Fleet News

Costs put brakes on green rental growth

You may have picked up on the message that green is good.

Across the fleet industry the environment is more of a concern than ever, and much is being done to reduce the impact that business operations have on the planet.

Within the fleet world, there have been many high-profile developments to reduce emissions, from improved journey planning to more restricted, greener company car lists.

But the world of daily rental – a significant part of business road travel in the UK – is finding the going tough.

If you look hard enough there are green options to be found, but there are economic reasons why there aren’t more.

The way things are

Historically, most rental cars have been petrol-powered, but that’s changing, according to Tim Anderson, fleet advice manager at the Energy Saving Trust.

“There are a lot more diesel vehicles than ever before, which is certainly positive.”

Car club StreetCar has 25 diesel-powered Volkswagen Polo BlueMotions available to hire around London.

Low-carbon cars have an obvious benefit in the capital, as hybrid and alternative-fuel cars are exempt from the congestion charge.

StreetCar co-founder Andrew Valentine says: “There has always been a desire for green, fuel-efficient cars but there is no doubt that this desire is strengthening over time as the problems associated with global warming become more apparent.

“It was a natural evolution to move towards a fuel efficient fleet when it became practical.”

Some alternatively-powered cars are also available, as Tim Bailey, fleet director of National and Europcar UK, explains.

“We have a number of Toyota Prius on our fleet. They are predominantly in the London area although there are a few around the country,” he says.

Roger Grainger, sales director at Avis, says: “Between 40% and 50% of Avis’s fleet in the UK has CO2 emissions below 140g/km. We aim to increase that percentage by bringing in more small, low carbon-emitting diesel cars.

“Alternative technology is also being trialled. Avis UK has had 20 Toyota Prius hybrid vehicles on its fleet for six months.”

Why aren’t more green cars available?

The simple answer is cost.

“It’s great to have the hybrids and people are constantly asking for them, but they’re not prepared to pay,” Tim Bailey says. “They cost significantly more to buy and operate.”

National also runs Volkswagen Polo BlueMotions, but not many because of the extra expense.

“People expect it as part of the offering but in reality you have to pay for it,” Mr Bailey says.

Tim Anderson adds: “Daily rental is usually where vehicles which manufacturers need to move quickly end up. As a result, they are quite highly discounted.

“With emerging technology, you don’t get the same level of discounts so those vehicles look less attractive to daily rental companies. Hybrids in particular have that challenge.

“A lot of money has been spent on developing technologies and manufacturers are not going to be overly keen on offering big discounts.

“As for alternative fuels, there are already some challenges with misfuelling and communicating with customers. People don’t want to spend ages being told what fuel to use – they just want to pick up the keys and go.”

What can be done?

“Investing in some of the technology may be more bother than it’s worth, economically, for daily rental companies,” says Mr Anderson.

The opportunities in providing alternative-fuelled vehicles and advanced technologies are limited.

“It is right that they have them in small numbers for customers that particularly request them.

“There is more opportunity to provide them but it will be demand led. It has to be fleet led – the daily rental industry is very responsive to what customers want.

“Pressure from fleet operators looking to reduce their emissions and costs will drive demand.”

Rental firms also have a role to play.

“The bigger the car hired, the more profit daily rental companies make, so staff are incentivised to upgrade customers,” he says.

“We would generally recommend downsizing where possible, which is diametrically opposite. There is opportunity for a cultural change on both sides to act responsibly.

“The daily rental industry has a lot of work to do in a number of areas, mainly in vehicles, their culture towards vehicle size and their own operation. Delivering and picking up cars from locations away from the branch is very fuel intensive and I’m sure that could be improved.”

National is looking at grouping its cars by CO2 emissions, but there is no getting around the cost to rental companies of newer technology.

“These vehicles are at the cutting edge of technology and the cost of research and development is part of the cost of the car. There are also not as many of them,” says Mr Bailey.

“Corporate entities renting cars need to prepared to pay more. When that happens, volume production can step up. It’s not going to be done by Government or taxes forcing people one way or the other.

“It needs to be a conscious decision from fleets and their companies. It will mean a short-term rise in costs, but for the benefit of the long term.”

There are signs that the demand is already growing in certain areas.

Oz Choudhri, UK sales manager at Enterprise-Rent-A-Car, says: “Over the last 18 months we have seen a significant rise in the demand for greener fleets among our customers.

“This growth is expected to continue.”

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