Beware open-ended contracts

Hire length terms should be locked down at the time of signing to ensure the vehicle is kept on loan for the shortest time possible to fulfil the terms of the hire. “Key to reducing short‐term hire costs is the proactive management of open‐ended hires,” explains Jay Lovell, business development manager at Days Contract Hire, which also supplies short and flexi hire.

“Policies such as ours will actively manage open hires to prevent them running on indefinitely. By keeping in regular contact with the driver, fleet manager and any other relevant parties (such as a garage or accident management providers in replacement hire cases), average hire lengths can be reduced, bringing better control and a reduction in overall hire spend.”

You get what you pay for

Selecting a supplier because they offer a low‐cost quote can prove to be false economy and a costly mistake.

“The most common mistake when procuring daily rental is simply looking for the lowest price,” says Carlos Montero, commercial director at fleet management firm FleetEurope. “The first consideration should be usage. Thought should be given to the frequency of hires and the types of vehicles required, as these can quickly escalate costs.

“We would also advise customers to remember that rental requires the physical movement of vehicles to enact a service, and it is how those situations are managed that shows the true value of a supplier. If a supplier is £2 cheaper on one day’s rental but the vehicle is delivered late and the driver is then late for a meeting, that is not a true saving.”

Up-to-date records

Most suppliers will offer an online management tool to allow customers instantaneous access to information about the current rental profile. As well as helping to maintain an overview of the fleet and the driver assigned to each vehicle, these online systems can also provide vital administrative support and simplify the logistical challenges associated with short‐term rental.

This is particularly useful for organisations running predominately fieldbased fleets, as it is all too easy for important paperwork to get left behind or not completed altogether. With the online platform, driver details and important information, such as any vehicle damage, are instantly recorded, reducing the administrative burden and protecting against false claims by providing evidence of the vehicle’s condition on delivery if it is queried at the end of contract.

Open communication

There should be a continuous dialogue between supplier and customer to flag up any potential issues, such as a contract reaching its mileage terms or vehicles that are being underutilised.

“Working with individual divisions and the Hitachi Capital downtime team, we utilise any spare long term lease and pool vehicles, which are available to reduce the expenditure on daily hire,” explains Kathleen Whittam, head if rental solutions at Hitachi Capital.

“We proactively monitor and intervene with drivers (and subsequent behavioural reporting) to avoid unnecessary ancillary costs. Our approach is based upon KPI reporting and added value comes from managing peripheral activities, such as liaising with accident management teams and administering motor offences. This reduces management time, involvement and expenditure.”

Supply and demand

Daily rental is used to support a business during a period of growth, and a multi‐supply network can help to ensure vehicle requirements can be met at this crucial time: “The benefits of this model are numerous, including greater vehicle availability and access to specialist vehicles to meet varying needs of customers,” comments Ian Drayton, senior manager in car & van rental at Lex Autolease.

“It also means that customers with large volume requirements can be accommodated. A multi supply model is also less likely to be affected by seasonal surges in demand. It’s vital that vehicle suppliers are highly regulated, and all our contracted suppliers are signed up to our Service Level Agreements to ensure an efficient rental service.”

Investigate hidden charges

Some suppliers limit Delivery and Collection (D&C) for vehicles to short distances, so it is vital to check these terms and if the delivery radius is limited, that the supplier has a branch close to the destination to ensure additional charges are not incurred. This should also extend to where employees, offices, suppliers and customers are based for a field‐based organisation.

“Keep an eye out for hidden extras such as delivery or collection costs and caps on daily mileage, a practice becoming more frequent with daily rental,” advises John Ellis, managing director at Nexus Vehicle Rental. “Costs can quickly stack up when you add in the potential for damage claims and refuelling charges so it’s vital your drivers are made aware of this.”

One-stop solutions

As fleets increasingly look for a more tailored rental offering, it can prove prudent to select a partner that offers a one‐stop shop for all short and medium term hires. There is also the added advantage of maintaining an ongoing relationship with a current supplier, rather than having to start the tendering process from scratch. This requires a degree of foresight and for the fleet manager about what their daily rental requirements could be in six months to a year’s time.

“One‐stop solutions offer the widest choice, the greatest flexibility and maximum convenience, whilst maintaining a competitive price,” explains Mel Dawson, managing director of ALD Automotive. “This can cater for a company’s every need, whether it’s for an extra car at short notice, a bespoke vehicle for several weeks, or even a van for 12 months.”

Case Study - Reducing emissions

Heathrow Airport Ltd. runs a car pool program enabled by Hertz 24/7 that allows employees to access a dedicated fleet of low emission vehicles bookable online, over the phone or using a mobile app. By implementing a car pool scheme of on‐demand technology enabled vehicles, Heathrow Airport Ltd. claims the size of its vehicle fleet has been reduced by 25%, leading to a 28% reduction in carbon emissions due to the use of more efficient vehicles and improved vehicle utilisation.

The car pool vehicles, replaced every three years, are tracked by GPS and the emissions figure is calculated at the end of each month. Heathrow Airport Ltd. also reports reduced administration and overhead costs through the 24/7 car pool programme.