Rental companies have been accused of partaking in “suicidal pricing strategies”, by an independent contract hire and rental consultant.
Mark Brooker, who has worked for major contract hire and rental companies, told Fleet News: “Major Corporate deals are still being struck at crazy prices as the major rental companies battle it out for an increased share of the market, almost at any cost.”
His comments come in the wake of Newtown Vehicle Rentals and Leaseway Vehicle Rental entering administration.
Leaseway operates one of the UK’s largest privately owned LCV fleet hire businesses from sites in Glasgow, Newcastle, Leeds, Manchester, Birmingham and London.
Established in 2003, the company currently runs a fleet of around 13,000 vehicles and employs 255 people.
Bruce Cartwright, joint administrator and head of business recovery services at PricewaterhouseCoopers in Scotland, said: “During the last 12 months, Leaseway has encountered trading difficulties that has made it difficult for the company to service its existing financial obligations.”
The company’s directors had considered various options to deliver a restructuring solution that would provide a long term viable business, but unfortunately that failed.
“Our immediate priority is to continue trading the business, ensuring that commitments to contracted customers are met,” added Cartwright.
Meanwhile, PwC is seeking a buyer for some or all parts of the business.
“Companies have often been able to survive based on profits achieved via the resale of vehicles, but those days have gone for the time being and inevitable losses on disposal have only made the situation worse,” said Brooker.
“Some rental companies have been fortunate enough to fund the majority of their fleets historically via back to back agreements with the manufacturers, thus getting away from any disposal risk or reward. Those days too are slipping away as the manufacturers seek to avoid ‘carrying the can’ for the rental companies.”