided they have the network and business model required to make the most of it.

“Smaller fleets need and appreciate rental, but prefer it to be managed locally rather than through a central location,” he says.

But there are signs that smaller fleets are catching on. Northgate Vehicle Hire’s managing director Phil Moorhouse says the bulk of his business comes from smaller fleets that realise the flexibility of rental.

“They pay for a van on a weekly basis and can return it whenever they want unhindered by the contractual terms imposed by vehicle leasing companies,” Mr Moorhouse says.

Colin Tourick says smaller firms should let their contract hire companies do the hard work.

“It is often the cheapest way too, because that way the client gets the benefit of the discount the contract hire company has negotiated with the hire company,” he says.

More work is needed however, according to Mr Moorhouse.

“We need to change the perception that rental is mainly a short term solution to a vehicle need,” he says.

“It is extremely price competitive in comparison with other methods of acquisition, particularly when you consider there is no long term funding commitment. This flexibility may become even more important with increasing uncertainty in the future of the economy.

“We need to convince more organisations of those benefits and to focus them on the idea of vehicle usership and not ownership.”

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