MV Commercial expands with 1E4m TLS deal
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Livingston-based MV Commercial has struck a E4m deal with TLS Vehicle Rental to acquire 250 of its trucks and customers, doubling its rental fleet and securing stock for the sales division
Words: Kevin Swallow
MV Commercial based in Livingston, West Lothian. has doubled its rental fleet following a £4m deal to take 326 assets and 120 customers from TLS Vehicle Rental.
It lifts the MV Commercial rental portfolio to 600 assets, and increases turnover by approximately £25m a year to £.14m. Steven Cairns, operations director, says the deal will have a threefold effect on the business. "The deal strengthens the hire business, it acts as a stock generator to sell in the future and is a mechanism for fleet management on the existing hire business," he says.
"The contracts automatically transfer over to MV Commercial, they are all long-term agreements, which is what we do. We don't do spot hire, unless it is to an
PREVIOUS DEALS
Today, MV Commercial operates out of three sites. Its main office is Livingston, West Lothian, with two other sites in Leighton Buzzard, Beds and Bolton, Lancs employing 30 people.
In January 2005, MV Commercial bought Regal Truck Rental. Around that time it also struck its initial deal with TLS for 217 fridge trucks and tractors, which came with more than 100 established customers. Both deals helped establish the business in England (CM 26 January 2006).
Steve Cairns says the next step for MV Commercial is to establish a fourth site somewhere between Birmingham and Manchester. existing long-term customer."
The rolling stock is 7.5and 18-tonne chassis with box and curtainsider bodies, consisting of DAF, Iveco and MAN vehicles, all around two years old. "It is all fresh kit, very sought after in today's used marketplace," he says.
Timing is also important, adds Cairns, and the deal comes after 18 months in which the business has had to reshape and refocus. "We have positioned ourselves in a way that, if the right opportunity came up, we'd be ready to go for it.TLS approached us, on the back of the deal we did five years ago [see box],he says Reputable company -TLS is very conscious as to who takes any disposal, as they could go to the manufacturers and sell the trucks, but they would be seen as exiting the market, and leaving customers high and dry. It was very important for 'I'LS to hand the business over to a reputable rental company to look after the customers and continue the work TLS had done. The fact we had a track record from the previous deal, the feedback was very good, and they believed it would make sense to see if MV Commercial had the appetite for something similar,he says.
This type of deal is rare, says Cairns "It's a unique set of circumstances. Sometimes you find [mass vehicle disposalj is a distress situation where the company goes to the wall, hut in this case you are buying a good profile of vehicles and customers.m
• For further information, go to www.11111Commercial.com MV Commercial has built itself as a rental company that buys and designs its rental fleet, then sells its own stock. It started by specifying fridge vans and in 2008 started to build and hire out crane-mounted trucks as well, which the company says has developed into a market leader.
MV Commercial now has more than 50 crane-mounted vehicles on its rental fleet going out to operators in construction and rail, as well as those who transport machinery and temporary buildings. It's a part of the business that has grown organically, and on the sales side it retails 75 to 100 new and used cranevehicles a year.
The company is evenly split between rental and sales. Steve Cairns explains: "Our profile and how we market the business is very strong.
"We do have an appetite to develop the hire business further. If opportunities arise, we will be more than happy to look at it; we are builders not demolishers."
In general, the rental market is very good, he says. "With the downturn in registrations people are hedging their bets and hiring not buying. The market is quite strong, especially for this sort of kit [in the deal with TLS], it's well maintained and with low mileage," he says.
Enquiry levels have risen 50% at MV Commercial in the past three months.
"Things are on the up and we are very encouraged by what the future holds," says Cairns. "Our contracts are rolling; it is a sophisticated process so vehicles can be taken out and new ones put in without affecting the deal. The average term each vehicle is out for is 18 months."
Key for MV Commercial is its flexibility, particularly when working with customers whose needs are evolving.
"The whole hire job is about building long-term relationships, it's service driven, because there is so much choice.
"If you aren't providing the right sort of service, they'll go somewhere else," says Cairns.
STRONG SALES
The trade side of MV Commercial runs with 70 to 80 vehicles in stock, and a three-strong sales team. Steve Cairns says: "We have various agreements set up for ex-finance company stock, plus stock from the hire fleet."
MV sells 400 to 500 units a year, with around 30% sourced from the MV rental fleet. "The rest is sourced from a mixture of ex-finance company stock, vehicles we've bought in and we'll take vehicles in on sale-or
return as well," he says.
Increasing demand for late-year product that goes from the rental fleet to asset is producing a much greater return, pushing up values significantly, especially for the specialist equipment like the crane lorries.
The manufacturers' price hike for new stock has changed the buying policy. "We are still buying for the contract hire fleet, but we are shopping around to get the best deals. Before, we might have placed a large order with one manufacturer, but now we look for cancelled orders and that type of thing, any good deals. MV Commercial still put on 40 new vehicles in the last three months for the hire fleet."
Historically, the run up to Christmas provides a huge drive on the rental business before tailing off in the new year. "We don't expect to see a major downturn this time after talking to the customers," he says.