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The last three to four tumultuous years have seen a multitude of supply chain shortages and disruption challenging the motor industry. Although these issues are easing and we are starting to see light at the end of the tunnel, the knock-on effect for the daily rental sector has been severe, forcing rental providers to compete with the retail and leasing sectors for the few vehicles that are available as they struggle to re-stock their fleets. With access to new vehicles restricted, turnover has slowed and in turn, rental fleets are aging, presenting a list of challenges to rental providers.
The pain doesn't end there, however, it is felt by fleet operators as they look to find solutions to manage their own fleet availability as well as satisfy the requirements of their drivers. So how are industry challenges still impacting the short-term rental market?
It goes without saying that as vehicles age they require more maintenance and incur higher maintenance costs. With the entire short-term rental fleet aging, the increased costs of servicing, maintenance and repair can be significant. One important factor is the current MOT system - many rental companies are keeping vehicles for over three years, meaning they need to factor in the cost and downtime of the annual MOT. The shortage of both parts and staff as well as global inflation, is compounding the challenges, with unit costs and labour rates increasing dramatically.
The increased age of vehicles, as well as precautions required in a world of Covid-19, means more time is needed to fully prepare vehicles before they go out on a new rental. Deeper cleans are still expected by many customers, with the more fastidious suppliers conducting full sanitisation of ventilation systems which can take several hours for just one vehicle.
Meanwhile, daily rental providers have to remain agile with their rental offerings to remain profitable. One day and one-way hires are limited with retail daily rental providers having to increase the minimum-term for rentals and bring down the maximum rental term to increase availability for the most lucrative, high-volume segment of their businesses. Some businesses have introduced a taxi-based service to help bridge the gap in services left by the withdrawal of daily hire.
Companies have become accustomed to a wide range of car and van rental options each with low mileage and in new or almost new condition. However, the recent changes in the industry mean rental vehicles are typically older, with higher mileage and more signs of wear and tear. Some rental providers have seen the age of the rental fleet increase which has led to a relaxation on the stringent policy of immediate repairs for even minor cosmetic damage - they simply cannot afford to have vehicles off road for days at a time while minor cosmetic repairs are carried out. Customer feedback has shown that drivers would prefer to have access to an older vehicle than no vehicle, but the
ingrained customer expectation of a wide range of options and vehicles in perfect condition is hard to shake.
Without a doubt, fleet operators are having to shift expectations and make short and long-term changes to meet the challenges and manage operational expectations due to the challenges in the daily rental sector.
Looking at day-to-day operations, the impact of the lack of short-term rental is huge. Obviously prices continue to rise and even when fleet managers can get hold of a short-term rental, that rental provider may require the vehicle back sooner than hoped to fulfil a more lucrative booking. Meanwhile fleet managers find themselves having to delay servicing and repairs on their own fleet due to lack of a relief vehicle and needing to handle the risk implications this brings. Also, the easy option of a daily rental to cover an unexpected breakdown or accident is hard to come by. Obtaining temporary vehicles for new staff members while they await their own fleet car is also a struggle.
Unfortunately, the persistent 'domino-effect' of issues the lack of vehicles is bringing does not look set to end soon. So what's to be done?
While there is no quick fix, many fleet managers are coping admirably, with a judicious balancing act between risk management and operational needs. Reviewing current fleet availability and the profile of the fleet is helping many. Underutilised vehicles can be re-purposed to act as replacements when operational vehicles are off road. Also, some fleet managers are keeping hold of vehicles they might normally defleet, so they can be used as pool vehicles instead of relying on the short-term rental market.
As fleet management continues to navigate its way through these issues one silver lining is that the relationship between the fleet management role and the rest of the board is more important than ever. The critical function fleet provides in the day-to-day running of organisations is being acknowledged and fleet managers work hard in a challenging market to make things work this increased recognition and improved relationship is a big positive to come out of a turbulent time.
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