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Oil Engines in Hire Cars Pay

29th July 1955, Page 60
29th July 1955
Page 60
Page 63
Page 60, 29th July 1955 — Oil Engines in Hire Cars Pay
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Which of the following most accurately describes the problem?

AHIRE car and a taxi are both hackney carriages. The tax on a hackney carriage is based on seating capacity, being £10 per annum for vehicles taking up to four passengers and £12 per annum if the seating capacity is in excess of four but does not exceed eight.

As the tax on any car likely to be used as a hire car is £12 10s., there is no point in registering it as such: any car can be employed for the work so long as no attempt is made to ply for hire in the public streets.

There are many grades of hire-car operator, just as there arc of hauliers. In this article I am principally concerned with the small operator, the owner of not more than three or four cars and in need of some guidance in respect of rates and charges.

It should be understood that in London and some large provincial towns the regulations governing the use of taxicabs are far reaching, and in some cases it is necessary to give a specification of the vehicles to be used. On the other hand, there are many towns where such conditions do not apply and the cars used as taxicabs may be of any size or type.

Large Used Cars

At one time there was a tendency to use large and imposing-looking vehicles for private-hire work, and to some extent that tendency still prevails. The Daimler cars used in London by Daimler Hire, Ltd., is a case in point, and there is no doubt that many users prefer the luxury and comfort of such vehicles. Smaller operators pander to that taste by buying large used cars of a type they could not afford in the new state.

Of late, however, there has been a change in that attitude and there is now a growing tendency, especially in the provinces, to use smaller cars, particularly those which are similar in design and appearance to the latest types of London taxi. The coming of the oil-engined taxi and hire car is helping to bring this about.

A disability attaching to the use of large, imposinglooking cars is the high cost of operation, especially their high fuel-consumption rate. In some cases the drift towards the use of cars of smaller horse-power has, in my opinion, gone too far. For the arduous rough and tumble of taxicab and hire-car operation a reserve of power is an advantage. A larger engine would not be driven all out for so high a percentage of its time and there is less need to use the lower gears.

Turning to the economics of the problem, the matter of costs and earnings is. in principle, very similar to that encountered in connection with goods haulage and can be dealt With on our old familiar lines. In that way we have to consider, first, the operating cost of the vehicle, then the cost of running the business (establishment costs) and profit.

Costs Up to Date

For the first of these—the vehicle operating costs—we cannot do letter than refer to "The Commercial Motor' Tables of Operating Costs." Some of the figures will require a little revision, because the prices of commodities have altered considerably since the Tables were published. Taking a 16 h.p. car as an example, the figure for petrol is 2.34d. At 4s. per gallon that is equivalent to 204m.p.g. Taking petrol at 4s. Id. per gallon, the price the small operator will have to pay today, and still sticking to 204. mpg., the cost of petrol per mile is 2.40d.

Lubricating oil has increased in price and the cost per mile for lubricants is now 0.15d. The tyres are 6.00-16-in. which, less than a year ago, cost £36 per set of four, are now £43, so that the cost per mile for tyres at 24,000 miles per set is 0.43d. For "maintenance (d)," which covers 'washing and polishing, greasing and oiling, I suggest 25s. per week. If, as I am assuming, the weekly mileage is 400, then the cost per mile for this item is 0.75d. For " maintenance (e)," quoted in the Tables as 0.66d., I should, today, take 0.76d.

The final item of running costs is depreciation, and for that a little sum must be worked out. A first-class 16 h.p. hire car, as used in the provinces, will cost a round all-in figure of £1,225. Deducting the cost of a set of tyres—


€43—we are left with £1,182. Now take away the residual value, that is the -possible value when sold, say £112, and we get £1,070 as the figure for calculating depreciation. 1 assume a life of 120,000 miles and,.dividing that into £1,070, I get 2.14d. per mile for depreciation.

We thus arrive at a figure of 6.63d. as the running cost per mile. For a. 400-miles week the total is £11 Is., to which the standing charges must be added.

. They arc as follows: Tax, 5s. per week; wages, for a 44-hour_ week, £9; rent, and rates, 8s.; insurance, £1 5s.'; interest on capital, £1, making £11 18s. in all. 'The total cost of operating the vehicle for one week of 400 miles is thus £22 195.

That amount is not, however, the sum total of the operator's expenditure; there are still the establishment costs to consider. The nature of these costs, and what I mean by the term, will become evident as I proceed to enumerate the items. They are, first, management expenses, being the amount the operator gives himself as wages. I have taken the modest sum of £300 for this; it should be more rather than less, and if the reader doubts this let him consider what the figure would be supposing the proprietor had other interests and appointed a manager to take his place. He would have to be paid out al least twice that sum.

Next comes clerical wages, by which I mean what would have to be paid to a typist-cum-clerk, who would assist in such work as answering telephone calls, entering engagements, cancellations, giving instructions to drivers, and so on. I have assumed £240 per annum and, believe me, a good girl would be worth twice that sum.

Telephone expenses will be considerable, and I fancy I have hardly allowed enough at 130 per annum, but I will leave it at that. After all, it is for the reader to check my figures and align them with his own experience. For lighting and heating I have allowed £80. That is, perhaps, on the high side, but if the reader also thinks so, let him apply the procedure already tecommended in respect of telephone expenses.

Water for car washing and other purposes comes next, and £10 should cover that. Finally, the accountant who checks the operator's figures will want £10 for his services, and we might add £160 for the cost of running a car in connection with the business.

The total of the foregoing items is £830 per annum, £207 10s. per vehicle or approximately £4 Is. per week. That must be added to the total of operating 9psts—£22 19s. —to give the total expenditure per week per car-127.

The £27 is for a 400-mile week, so that the total expenditure per mile is Is, 4.2d. If the operator works out his charges, as so many do today, at Is. 6d. per mile, then his profit margin is 1.8d. per mile, or £3 per 'week per car, or £12 per week for a fleet of four vehicles.

Actually, 400 miles per week is not excessive for a hire car; many cover 600 miles or more in that time. In that case the total running cost per week will increase to £16 I Is. 6d. The standing charges will no doubt increase also, as for a 600-mile week there will be overtime payments to meet. The total of standing charges, instead of being £11 8s., may rise to £13 10s. The total for running costs and standing charges will rise to £30 Is. 6d.

The establishment charges are not likely to alter, remaining at £4 Is., and the total expenditure per week will rise to £34 2s. 6d., that is, Is. 1.65d. per mile. On that basis the profit per mile at a charge of Is. 6d. per mile will amount to 4.35d. and the profit per week per car will be £10 17s. 6d., or £43 10s. for a fleet of four cars.

Now suppose that this operator had been enterprising enough to buy one or perhaps four oil-engined cars. What then would have been the economic aspect?

I have been given some fantastic m.p.g. figures for the oil-engined hire car, even as high as 45. I impose, however, to assume that 40 m.p.g. is as good as one has a right to expect. If the fuel costs 4s. per gallon, the cost per mile for fuel will amount to 1.20d. The cost of lubri

cants, tyres and maintenance (d) will be the same as in the case of the petrol-engined car, that is 0.15d., 0.43d. and

0.75d. respectively. Maintenance (e) will be less-0.68d. instead of 0.76d.

Depreciation will have to be calculated. The original cost of the car will be about £1,450. Take away £43 for tyres and £147 for residual value and we are left with £1,260 as the net value. If we take it that the oiler will not have a longer life than the petrol vehicle, but I am sure that it will, then the depreciation per mile will be 2.52d. The total of running costs comes to 5.73d. per mile, and for 400 miles, £9 1 Is.

The standing charges will be about' the same as in the case of the petrol car except for the interest charge, which becomes 23s. instead of 20s. The total for standing charges will, therefore, be £12 Is7, and this, plus £9 I Is. for operating costs, makes the total £21 12s. The establishment costs remain unaltered at £4 Is., so that the total expenditure per week involved in the operation of this oil-engined hire car is £25 13s. The cost per mile is Is. 3.39d., showing a saving, equivalent to an extra profit, of about fd. per mile or 25s. per week per car and £5 per week for the four cars, as compared with the petrol-engined cars.

If the weekly mileage per car is 600, then the saving will be very much more. The total of running costs will work out at £14 6s. 6d. and the standing charges the same as for the petrol-engined car, plus the 3s. extra already mentioned as being due on account of the increased interest charge making the amount £13 13s. The establishment costs will remain at £4 Is. per vehicle per week. The total expenditure on this oil-engined vehicle is thus £32 Os. 6d. or Is. 0.81d. per mile, equivalent to a profit of 5.19d. per mile or £12 19s. 6d. per week per vehicle. S.T.R.


Locations: London

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