Digitalisation to reshape rental, says Hall of Famer Neil McCrossan

Fleet News Hall of Famer Neil McCrossan, who was inaugurated to fleet's highest honour at the 2022 FN50 Dinner, is one of the founding fathers of modern-day business rental.

Together with colleagues at Swan National Rentals, he conceived many of the rules that have resulted in today’s rental environment, taking an embryonic market and applying new processes and creating new services.

McCrossan’s rise to the top happened at astonishing pace: in 1980, he joined Swan as a casual driver; a decade later he was on the board as sales and marketing director, leading the re-branding to Eurodollar Rent a Car.

“I joined at a time when we were creating the industry and Swan was at the forefront of that,” McCrossan (pictured) said.

“It was a meritocracy: if you were good at what you did, you got spotted and promoted into a bigger job. I was fortunate to get into the industry just as it was taking off.”

He added: “We fixed the proposition: we invented delivery and collection, one-way rentals, MI, online portals before the internet and the broker channel. We made business rental useable, affordable and practical – that’s how we grew the market.

“We provided another option to the way you provide people with vehicles for company use, the way you moved people around the country and the way you rewarded people.”

Through innovation and quality, Eurodollar became UK market leader and expanded into Europe. The business continued to evolve through MBO, flotation and eventual sale into Vanguard Rental Corporation, at that time owner of the National Car Rental and Alamo brands.

As VP commercial development, McCrossan had a wide-ranging role encompassing sales and marketing, operations, reservations and strategic projects.

He left in 2006, just prior to the sale and break-up of the business, taking up the role of CEO of Nexus Vehicle Rental two years later.

At Nexus, he helped to raise private equity backing and overseeing key acquisitions to grow the business. After six successful years, in which he quadrupled the size of the company, McCrossan exited the rental business.

The lure of rental could not be resisted for long, however, and by 2017, McCrossan was back, this time as sales director of Northgate on what was initially a short-term assignment.

“Rental gets under your skin – you either stay in it for six months or you stay in it for decades,” he said. “It’s fast moving and fast paced, and you can make a difference.”

His personal objective at Northgate was to not just boost the company’s finances and improve turnover, but to deliver a customer-focused approach that ensured clients’ needs are met.

“People talk about economic cycles but I’m not sure there is a business cycle in this industry anymore - there’s just linear progression as we move into the future,” McCrossan said.

“The market is totally different with new challenges and opportunities and that’s why I’m still here – the future is hugely exciting.”

His initial years at Northgate focused on giving the business fresh impetus and a new approach to the market which delivered fleet, revenue and profit growth after a period of stagnation.

Then Covid hit and “changed the world overnight”. Throwing further chaos into the pot were the UK’s exit from Europe and the supply chain challenges which fundamentally shifted the relationship between the rental industry and the manufacturers.

“Before, the relationship was ‘how many do you want, could you take some more and could you keep them for less time so you take more from us’,” said McCrossan.

“Now it’s a far different relationship in regard to how many vehicles they will supply and the prices at which they will supply. It has changed the industry dynamic with pricing and propositions; it causes challenges for us and our customers because we can’t get the number of vehicles we want so customers end up in older vehicles, and it costs us a lot more money to service and support those vehicles.

“But we are business people, and we have a wonderful habit of finding a way through dilemma and issues and finding an accommodation.”

Nevertheless, with margins shrinking, or in some cases disappearing, McCrossan believes some of the innovation and sophistication in rental has taken a back seat, due to a lack of affordability or lack of availability.

Short-term rental, a sector in which Northgate has limited exposure, is one area where customers have been forced to find their own solutions due to the lack of availability, he explained.

“Shorter-term rental has almost gone away in the B2B sector; delivery and collection is not as easy to provide. Vehicle rental was providing solutions through a range of services, and some are now too expensive to provide.”

However, McCrossan bursts the bubble of perception that rental companies’ main method of generating profit still comes from the trading of vehicles.

“It used to be an arms race about the services and sophistications we could bring to market and that was the right thing to do at the time if you wanted to grow your business,” he said. “But the financial model was different between how much money you made running versus how much you made trading vehicles.

“Rental companies can make money in different ways. These days you’ve got to buy well, rent well and sell well - you get those three things right, you can make money. But the days when you could use rental as a loss leader because all the money was in buying and selling vehicles are long gone.”

Despite the challenges of a supply constrained market, Northgate continues to look at new opportunities and is embracing mobility as a flexible vehicle hire solution, corresponding with greater willingness of companies and their drivers to adopt alternative mobility options.

It also believes success comes from being a full service provider with fleet management, accident management and telematics among its suite of products, alongside its insurance replacement business and its own network of workshops and bodyshops.

The latter are particularly beneficial in controlling costs and maximising uptime of an ageing rental fleet.

In 2021, Northgate’s parent Redde Northgate plc acquired ChargedEV to offer business and private buyers charge point installation. It also has a refrigeration offering and last year bought Blakedale, which supplies a fleet of 334 traffic management vehicles from 3.5-18 tonnes to highways contractors on short- and long-term rental.

“We are building a model that keeps customers mobile in Northgate vehicles but also in their own fleet vehicles from resources that we own within the group,” McCrossan said.

“They can interact with a single partner rather than multiple suppliers. The breadth of our proposition allows us to make the mobility promise more real.

“And on top of all that we have the transition to electric, helping our customers to understand all the factors around cost, suitability and infrastructure.”

Increasingly, client engagement and product delivery will be via digital channels, according to McCrossan, with a greater emphasis on self-service by the driver.

Companies will want to retain control over supplier choice and managing the services and costs, but “transactional elements” could become a more direct relationship between supplier and driver to fulfil.

“If it’s done well, it works. We’ll see more of that come into the corporate arena over time because AI and digitalisation will make it easier for the end consumer to access these services and for suppliers to deliver them at the right price and standards,” said McCrossan.

“Customers won’t want to have large internal departments to facilitate that on behalf of their workforce. They’ll want drivers to interact with suppliers more directly and obtain a range of services that the company has sanctioned that they can buy and use to ensure they stay mobile, supplied by approved suppliers at approved standards and pricing.”

Over a long, successful career in the rental industry, McCrossan has seen considerable change and been the architect of many of the biggest developments that have shaped the business market.

He philosophy also presents good advice for up-and-coming fleet decision-makers about recognising and seizing opportunities when they are presented.

“We all have moments in our careers where we are given opportunities to succeed or fail, to make things better or to make things worse. Spot them if you can, focus on what’s important and follow through,” he said. “The detail matters because the detail makes things work or not work.”