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BRS report promotes contract hire

28th June 1986, Page 16
28th June 1986
Page 16
Page 16, 28th June 1986 — BRS report promotes contract hire
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Which of the following most accurately describes the problem?

• An accountant's report published last week supports BRS's claims that contract hire is the most attractive option for acquiring vehicles.

The report, called Financing the acquisition of commercial vehicles, is the result of investigations by Andrew Jones, a partner of City accountants Ernst and Whinney.

Launching the report, Jones said: "The results do appear to show an advantage to contract hire, mainly because contract hire includes running costs within its rate."

Although Jones was commissioned by BRS to investigate the various costs of acquiring new vehicles, managing director Geoff Pygall said: If the report had come out with the wrong answers we would have buried it."

He explained that the report was requested in response to two significant recent financial changes — the phasing out of first-year capital allowances, and the introduction of the new accounting standard SSAP 21. This involves treating leased assets like purchased ones, so making the amount of borrowing taken on look larger.

Jones compared cost levels for borrowing to buy, finance leasing and contract hiring by including running costs, a 13% interest rate and taxation, and he discounted the figures to produce today's money values.

This produced the results shown in the graph, with costs per year for the three examples of vehicle being lowest with contract hire. He used BRS's contract hire rates. BRS is sending 25,000 of the reports out to financial bosses in the UK. There are to be nationwide seminars to discuss the report. Its sales force will also be taking it to present customers to reassert BRS's position.

But in a market which FIRS expects to grow at 10% each year, Pygall admitted that the report is also good news for other contract hire competition.

"There's no doubt people are latching to on the advantages — they're looking for economies," he said.

BRS says that by taking on contract hire, companies can solve some of their industrial relations problems.

Pygall said: "Brewers and oil companies can have pretty restrictive practices going on, and the political climate now allows changes to be made. This and contract hire is causing a lot of companies to look at their transport operations."

BRS marketing manager Peter Parry added: "If companies don't want two different unions, we can help."


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