The industry is preparing for the collapse of another major rental or vehicle provider of a similar scale to 1Car1.

In March, the Leeds-based van and car rental company went into administration leaving 15,000 vehicles owned by a range of banks and finance providers to be recovered.

The recovery of the vehicles took over five weeks and, according to the administrator’s report, left the finance companies facing a bill of over £930,000.

Now lease and finance providers have begun preparing for a similar collapse.

“They are expecting more big failures,” said David Mercer, Manheim's director of automotive services. “They are positioning themselves to be ready for another 1Car1 – there is real concern about how they will get their vehicles back.”

At least two top FN50 vehicle providers have already approached Manheim, which began offering an asset recovery service late last year.
“We offer a fast-response, high-volume recovery service,” said Mercer.

As a result of the concerns that another large-scale company will go bust leaving thousands of their vehicles to be recovered, Manheim also this week established an additional service offering to embed an ‘event manager’ into the finance or lease company to oversee the vehicle recovery process.

Within 72 hours of a company going under, Manheim said a “massive surge” of recoveries will be instigated to get vehicles back.
“The rental industry is particularly vulnerable,” said Mercer confirming fears that another large rental company will go bust this year.

The preparations follow reports in Fleet News (May 21) that some independent leasing and rental companies are facing bankruptcy after changes to their funders’ lending criteria.

At the time, Deloitte’s Fenton Burgin said: "There will be a number of finance directors in the industry who will be very concerned about the terms of their existing banking facilities."

With the expectation of more collapses, BCA has confirmed to Fleet News it is about to launch a “one-stop shop” for vehicle repossessions.

“As the economy continues to go through recessionary times, increasing numbers of business failures and rising unemployment will inevitably lead to an increase in the use of asset recovery services,” explained BCA communications director Tony Gannon.

“Our new offering neatly dovetails with our customers’ preferred sales channel for repossessed vehicles, which is inevitably by public auction to guarantee transparency, a clear audit trail and the best possible price on the day.”
BCA will make a formal announcement of the new service later in the summer.

The preparations also come at a time when Manheim reports a growth in early terminations and repossessions of cars and vans from companies that are failing to meet their contracted terms.

“There is certainly a trend upwards,” said Mercer. “We are seeing more SME failures where we recover their assets.”

He said that in 25% of cases, the recoveries are ‘hostile’ while the remainder involve companies advising their vehicle supplier that they can longer make payments.

Vehicle and finance providers are becoming less lenient he said. “They are becoming quicker to act and will recover their vehicles sooner rather than later,” said Mercer.

The Finance and Leasing Association (FLA), whose members would instigate recovery of vehicles, said help is available for struggling companies.

“If a company does get into difficulties making the rental payments on a finance or a lease agreement, there are some steps they can take,” explained an FLA spokesman.

“The first is to talk to their lender. Under our Business Finance Code, lenders will try to make a responsible decision as regards customers who have repayment difficulties. This will perhaps involve rescheduling repayments.”