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Vehicle glut leads to falling rental prices

28th September 2006
Page 13
Page 13, 28th September 2006 — Vehicle glut leads to falling rental prices
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Which of the following most accurately describes the problem?

THE GROWING NUMBER of operators choosing to rent trucks rather than buy them has sparked a glut in the vehicle rental market, causing prices to tumble by more than 10%.

Kelvin Briggs, the head of sales at Alliance & Leicester's commercial bank, says the move from Euro-3 to Euro-4 and the introduction of digital tachographs have encouraged a number of small operators to delay fleet replacements in a bid to avoid the new technology.

-Pressure on profit margins as a result of fuel price increases and costs associated with the Working Time Directive has made operators critically assess whether fleet replacement or addition makes financial sense," he reports

Briggs adds that renting is seen as an easy call at a time of uncertainty. But because of the number of companies now offering hire vehicles it is a buyers' markets

However, upward price pressure is expected soon: Hill Hire MD Andy Mitchell says his com

pany is increasing rates by 10°/0; he hopes others will do the same.

"We have got to put the rates up," Mitchell continues. "It's as simple as that. We are one of the bigger operators and if we start doing it, others might."

Another reason hire firms are suffering, he suggests, is a decline in high street spending: When the consumer starts spending it affects the demand on the rental fleet because a lot of the take-up of the rental fleet is through the retail sector."


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