Ross Clarkson, marketing director, Northgate Vehicle Hire, looks to the issues likely to come to the fore in 2010.

 

“The New Year is the time when many fleet decision-makers cannot continue to postpone fleet funding decisions any longer in an environment when there is still great uncertainty about the economy.

“Through 2009 fleet managers have delayed vehicle purchases and extended leasing contracts, but ultimately new vehicles must join the fleet. But instead of always adopting the identical approach to vehicle funding, forward-thinking fleet decision-makers will seek out more flexible options.

“For example, we are already finding that some outright purchase and contract hire fleets are maybe continuing to buy or lease part of their fleet but looking to rent the remainder of their vehicles, particularly where they remain uncertain over 2010 trading conditions. This provides them with the ability to manage risk and retain a degree of flexibility.

“In the final months of 2009 the price difference between the cost to rent vehicles and the cost to lease them has shrunk significantly. Traditionally the difference between renting and leasing was anything between 10%-20%, but the former obviously provides the flexibility of not being tied into a contract.

“However, while leasing companies have significantly increased prices - Northgate’s hire rates have increased on average by only 2.3% although further rises are likely in 2010 as the company highlighted in its recent half-year results.

“Therefore, the margin between flexible rental and contract hire rates has shrunk to the benefit of fleets seeking to use rental as a more viable option of acquiring vehicles.

“Meanwhile, as fleet managers continue to balance the task of containing costs with ensuring they are running an efficient fleet, they will be looking increasingly to suppliers who can provide value in terms of being able to deliver high levels of customer service and offer a wide range of operational solutions and not just about a vehicle at the lowest rate.

“Cost pressures will remain unchanged in 2010, but the demand on fleets to cut CO2 emissions will continue to rise. While the incentive of lower taxes will remain for fleets to operate low emission vehicles, the penalty for those who don’t will be rising costs as tax and fuel bills escalate sending budgets soaring.

“Many businesses, including Northgate, have spent 2009 battling the recession with the focus on two strategies - repairing the company balance sheet as asset values decreased as well as cost management.

“2010 will be about improving trading performance as the UK emerges from recession. That means whether a supplier or an end-user fleet the efficient use of resources and delivering a return on capital investment is crucial.”