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DAILY RENTAL: Why daily rental's a fine solution
Date: 15 March 2011
In the wake of the UK's first corporate manslaughter conviction last month, where Cotswold Geotechnical Holdings was fined £385,000 following the death of a geologist, the subject of duty of care is once more in the spotlight.
For fleet managers, the corporate manslaughter legislation focuses attention on a number of safety-related issues that must be addressed to ensure that the company is covered. Some concern the individual, such as eyesight and licence checks, while others are related to vehicles: they must be well-maintained, insured for business use and fit for purpose.
Firms with travel requirements have to try to balance all these things. Regular car users are often covered from a duty of care perspective through company car provision, but private users, or those that simply want to pop out on a quick errand, can sometimes be overlooked.
Indeed, grey-fleet drivers pose a huge risk, according to fleet expert Colin Tourick. "A huge number of grey fleet vehicles are not maintained to the same standard as regular company cars," he says. One solution to aid fleets' adherence to duty of care legislation is daily rental, Tourick suggests: "It makes good sense from a risk management perspective to require employees to use rental cars rather than their own cars for driving on company business."
Rob Ingram, director of business rental at Enterprise, says: "Many firms that rent will often have a process in place to review drivers licenses for any additional penalty points or issues. The maintenance of the vehicle pretty much speaks for itself - rental cars are cleaner, maintained, roadworthy, taxed etc. It's also easy to select a vehicle that actually fits the needs of the journey travelled. For example, a large saloon for sales samples, or a small three-door vehicle for a simple local errand."
He continues: "Rental companies also have the benefit of technology to help them keep track of service schedules and maintenance requirements for their fleet, so there is a confidence that is borne out of selecting a good daily rental partner.
"We can also work with employers to help them define their duty of care checks, putting in place best practice in terms of the checks they may elect to do for their employees and the frequency of those checks."
Kenneth Bowling, MD at Driving Risk Management, adds that rental cars are normally less than three months old and meet the latest emissions and safety standards: "Rental is generally a good choice from a duty of care perspective as well as achieving the all important green credentials from lower CO2 and fuel consumption."
But Paul Holmes, fleet director of driver training firm AA Drivetech, argues rentals could actually increase driver risk: "Vehicle unfamiliarity is a common cause of driver stress, confusion and error," he says. However, Holmes adds that vehicles from "reputable well-known rental names would clearly be in first-class mechanical condition, which would obviously help with improving safety".
In terms of costs, Tourick says: "I'd advise fleet managers to do a cost-benefit analysis and see where it makes sense to use rental cars. Hiring a car for a day for an employee who needs to do a five-mile return journey? The employer might pay the employee £3 for that trip if the employee used their own car, but would pay perhaps £35-£40 to hire a car for the day. But if the journey was 200 miles the case for renting would be stronger."
Ingram adds: "We work with clients to determine a break-even of where rental becomes cheaper than mileage reimbursement. Our Grey Fleet calculator can help companies understand the point at which rental becomes more cost-effective and develop a policy that factors-in rental use over private vehicle use over a certain mileage. You then factor-in the risk mitigation of rental over private use and it suddenly becomes a very attractive proposition."
Tourick advises that fleet managers treat grey fleet cars as they would regular company cars: "Ensure they are regularly serviced and MOT'd, that the cars are inspected for tyre wear frequently, and that the drivers are insured and are properly licensed."
Objections
Ingram says that one of the biggest objections to daily rental use for fleets is the necessary behavioural shift. "It's easy to jump into your own car and off you go without having to preplan the trip," he says. "There is a degree of preparation required if you have to rent vehicles as you need to know when you're going to travel and how long you need the car.
"That's why it's important to select partners with large branch networks that can provide access to vehicles quickly and easily through a local branch. Size of fleet is also relevant as you want to be sure vehicles are available. There are a couple of other ways to help this shift change - pool cars for example can be of use, but often sit under-utilised, or hourly rental programmes can provide a degree of immediacy to access a car."
Daily rental also provides costs benefits, says Ingram.
"Rental companies can really help balance costs with duty of care, and cases like the recent corporate manslaughter ruling will serve to remind companies that they are not exempt from duty of care and they will need to ensure they are addressing their risks in a managed cost environment."
Ingram states that companies that have taken a view to manage down costs "cannot and should not overlook the importance of duty of care responsibilities".
He concludes: "The great thing with rental is that used in the correct way, with the correct partner and as part of a balanced transport policy that factors-in the need to check the 'personal' aspects of drivers suitability to drive, it can actually be a very cost-effective solution. It's not a replacement for leasing, public transport, or even some private car use when necessary, but it is a mechanism that can provide flexibility, cost effectiveness, and duty of care/risk management for companies."
