What happened to vehicle rental?

Vehicle rental used to be simple, right?

You would sign a contract with a supplier, and then place requests and the vehicles would be delivered. Then the pandemic arrived, and the world of vehicle rental changed, probably forever. Manufacturers have slowed down production, rental companies slimmed down their workforce, closed branch locations, and reduced their fleet size, because demand fell off a cliff.

As the pandemic eased demand for rental vehicles picked back up and outstripped supply. Rental suppliers simply could not get hold of the vehicles they needed from manufacturers, with the semiconductor shortage being a big factor. Manufacturers realised they could drive their profit with fewer vehicles at increased costs to private buyers, resulting in supply to rental suppliers, who were used to discounts, drying up.

New and used vehicle prices rocketed

Faced with demand that they could not meet, rental suppliers focused on driving profit, leaving some segments of the marketplace being presented with huge price increases, effectively attempting to migrate less profitable rentals to other suppliers.

“Problem” requests such as 1 day hire request, delivered out of hours were simply turned down by suppliers. The cost was too high to deliver such a vehicle, which utilises 2 delivery drivers and 2 vehicles for 1 day’s revenue.

Perfect storm for customers

Use of rental vehicles has increased due to the backlog of replacement leased or purchased vehicles. Rental costs are significantly higher than ever before and requests for vehicles are regularly declined by suppliers, leaving customers in limbo. At a time where the public sector faces serious financial challenges, it is difficult to calculate the financial impact of such issues:

• Missed appointments/opportunities
• Administration time talking to suppliers and internal drivers to make alternate arrangements
• Risk of asking drivers to use their own vehicles

True cost of vehicle rental

Most customers probably do not know the wrapped-up cost of vehicle rental, they focus on the daily rate from a supplier and potentially even procure on this basis. £30 a day is clearly cheaper than £35 a day?

I worked for a mainstream vehicle rental supplier for 22 years, with 7 of those at board level, and driving profit was always a key consideration, what add on, or ancillary services can we introduce that makes the daily rate look low, but delivers enhanced profitability:

The charges applied for a rental can include:

• Daily Rate
• Delivery & Collection (Home or Business)
• Out of hours delivery
• Out of hours collection
• One wayAirport pickup
• RFT charge (Road Fund Tax)
• Refuelling Administration Charge
• Fine Administration Charge
• Damage Administration Charge

In an extreme example a car that has a daily tariff of £40, which is requested to be delivered at 8pm to a home address, and then collected from a different address the next day could easily have £80 worth of ancillary costs simply based on the delivery, out of hours, and collection ancillary charges from a mainstream supplier.

The same vehicle from a local independent rental supplier may be £45 a day, but they may charge the amount of delivery and collection and potentially deliver for free out of hours if the delivery location is close to their premises. The customer has received the same service but incurred a cost of £70 vs £120, plus the customer has supported a local independent supplier.

The challenge for YPO members is how do we engage and manage multiple suppliers to maximise supply and keep control of our costs, whilst minimising administration overhead?

YPO Portal – Turnkey solution for vehicle rental

The team at YPO recognised that traditional rental frameworks had limitations for members with diverse rental requirements ranging from cars through to HGVs, forklifts, minibuses and municipal vehicles, where having to call individual suppliers and receive disparate invoices and customer services was not an ideal scenario. This resulted in the YPO 1092 Vehicle Hire framework being based around a Rental Portal supported by a Rental Management team.

The framework allows a member to work with the Framework Provider to build a bespoke rental management solution to support all of the member’s needs.

• Bespoke Supplier Panel
• Vehicle Groups Driver Profiles
• Booking rules
• Authorisation
• Self-booking
• Fines Management
• Damage Management
• Cost control
• Bespoke Invoicing

The framework is already used by a number of members who value the holistic approach allowing a single partner for all of their vehicle rental requirements.

Requests are actively managed by the team according to the members individual needs, for example for one member we agreed that any out of hours delivery requests would be discussed with the driver to ensure that the costs are understood and delivery options made clear.

This has resulted in savings of £3000 thus far on that one element alone.

Another YPO member had a large rental estate from many suppliers and were struggling to control costs, track usage and recharge internal departments for their specific hires.

The portal was used to novate all existing hires and suppliers across to the platform so that invoicing was simplified and bespoke Management reports produced that could be used internally to make decisions around rental usage and future options.

After the introduction of the Portal, the Fleet team commented:

“Prior to using the Portal, we were limited with our options and struggled to meet the demand for vehicles, however, with the Portal in place, they have so many more suppliers we can use. They have a great relationship with many suppliers across the country so you are not limited to vehicles in your area and if you have a requirement to utilise a particular supplier they can get an account set up with them for future use. The service the Portal team provide is amazing, whoever you deal with is happy to help you and provide the right support for your needs. They are all very knowledgeable within the hire industry and we hope to be work together long into the future”.

Help us to help you

We often get asked for advice to ensure that vehicle rental runs smoothly for drivers.

The first piece of advice would be to book early, don’t leave a request for a vehicle to the last minute, particularly if the requirement if for a specific type of vehicle such as an automatic or EV.

It is surprising how often customers are fearful of rental due to bad experiences, either for themselves or that a colleague has experienced, particularly around disputes.

Most of the customer service issues around vehicle rental tend to be:

• Refuelling charges
• Damage

My advice would be for drivers think of the vehicle supplied by their employer as though they were renting the vehicle themselves with any resultant costs being their responsibility:

Check the vehicle condition against the delivery documents - If there is any additional damage this needs to be reported to the rental supplier before driving the vehicle and within 2 hours of the rental commencement time. Take photos of the damage, ideally showing the delivery address in the background

Take a photo of the odometer and fuel gauge - This will greatly assist any future debates around fuel charges or mileages.

Think about insurance conditions - Remember the vehicle should not be driven until the rental start time, even if the vehicle is delivered early. It is likely that the driver will not be insured if an incident occurs before the start time on the rental documentation.

Fixed Notice Penalties

Rental companies are inundated with parking fines, toll fines and bus lane offences, a rental vehicle is the driver’s responsibility during the rental period, and any subsequent fines will be passed on with a hefty administration fee.

The YPO Portal can be configured so that each member has a driver confirmation that contains specific information related to driving advice and conditions to reinforce policies at each rental.

Final thoughts

The vehicle rental environment has changed dramatically forcing customers to evaluate their approach. The YPO Portal supported by the Rental Management team can simplify the entire process providing key management information and feedback to help members manage their costs.