Contrasting signals have emerged
in the past weeks from the van rental sector, with some companies
incurring losses while others are reporting healthy business
levels.
But the overall feeling is that the
crisis is hitting the segment, and that long-term van rental cannot
become an alternative to leasing in the long-term.
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The recently published results for
Northgate, for example, have revealed the difficulties of a key
player in the sector.
The company, which has a fleet of
69,100 units in Britain, has warned that its profits may plunge by
50 percent this year. It reported a 40 percent fall in the six
months to 31 October, and expects profits to fall even further.
Some van rental companies, on the
other hand, say business volumes are healthy and that long-term
rental can provide an “alternative” to leasing.
TLS Vehicle Rental, part of GE Capital
Solutions, has recently opened a new van centre in Leicester.
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By GlobalDataThe company, with a fleet of 18,000
CVs, said it intended to increase branch coverage where there was a
“high degree of potential”.
In October, CEO Carl D’Ammassa said
that because of the credit crunch, many companies have become
unsure about the future, preferring rental to long-term lease.
Another company, Sixt, has seen a
growth in 2008 with revenues 16 percent up.
Sixt, which has got about 26,000
vehicles, half of which are LCVs, said that many firms which used
to lease vans are now opting for a “flexible rental” solution,
which allows van rental without minimum or maximum length.
Sixt managing director Ian Lawrence
said: “With leasing, you are often tied into a fixed term, so you
normally take a vehicle for a contracted period and there is a
penalty if you terminate it earlier, whereas this does not happen
with flexible rental.”
But Lawrence admitted that rental
cannot become a substitute for leasing.
“We offer flexibility, but if you are
absolutely certain that you will need the van for the whole length
of the term, then leasing is still a fantastic option,” he
added.
He also explained that some companies
are facing difficulties because they “have bought vehicles on a
risk basis [where no customer is in place at the time of
acquisition]”, claiming that this was not the case for Sixt because
it had manufacturer buybacks and was “guaranteed to get what we
expect from the vehicle at the end of its life”.
For several players, the crisis has
been the result of significantly reduced residual values and a
lower utilisation.
In the case of Northgate, the impact
of residual values had already been forecast some months ago, but
only has become evident with the recently published results. Also,
the utilisation rate was below the company’s target of 90
percent.
Avis, which also rents vans, showed
signs of difficulties too. In November, it announced it was axeing
300 staff in Europe. Its head, Pascal Bazin, anticipated “continued
difficult conditions throughout 2009 and beyond”.
These expectations reflect a drop in
van sales. In November, the total number of van registrations in
the UK was almost 50 percent down compared with last year, the
worst performance within the CV sector.
