Press Coverage
Click to download the article [PDF]
‹ Back to Press Coverage
01/04/06 Fleet World – Counting the daily cost
Companies using daily rental operations, whether for occasional vehicle use or on a regular basis need to keep a close eye on costs. Most major operators offer on-line booking but it is important that pricings are clearly presented and transparent so that the fleet manager can monitor costs properly. Are operators offering special deals for ‘regular’ use?
“Currently a business like ours sees growth in three areas,” says Sean Welham, Marketing Director for TLS. “First, we win at the expense of the rental companies – because the normal cut-and-thrust of any business is competition. We also see people coming to us who haven’t rented before – maybe to replace assets on a temporary basis. Also around twenty-two percent of our new business is coming from people who used to contract hire or ‘own’ their vehicles outright. These are people who in the past clearly wanted to own – or contract hire – their vehicles. We are gradually seeing the argument of using rental ‘in part’, to fund fleet requirements, growing in popularity.”
“If you own a vehicle, its real cost is not known until you dispose of it, because one of the biggest costs is depreciation. In reality, people subject themselves to a degree of risk because you can’t make depreciation go away. This is what made a lot of people turn to contract hire, where somebody else takes the residual-value risk. Small businesses in particular, don’t want to take the risk themselves.”
“But, the relationship also comes with a commitment. If you go to a contract hire company and ask them to buy a vehicle for you and say you’ll pay a monthly fee for three years, they will make sure you’re signed up for that because they don’t have a mechanism for getting rid of that vehicle without losing money. Termination clauses have always been built into their models, with early termination penalties to compensate them should the vehicle be terminated. Alternatively, they’ll have very defined criteria such as excess mileage fee which they’ll charge if you go over the limit.”
Ian McKenzie, group business development director, FMG Support says online systems are starting to revolutionise the ongoing management of vehicle rentals.
“Automating orders and providing access to reporting and billing information in real-time has also enabled businesses to deliver higher levels of customer service and manage their own internal operations with greater efficiency and profitability.” He says. “For example, systems can set agreed, pre-defined business rules that allow companies to always receive the best cost for each transaction according to agreed criteria, and also enable tiered access for employees throughout the business to place bookings themselves. This ensures that control remains centrally but provides the flexibility for employees to order rental vehicles within appropriate bands.”
He says the value of using online services to derive efficiencies beyond merely reducing administration still largely remains untapped. The extent to which this can be achieved largely depends on the choice of online service provider and their expertise to deliver against fleets’ performance objectives.
“Businesses that want to create value from rental with minimum internal resourcing need to consider fundamental elements such as use-ability, quick response times, integration with existing software and accurate invoicing, and then look beyond the specific requirements of the business. For example, FMG Support’s technology system, Ingenium, provides a flexible solution that can be built around customers’ needs from just providing a tool to process bookings through to through to creating a fully outsourced vehicle rental management solution. Its online system also enables customers to access an extensive network of vehicle suppliers or can route requests to only preferred suppliers.”
Daily rental is the largest sector of the fleet market to be targeted by 1link with a new e-commerce product. 1link Hire Network is a platform that brings together car rental suppliers and purchases in real-time. For purchasers, it enables online access to multi supplier quotations and hire pricing. For daily rental suppliers, it ensures that invoices are always correct by electronically validating them through the 1link system. As the other 1link platforms, a major benefit is the big reduction in telephone traffic to manage bookings.
Ken Trinder, head of business development at epyx, the company behind 1link, says “The system eliminates the errors usually associated with the vehicle booking process and gives the added flexibility for customers to set up branded websites and online booking for their drivers. Daily rental companies are enthusiastic because it will allow bookings to be processed online accurately and at a very low cost.”
Neil McCrossen, Vice President Commercial Development of National Car Rental says “It is inevitable that cost will be always be a hot topic in respect of vehicle rental – but I firmly believe that in the context of the fleet and corporate user the wider issue must be about the relationship a company has with its daily rental supplier. If that relationship is tailored to their specific needs, then the unit price will not be an issue. The business will profit overall from the operational, efficiency and productivity benefits provided by the daily rental company.”
“National is focused on the performance and success of its customers first and foremost. We take the time and trouble to listen to what our customers need and respond with a solution that is tailored to those requirements, no matter the type of vehicles required, length of time – from one day to six months, reason for hire or location. And we have made it our business to do much more than just rent vehicles. We take a holistic approach to the entire process of temporary vehicle provision so that we can address every aspect of the daily rental service, from the choice of vehicles to the locations in which we operate.”
“Of course, the use of e-business solutions is key to the management of rental spend. National’s carhirebooker.com rental management system allows companies to enforce travel policies, review reservations and monitor costs on an on-going basis. Online Management Information also allows fleet managers to see where efficiencies can be made, and e-billing means invoices can be delivered direct to the desktop within hours of rentals terminating.”
“Taking a consultative approach to our customers’ complete needs is also we believe fundamental to the service we provide and this will be particularly important this year due to the challenges the rental industry and its customers are facing as a whole in terms if manufacturer vehicle restrictions and increased costs.”
“How companies use daily rental operations is dependent on their particular situation and preferences,” says Des McCann, Director of UK Network Operations for Budget Rent-a-Car. “Budget is focused on providing a value-for-money, simple and stress-free rental experience to its business customers. The company aims to provide exceptional service with consistently low rates and offers a range of business billing options to keep things simple.”
“Budget offers CorpRate for the larger company. This has the benefit of regular discounts and a dedicated account manager to help organise all the organisation’s rental travel requirements. We offer BusinessConnections to the small-to-medium sized company (SMEs) who have occasional or regular rental needs. This programme gives businesses greater value and control over their rental requirements as no contract is required. Members of the scheme receive a five per cent discount on each and every rental they make, alongside regular offers such as free car upgrade vouchers.”
He claims Budget gives greater control to the person who looks after their company’s travel arrangements by providing an easy-to-use microsite which enables the travel organiser to log in and book and manage all car rental requirements at the clock of a mouse. Budget has invested in developing its website and making online booking straight forward and transparent. Pricing on the website is clearly presented and depicts dual pricing options for customers who wish to pay now, or pay later, allowing customers to see at a glance the discount benefits for forward booking.
The company has also invested in developing microsites for individual companies giving greater control: for example, access to dedicated pricing and restricted car group options if requested, to aid travel policy adherence.
