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DAILY RENTAL: Rental sites: a necessary evil?

Date: 06 September 2012

Does the future of the rental industry lie in growth through physical presence or can it remove expensive sites and continue successfully? Jack Carfrae gets the inside line on the next step for rental from the UK's captains of industry

The old adage about how much it costs to rent a car compared to the price of hiring a suit rings true in a lot of cases. As businesses seek to shed their overheads, the case for hiring a car is easy to make in that fleet managers know what they've got, when they've got it and there's no long-term obligation or outright purchase cost.

If you can make the price and the practicalities stack up then chances are you're already using rental, but like any other British industry, rental firms have to keep on their toes to stay in business, and at a time when the majority of sectors are decreasing their physical operations and favouring cost-saving measures such as working from home or operating online, some of the major rental firms have taken the opposite approach, expanding their physical presence rather than contracting it.

Having sites as close to paying customers as possible obviously has its benefits, but there is a big cost attached. Enterprise is convinced it's worth paying out for. Director of business development Rob Ingram told BusinessCar: "When things were bad in 2008 and 2009 you did see a lot more rental sites in the UK closing, but we were expanding. The closer you get to the customers, the better."

Ingram maintains that the habits of corporate customers dictate the need for as local a site as possible, as reservations are inherently last-minute affairs: "Most rental is much more of a short-term decision and that seems to be on the increase. With business rental, it's surprising how many reservations come through for a car that day after 4pm. There was a case when one company was interested in us trialling a pickup service after 4pm - we got a 20% take-up with that and it wouldn't work if you were far away from them."

As regards the expense of more sites, Ingram says that it is outweighed by the savings in deliveries and the subsequent staffing costs required to ferry vehicles over longer distances: "Think how much we save on delivery and [delivery] employee costs. We also see an uptake in business in the local area - take Guildford and Woking for example, they're only four miles apart but previously we didn't have a site in Woking. Since we opened it up it grew rapidly because it picked up more local business. Both branches have grown because they service each other - if one doesn't have a car that a company needs then the other one can go down the road and supply it."

While Enterprise may have adopted the expansion strategy with open arms, not every rental firm is convinced that it's the way forward. John Ellis, managing director at Nexus Vehicle Rental, says that a proportion of the large firms are leaning more on small desks rather than their own full sites: "Some of [the major rental companies] have constricted in size and some of the others are working on or working out of hotels with just a desk rather than an actual, physical branch. The major players have done their work [in terms of expanding and contracting] and I wouldn't think it would get much smaller."

In response, Ingram claims that Enterprise at least, isn't going down the 'desk at a hotel route', though that's not to say that the other major rental firms aren't: "In North America you see a lot of those kiosks but we're not trying to do that. We want employee reactions to be streamlined and people there to be able to sort out problems."

Ken McCall, managing director at Europcar UK, agrees with Enterprise's theory that having a large network is worthwhile when it comes to corporate customers, but he's also of the opinion that getting delivery drivers to and from collection and drop-off points more efficiently is a worthwhile cause: "[We're working with] AutoClenz who use electric bikes to get delivery and collection agents back to the depot after dropping off a vehicle. We're already doing this in London. this will help our business clients during the Olympics when congestion is expected to be bad. But we also want to extend it to other parts of the country in response to customer demand."

Ollie Woodmansee, sales director at Avis, says that while a delivery and collection service is popular with business customers, most of them still want to be able to physically visit a site to make a booking: "While we have a successful product, Avis Delivers, that delivers and collects vehicles, the majority prefer the ability to walk into a branch to rent a car. To meet this demand, it's vital [to have] a strong network, with rental stations in close proximity to our customers."

Moving along

In terms of the technology side of the business, the major rental firms have seen success by rolling out online, mobile and app booking systems, which is something that is expected to have increasing impact on the marketplace.

Ingram says that Enterprise's online reservation system has become popular with corporate users and hinted that an app from the company could be on the way: "The online booking tool has continued to grow, especially since it is dedicated to business customers. We're considering whether handheld apps will benefit customers and whether that will make it faster for you. I think we'll likely see that."

Europcar is already on the case with an app that allows international bookings along with a system called eReady, which allows corporate customers to activate rental agreement contracts online. "Carhirebooker allows our customers to log on to manage their car hire needs. They can arrange hire for a future date, extend the period of their current hire or request that a vehicle be collected," says McCall.

In addition to apps, Avis has rolled out a system for business customers to manage rentals while they are happening, as Woodmansee explains: "For all of our corporate clients we have developed personalised B2B portals, which provide access to account information, real-time information on booking data, fuel consumption and mileage."

In contrast the industry's penchant for mobile technology, Ellis sees more worth in investing in and upgrading his company's core software structures than rolling out apps and mobile technologies, which he describes as "more for retail than the corporate market" and "a bit gimmicky".

"Many of the major firms have their IT structure based overseas. The basis of a lot of our contract wins is IT development. Our system is designed by us and works from a commercial and an operational perspective.

"Apps can be restrictive. PDA tech and telematics - as it becomes cheaper and more sensible to operate - will become worthwhile. However, this has been said for some time and it's still not on the short-term horizon."