Blended funding is key to business wins for Nexus

A rapidly-changing market has seen fleets look for as much flexibility as possible. That’s music to the ears of Nexus boss David Brennan, as Matt de Prez reports

Blended funding has become as much a buzz phrase as business mobility over the past couple of years, with salary sacrifice sitting alongside contract hire and, sometimes, outright purchase.

More recently, rental has started to become a key part of the blended jigsaw, according to corporate vehicle rental services provider Nexus Vehicle Rental. As a direct result it has grown its customer base by more than 20% over the past year.

According to David Brennan, chief executive officer of Nexus, more operators are moving away from a single method of acquiring vehicles, such as outright purchase or contract hire, and bringing rental into the mix as it offers less risk and greater flexibility.

He says corporate rental is growing because businesses are looking at different ways to minimise downtime and reduce the number of vehicles on their fleets, while also dealing with changing demands from clients.

“This has come about as companies look to be as flexible as possible around business mobility,” explains Brennan.

“A delivery company, for example, may have to cope with spikes in seasonal demand and be forced to take on temporary labour.Therefore it will need additional vehicles to cope with this – but purchasing or leasing would not be cost-effective as those vehicles would soon be sitting unused.”

Rental spend in the UK is currently around £1.8 billion per year and at any one time there are around 500,000 vehicles on hire, making it a big market.

Nexus provides a digital platform which allows its customers to rent any vehicle for any time period, from a car to a van to an HGV, through a national network of rental suppliers. It also has a specialist division offering wheelchair accessible and adapted vehicles.

It was during the recession that corporate rental first piqued the interests of chief finance officers, fleet managers and directors who were looking for ways to reduce capital investment and find a vehicle supply that could be switched on or off when required.

“People rent when they don’t want to spend any money up front,” says Brennan.

He expects to see even more demand for rental following Britain’s decision to leave the European Union and has a five-year plan to deliver annual double-digit growth.

“Many customers, post Brexit, are now looking at how they can have a flexible supply chain that enables them to keep their options open and keep in tune with the changing demands of their business,” he explains.

By choosing to rent, a fleet can quickly acquire a quantity of vehicles suited to its needs with no strings attached, meaning if requirements change they can be sent back or extended at any time.

It isn’t the most cost-effective method of acquiring vehicles, especially for longer periods of time, and historically fleets have mainly used rental for the emergency replacement of an asset that is off the road.

But what Brennan has seen, from larger clients in particular, is an increase in the number of more complex and business-specific rental requests.

He says: “Most companies have a clear focus on either cars or vans, but in some cases we are asked to provide very specific assets where the client has a unique requirement or project.” 

For one customer, 20 Land Rover Defenders complete with snow plough attachments were needed for six months. And another wanted a tractor, in Northern Ireland, within the hour.

The key to meeting these demands for Nexus is its network of trusted suppliers and the service level agreements it has in place with them.

Nexus doesn’t hold any vehicles itself; it acts as an intermediary, providing administrative support on top of handling the booking process.

Nonetheless its 870 customers, which include LeasePlan and two other top 10 FN50 leasing companies, can get same-day access to more than half a million vehicles.

Brennan says: “We’ve had a lot of buy-in from all our service providers to look at areas where the service can be improved. We track that monthly and have quarterly reviews with suppliers where they can get feedback to take to their operations teams and make improvements where necessary.

“The quality is very important for us because if it’s easier for a customer to go direct to a supplier then our proposition doesn’t work. Our service has to be better, our price has to be similar and our capability to deliver what the customer wants has to be better.

 “Our service depends on our supply chain every day and together we are trying to deliver an exceptional outcome for our customer while providing growth for our suppliers.”

As rental demand has increased in the last two years, Nexus has grown its network of national and regional rental providers by 29% and can now access vehicles from 2,000 sites in the country. Suppliers include Northgate, Thrifty, Europcar, Lincs Van Hire and Stan Hire.

Keeping tabs on this number of assets in real time requires considerable computing power. This is the job of IRIS, the Nexus booking system.

It was launched in December 2014 and designed to achieve a booking in 30 seconds or a re-booking in 10 seconds.

What’s more it can integrate with a customer’s internal computer system or be accessed through a web portal, allowing them to self-book whatever they need at any time. It handles 85% of all transactions electronically.

All the processes from request to return are automated, so the customer can spend more time on their core business.

Brennan says: “We want to be seen as the best technology provider in the market; we think we are now but we want to stay ahead.”

That’s why the company is planning another system update in 2018 which will include further enhancements and incorporate the latest technology.

Over the past 12 months, Nexus has seen greater demand for its service from HGV customers. It is currently able to offer only a limited service for HGV rental, but a new, fully dedicated HGV proposition will go live early next year.

Brennan explains: “We run a regular survey with our customers and the one question we haven’t been able to answer is for those asking about their HGV fleets. We are now responding to that demand and building a specific HGV system.

“We will utilise it with our existing clients first and we are working with a pilot client this year in preparation for a full launch in 2017.

“In this market I think there are lots of opportunities to help customers reduce vehicles’ off-road time, make sure they have the right asset available, give them confidence and a technology-based solution to streamline the service.

“At the moment our journey is to increasingly build our supply chain in that market, fine-tune the technology and make sure it works in exactly the way that our clients want.”