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Rental/leasing mergers loom amid 'disastrous' RVs

Date: 28 October 2008   |   Author: Hugh Hunston

Keith Hawes

The business car rental and contract hire sectors could face further consolidation against a background of major write-downs and provisions for "disastrous" RVs, according to Keith Hawes, Renault's fleet director.

He forecast that manufacturers would increase prices or reduce discounts to the fleet sector and there will be an accelerated withdrawal from "expensive loss making, short churn business".

Hawes said: "By judgement or otherwise we [Renault] are in a reasonably good position with very low used car stock at the end of this year. We reduced annual daily rental volumes from 25,000 to 8000 units over the past two years.

He added: "RVs have gone to the floor, which means that there will be some manufacturers stuffed with used cars. If you are losing a couple of thousand pounds a car it is big bucks. Most rental companies have deferred costs to protect themselves.

"Manufacturers will either increase prices or cut discounts, which has a knock-on effect on the rental sector as they pass prices down the line, and maybe we will see some consolidation in the market."

Contract hire firms, claimed Renault's fleet veteran, are concerned with write-downs, particularly on 4x4s and "some are making big provisions".

Renault has not been "consciously clever" in anticipating the credit crunch and RV decline said Hawes, but its products in general and Laguna in particular, with stabilised RVs, had been cushioned by resisting "short-churn high-cost business".

Hawes admitted it was not easy to fall from number 32 to 43 in the latest BusinessCar Power List off the back of Renault's fleet share declining from third position two years ago to a current seventh, almost 25% down year-to-date and just ahead of Toyota.

Hawes said: "I hope everyone clears their cupboards at the beginning of next year and does business to make money and not to move volume. One major van rental company recently cancelled 3000 units with a single manufacturer. You have to distress the market to de-stock, which impacts on everyone else."