March 2009 - FLEET DEMAND FOR FLEXIBLE RENTAL ACCELERATES AS COMPANIES TURN THEIR BACK ON LEASING
Flexibility is crucial in business and never more so than when companies are in the grip of recession and every penny counts as all corporate costs go under the microscope.
As a result Northgate Vehicle Hire, Britain's largest vehicle rental company with a fleet of 68,500 vehicles available nationwide from 80 centres, is reporting accelerating demand for its non-contract rental solutions.
The onset of recession, declining business confidence and the expectation that economic recovery is many months away, means that companies are reluctant to commit to either investing in new vehicles or signing leasing agreements that can run for several years.
In recent months, Northgate has promoted sale and rentback as a funding solution to outright purchase fleets with significant success as it has converted over 1,000 vehicles across many deals notably in the SME sector to its contract-free, fully flexible NORFLEX rental solution.
Now, Northgate is reporting rising demand for NORFLEX from fleets that have traditionally contract hired vehicles.
Managing Director Phil Moorhouse explained:"As existing contract hire agreements come to an end, the economic outlook means that companies do not want to commit to fixed-term contract hire for two, three, four or even five years. However, these companies still need vehicles to ensure their business functions."
As a result, businesses are turning to NORFLEX in the knowledge
that they are not
subjected to upfront deposits that are typical of a leasing arrangement;
tied to lengthy contracts, which if broken, could trigger significant
financial and mileage penalties; and can hand vehicles back without
charge if business demand drops. Equally, if business activity
increases then additional vehicles can be immediately added to
it's fleet.
Northgate customers also benefit from the company's fleet being composed of the newest vehicles powered by the most modern technology that vehicle manufacturers offer and are equipped with the latest safety features. In addition, rental agreements include vehicle servicing and breakdown cover, which are typically subject to additional costs from leasing providers.
"Vehicle rental provides flexibility, while still leaving companies in full control of their operations and with a fleet profile that can be quickly changed to meet demand. Unwanted vehicles can be handed back without charge. In the recession more companies are discovering that NORFLEX vehicle rental is the solution to their fleet requirements," said Mr Moorhouse.
"Fleet costs should be under the microscope as companies look to save money and reduce their risks. Whether businesses presently outright purchase or lease, it is clear that too many are still failing to appreciate the cash-saving potential of rental.
"All fleets, irrespective of size, should view rental as an alternative vehicle funding route. It is extremely price competitive and significantly more flexible in comparison with other methods such as contract hire.
"Rental has historically been viewed as a stop-gap transport solution. But the recession is changing that perception and more companies are waking up to the fact that it is vehicle usership and not ownership that is key."
Six benefits of NORFLEX v contract hire
| NORFLEX Contract free No upfront deposit Penalty free if fleet demand shrinks No fixed mileage penalties Free vehicle upgrades Inclusive of maintenance and breakdown |
Contract Hire Locked into fixed-term contracts Advance payments impact on cash flow Costly early termination charges apply Excess mileage charges if contract breached No vehicle upgrade during contract term Additional charges typically apply for these services |
