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Key changes for vehicle hire sector in 2013, says trg

Managing director Nigel Schroder says that areas of change will include increasing rates, commenting: ‘Traditionally, many vehicle hire companies have made good money disposing of their fleet – providing regular lump sums to the business and supporting the true rental side and the rates they charge. But, I believe the hardening of pricing by manufacturers as they have less excess stock issues and a fragile used market will no longer make this an option. The business model for rental companies will have to change and the rental side will have to generate higher levels of profit in order to sustain the overall business. This has to mean the consumer will be paying more, and I believe we will see a rate increase throughout 2013.’

Product flexibility will see changes, with Schroder commenting: ‘In an ideal world, a hire business will want to hire a vehicle between Monday to the following Monday – where it earns money every day, as opposed to regular turnarounds (with higher operating costs). In order to do this, companies will need to offer flexibility, for example offering a free day, or five days for the price of three. I don’t believe some of the smaller, local vehicle hire businesses will be able to support this type of model, and it may not be cost effective for the very large players. ‘

There will also be IT innovation, with Schroder admitting that the sector is woefully behind when it comes to IT. He comments: ‘I believe many businesses will need to place real focus on technology to improve customer service – primarily in the check-in and check-out processes. At the end of the day, it is about improving the customer experience.’

Finally, he predicts that there won’t be a great number of acquisitions within the vehicle hire industry during 2013, but adds that ‘some of the smaller players, unable to meet costly insurance demands and with a lack of cash available, will either be taken over or will downsize yet further consolidating their sites’.

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.