LONGER DEALS OR RENT?
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Some dealers report that customers are looking to fund their trucks over longer periods than they did in the past. Partly it is to offset the higher capital cost of vehicles – new truck prices have increased significantly over the past year or two.
To a degree it is because many of them opted for lease extensions during the recession and discovered that running a truck for an extra 12 or 24 months did not necessarily result in a sudden rash of breakdowns, always assuming that it was maintained properly.
“We’ve got one customer who has traditionally run his vehicles for five years who is now thinking of running them for six,” says Andrew Jamieson.
“We’re not seeing a lot of people switch from, say, a three-year to a fouror five-year replacement cycle, but we are seeing some,” says Mike Lancaster.
Other operators are moving in the opposite direction, says Tim Strevens. “They’re often looking at shorter periods because they’re being offered shorter contracts by their own clients,” he observes.
There is a powerful argument for firms in that position renting their trucks rather than acquiring them outright, and operators are undoubtedly expressing increased interest in rental, says Mark Sanders. “More and more of them are taking rental vehicles for six to 12 months,” he adds.
Allports runs a 400-strong contract hire and rental fleet under the CV Rental banner, with rental vehicles accounting for 25% of the total. “We may expand it,” he says.
Rental appeals to businesses that need vehicles, but as yet do not have enough confidence in the strength of the economy to commit to leasing them, obtaining them on HP or purchasing them with accumulated funds, says Jamieson.
If they lose a contract unexpectedly, or the economy suddenly lurches downwards, then they can send their rental trucks back without suffering the penalties they might face had they signed a contract-hire agreement instead. “They like the flexibility,” Sanders remarks.
Opting for a rental truck may be one of the few options open to somebody looking to set up as an owner-driver who does not have enough cash in the bank to buy a truck – even a good-quality used one – outright. They are the people who are really struggling to obtain finance.
Even the most haulage-friendly finance houses are wary of funding somebody who does not have a proven business track record. “It’s something they simply won’t stretch to,” says Lancaster.
Go back to them with 12 months of bank statements showing a positive cashflow, a business plan and a contract with a customer, and they may be more willing to sit down and talk.