Cut throat contract hire
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• The latest ICC Business Ratio Report, looking at vehicle hire and leasing companies in the UK, shows the industry is one of the most fiercely competitive in the country.
Gareth Evans, executive controller of ICC Financial Surveys, says that between 1,000 and 1,200 companies are heavily active in contract hire and leasing management with up to 9,000 firms involved to some degree.
Figures for 1985 show there were between 39,000 and 46,000 self-drive light vans and cvs and 115,000-151,000 contract hire/leased light vans and cvs in Britain.
In terms of the proportion of total commercial vehicles in use made up from rented or leased vehicles the UK comes out as the most developed country in Europe with around 10% of the total being operated on this basis.
Improvements evident in the industry up until 1985, however, look set to take a plunge when the final results for 1986 are released. Return on assets figures show a considerable decline; there are disappointing returns on capital with many companies achieving far below the average of a 10.5% return and the profit margin has fallen by almost half in 1986.
Total borrowing has also been increasing substantially with many companies bearing very heavy debt burdens.
On the plus side sales and profits have been growing and the fundamental operating advantages of contract hire and leasing — service agreements, no worries over disposal, regular changes in models and a relatively small initial outlay — remain as strong as ever.