Falling sales may lead to rental reductions

The domestic market for UK vehicles sales has had a knock-on effect to the rental sector, prompting fears that the economic downturn may yet see rental companies operating at costs in 2012 that will seriously jeopardise their future. On the surface, this appears good news for companies that lease their field sales cars and small delivery vans in the LCV category, but, when you dig deep into the consequences long-term, is it really?

For starters, if the price of your actual van rental, subject to status, is at rock-bottom levels are the lease-hire companies inflating the ancillary products to the main contract? Most companies will include basic third party and theft liability within the base rental price but additional insurance for van drivers who lease their commercial vehicle is usually extra.

It is commonplace, however, that other lawful conditions of van insurance are necessary to be taken out before you can pull of the lot that are not included. It is here that there is a query as to whether it is cheap van insurance or an extortionately inflated cover policy to make up for the fact that the rental price is so very low that van-rental drivers are being sold.

rental van insurance not as comprehensive as you may think

Some of the savings organisations may be making by hiring vans ad hoq are being negated by the expensive premiums for excess, personal accident, supplemental liability, and personal effects add-ons that van drivers, unless fully au fait with the conditions of insurance or lease agreement, may not even realise they are not covered for until an accident occurs, simply because they have neglected to take out these ancillaries due to price.

With so many large names remaining in the vehicle rental sector, 3,050 businesses in all according to an IBIS overview tracking the five-year trend for the sector, competition remains extremely fierce. The report batches together domestic cars and light commercial vehicles in the study and has looked at the impact of sales since the global economy started to go pear-shaped in 2008 and will bear fruition next year as the five year plot realises completion.

Their forecasts for large reductions in the early years (2008/09/10) slowing but still falling in the latter years (2011/12) looks bang on the money. As we reach the last fortnight of 2011, many of the larger rental organisations have started to sum up 2011 and, with much trepidation it has to be said, are making their predictions for 2012.

Highlights in the next article, here.

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