Which rental road to take
December 1st 2009

Cleaning companies are no longer willing to commit to long term vehicle deals.Today, choice and flexibility are imperative in order to keep rental relevant.TLS Vehicle Rental and CFC Solutions mull over the market

For many years, when it came to acquiring vans, cleaning companies usually faced a simple choice. For their day-to-day fleet, they would buy or lease vehicles, usually using the industry standard – three years and 60,000 mile model – while if they needed a van quickly and for a short time, they rented at a daily or weekly rate.

However, the recession has started to blur these lines as many cleaning companies look for more flexible solutions.With the economic situation still far from stable, they are wary of taking of signing up to a long term lease or making the capital expenditure of buying a new van. Instead,medium term rental products are filling this gap.

"During the recession,we have seen a fall off in traditional daily rental in line with overall reduced activity throughout the economy and this has been reflected in our experience in the cleaning sector," explains Simon Cook, sales director of TLS Vehicle Rental."However, the slack has largely been taken up with flexible rental products such as our own Advantage, which is designed for rentals running into months or years."

Flexibility is key Cook says that during the recession, with businesses finding it difficult to forecast their van and truck needs, products such as Advantage allow companies a much higher degree of flexibility than other acquisition methods such as buying or leasing.

"More than anything as the recession continues, companies remain worried about cash flow," states Cook.

"They know that poor cash flow kills most companies during tough economic times and so are wary of any long term commitment.

"What flexible rental allows businesses to do is take on the van or truck that they need without any of the ongoing obligations of buying or leasing.

"The vehicle essentially becomes part of their fleet but the moment the need for it ends, they can hand it back without penalty. For many businesses, that is a proposition that makes a lot of sense."

No longer long term Neville Briggs of CFC Solutions, a market leader in fleet software that supplies several major cleaning companies, agreed and said that there is an emerging trend in vehicle management that the company has tagged 'flexi-fleet'.

"The fleet thinking of the last decade has largely been based on a one-size fits all approach, with the majority of fleets buying or leasing vans on a three year cycle," explains Briggs."What is becoming apparent when we look at our 2,000 strong customer base is that this approach is no longer really working for many fleets.

"A large number of companies have lost the appetite for a long term leasing commitment and are instead looking for medium term solutions." Briggs added that flexi-fleet thinking was characterised by fleet policies that were more closely allied to the particular needs of each company and were more proactive in the short and medium term than traditional fleet management thinking.

"The recession has really prompted companies in the cleaning sector and elsewhere to go back to basics and ask themselves exactly what it is they want from their fleet," says Briggs."When do they really need vans? What is the most cost effective way of getting hold of them? When are the periods of peak demand? "For many companies, the outcome is that they need a more flexible approach to fleet provision than in the past and medium term rental or leasing could be one of the answers to the questions that they are asking."

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