The turbulence in the van rental market, which saw rental prices fall to unsustainable levels before rising again at the end of last year, is over according to suppliers.

However, fleet managers hoping to see prices level off will be disappointed and should instead be budgeting for prices to continue to rise.

GE-owned van rental provider TLS said many of the rental companies that rocked the market by slashing rates to ‘unrealistic and unsustainable levels’ last year have now either gone out of business or have raised their prices.

“2009 was an extremely difficult year. Many of our competitors set rates that were completely unsustainable and the effect was to create a disorderly market,” said Simon Cook, sales director.

“We have seen rates that we are certain did not allow rental companies to meet their minimum obligations in terms of keeping vehicles properly maintained and to replace aged vehicles on the fleet, never mind to create profitability.

"Most of the rental companies which offered those rates have either now disappeared or are finding themselves in extreme financial difficulties.”

Now he says prices have returned to sustainable levels, but he refused to say if prices will now level off.

And the country’s largest van rental provider Northgate Vehicle Hire warned that prices are likely to increase.

Despite values of used vans rising – in December they were 46% up on the same month in 2008 - boosting rental companies’ coffers and utilisation rates now well above 90%, rental providers are still expecting a tough year.

“We are faced with rising overheads – such as delivery and collection and fuel costs,” Ross Clarkson, Northgate marketing director told Fleet News.

“Also the cost of financing new vehicles is rising and the prices manufacturers are charging for new vehicles are going up. This means rental prices will continue to rise.”

Over the past 12 months, rates were ‘ridiculous’ he said.

Few if any hire companies were making money last year, but those that have survived have cut their fleet sizes and now do not need to cut prices to get vans out.

Ryder, which operates an 11,000 commercial vehicle contract hire and rental fleet, of which 800 are rental vans, is also anticipating “a slow improvement” in rental rates during 2010.

“In a very mixed market, a 20% deterioration in LCV rental rates was observed over the last 12 months,” explained Ryder's director commercial vehicle sales Nigel Martin.

“There has been some LCV rate recovery in a highly competitive market.”

Ryder is now reviewing both its contract hire and rental renewal programmes for 2010. It is expected to renew its LCV fleet to ensure the average age is under 30 months.