Going back almost one year and the vehicle rental sector looked even bleaker than it does now. Many names disappeared from the market, either through mergers, being under the administration of loss adjusters or being wrapped up altogether.
The big fear for the industry now is that, as uncertainty about the economy continues, many large car and light vehicle rental companies are trying to buy their share of the market by leasing on a daily basis at ‘crazy prices’. Good news for the end user but sending shivers through the competition who, after suffering four years of trying every trick in the book to keep their heads above water, are having to consider profit first; this period will have probably included foregoing profit for market share at some point, in one form or another, by all of the big players but creditors will only invest for so long before wanting to see return for their dollars.
The British Vehicle Rental and Leasing Association’s chief exec John Lewis called 2010 tumultuous as it drew to a close, which was bore out by the lengths some vehicle rental organisations went through this year just to stay in business, going into 2012.
It is interesting to see how diverse the companies at the forefront of the industry have been with their strategies to survive the economic downturn of recent years.
Northgate, for example, has lost 8,000 of its 60,000 UK fleet; of the remaining 52,000 they have managed to keep 90% of those on the road, showing excellent utilisation of their rolling stock. Bob Mackenzie, Northgate chairman, confirmed they would continue with the same approach rather than try to compete at the crazy prizes on the cards for next year, citing ” hire rate improvement, efficient fleet management, further cost reductions and cash generation,” was their mid-term goal.
Hertz are wary of a price war, too, but in the same breath anticipate if they set their rate too high, other rental firms who have greater depth in the UK will take advantage. Their annual report acknowledged that, with a decreased market, their competition may well bring prices down to secure volume. Hertz, however, have worked hard on their brand recognition – priceless in such lean times.
Conversely, Enterprise Rent-a-car has increased its fleet size in the last 18 months by 25%. The privately owned company now haves a fleet of 50k+ vehicles, of which 16% are vans and has seen its recent investment justified by a 50% growth in its UK airport business over the past 12 months. Their business rental director, Rob Ingram, stands by their mission to be the best value provider, offering “the best possible service at the most competitive price.”
Perhaps taking in an overview of these strategies will help allay Leasedrive‘s Roddy Graham’s fears for 2012 that not all battles will be fought on price alone. We will wait and see.
There is some good news for industry; the BVRLA announce red tape reductions will help unnecessary hassle when it comes to commercial vehicle insurance and the need for drivers to provide proof when hiring a van; details of this move and more paperwork reduction to follow.
Author: News Desk
Is price setting a possibility in the vehicle rental sector?
Falling new vehicle sales in the UK market could have major repercussions for the rental sector in 2012 when it comes to leasing cars and light commercial vehicles, we discussed yesterday. On the surface, lower prices for car and van hire look too good to be true, but with prices so low, are you sacrificing essential cover or being stung for ancillary insurance that you do take out with the rental firms?
Following on from yesterday’s article delving into what may or may not be covered, today we look at how several of the top brass in the car and small van hire sector are interpreting the signs. Whilst everyone acknowledges that there’s a problem with rates for vehicle hire being too low, the impression as an outsider looking in is that there’s a lot of finger-pointing to apportion blame elsewhere rather than take the bull by the horns and actually do something about it. It appears no one wants to put themselves in a position to be shot at and draw the fire from those who may be the ones to pick up the gun and shoot it themselves.
Roddy Graham, from his vantage position as commercial director of Leasedrive group, believes that the bigger players in the market will continue to look for opportunities to increase their market share next year, foregoing the chance to raise the overall market price by doing so.
There are several factors affecting this judgement, elements of which are reflected across the industry.
Graham is disappointed that, on the back of vehicle manufacturers offloading unsold units at heavily discounted rates to the rental sector, those in the position to buy in that volume see the bulk acquisition as an opportunity to reduce the price to the end user, rather than make more profit.
In addition, he reveals frustration that the market is not moving as one to “collectively raise rates to more sensible levels” and that, if this process continues it will not be long “before one of the major names cries wolf as profits become significantly impacted.”
What Graham may not have full visibility to, or even willing to comprehend, is that every company within a niche has different targets, structures and cost bases. If you buy bulk at the lowest rate, your profit comes from volume. If you sell on the quality of your brand name, that dictates the price, not the cost of the product. Surely simple business economics?
What is more of a concern for the van driver next year, if the statement is to be taken at face value, is the implication that a whole market price could be set if it wasn’t for the fear factor alone that there may be one consortium member who would jump ship and spoil the party for everyone else. This could alert the OFT; as well as investigating the recent rises in domestic and commercial vehicle insurance, they may suddenly have a blip appear on their radar from the vehicle rental sector when they weren’t even aware there was a ship on the horizon.
More views from the industry leaders in the next article.
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.
A man, a van, a winter plan
Last year, the images of tailbacks on the motorway, orange arc-sodium reflecting off pelting snow, set against the backdrop of pitch night, pairs of red tailights intermittently broken with flashing amber hazards, heading into the distance as far as the blizzard would allow start to ring true once more as we approach the shortest day.
In those circumstances, it doesn’t matter how good your car or van insurance policy is, when the snow has come from nowhere and traffic is at a standstill miles behind and in front of you, you’re going nowhere. All you can do is phone your partner, let them know you’ll be spending the night on whichever of the three lanes of the motorway you’re marooned on, get the survival kit out of the back of the van and settle down for the night.
It is safe to say, UK winters can be unpredictable. You can set out to work in bright blue skies on a cool December morning; by the time you’re heading home, you can be trudging through 8 to 12 inches of snow. Other than ensure you van insurance policy incorporates breakdown cover, providing you can be reached, the next best thing you can do is get yourself prepared with a winter survival pack.
There are many on the market, but one of the most comprehensive is the Winter Car Kit, available in intermediate and deluxe versions, available from survivalbox.com. It is called the car kit but is aimed at the safety of the driver in inclement conditions, not the type of vehicle driven.
If you do get stuck on the motorway this winter, this could be one of the best £100 you’ll consider you’ve ever spent. Here are the basic components in the intermediate pack (Deluxe extras in brackets), other than your basic food stuffs, blanket and a bottle of water, which you should be carrying as a matter of course:
- a choice or red, yellow or green ‘chemical’ light stick which will remain illuminated for up to 12 hours and an LED torch
- Hi-vis sleeveless jacket with reflective strip
- Foil blanket and sleeping bag (extra sleeping bag in Deluxe pack)
- 4 x 125ml long-life water & hi-energy food (2 x self-heating meals in Deluxe pack)
- Ice scraper (folding spade in Deluxe pack)
- Pack of card and heater pack
- Wind- and waterproof matches
- Extremely voluminous whistle (wind-up radio in Deluxe pack)
- First aid kit (multi-function pocket knife in Deluxe edition)
The inclusion of this kit, like taking the time and effort to pay to have your logo on the side of your van, may not physically improve your driving skills but will show your broker that you are serious about your role as a professional driver when you come to look for cheap van insurance next time around.
Women on top in haulage industry
It may come as a surprise to some that the Department of Transport is headed up by a female, in Justine Greening. However, when you look at the latest employment figures released by the Freight Logistics Industry Image Group for the haulage and transport sector, it shouldn’t come as that much of a shock, at all.
Right throughout the sector women are holding positions all along the chain. From the sharp end as drivers and engineers to internal positions as transport controllers, office workers and managers, the fairer sex are now employed in a quarter of all posts.
The prominence has caused many insurance companies to reconsider their commercial vehicle policy when it comes to offering cheap van insurance for women. It has been highly publicised in recent times how much safer women drivers are domestically due to the shorter distances they tend to drive compared to their male counterparts. This is one of the main contributory factors to lower car insurance premiums but, as the playing field is levelled when it comes to driving commercially as a delivery run will not change its destination just because it is a woman driving, the gap may not be so dramatic. That difference, it is worth noting, may be negated altogether if the woman in question is driving for a large corporation and her sexuality is swallowed up as part of a larger fleet insurance policy.
This proportion of female employees has grown rapidly in recent times in an industry that has historically been the domain of the male. Of the 2.2 million workers now employed in the UK in the industry, women hold many of the high-ranked posts overlooking operations and the regulations of the standards set within the sector.
F.L.I.I. Group chairman Geoff Dossetter recently acknowledged the essential contribution women have made over the years, often as the unsung heroes of the industry. On the back of yet another report, this one highlighting how much more understanding female bosses can be when it comes to appreciating the work/life balance, Geoff went on to add, “It will be very interesting to see what sort of impact this hugely important and influential group of managers and administrators will have on the future operation and performance of logistics.”
If they have the same success in management as their compatriats in the domestic market have been in bringing down the cost of car insurance, it could be good news for commercial drivers everywhere.
Is the school run in the van legal?
Mammy was once told that, for one of her smiles, the ‘coloured’ crooner would walk a million miles. Although the Black and White Minstrels have long since been outlawed as politically incorrect, it seems that the sentiment remains, only this time Mammy is returning the favour.
Results from a recent survey by Kwik Fit, the tyre fitters and auto-repair specialists, have recorded that the average parents rack up an impressive 491 miles on UK roads ferrying their offspring to and from various sporting activities in which they are involved as part of the school’s extra curricular program. For owners of domestic vehicles, such as your family saloon or 4×4, other than the expense of the fuel and additional wear on the tyres, there is little other issue. Indeed, it is all the more to sport the ‘Mum’s taxi’ badge in the rear windscreen.
However, it is a very different story for van and commercial vehicle owners who think nothing of picking up their son, and possibly a couple of his friends in the back if it is a larger van, and running them to the soccer game after school and then returning to pick them up again after they’ve finished their shift.
Van insurance policies, unlike standard car insurance, can be very specific in relation to what the vehicle is permitted to do under its cover policy. Vans, after all, are classed as a work vehicle. If you are working for a small-medium enterprise and have a very understanding boss, it may well be that transporting third party passengers is included in the policy. However, if you are a sole trader or work for a large organisation, where fleet tracking systems monitor all vehicle movements, the likelihood is that no such allowance has been incorporated within the van insurance premium.
In a previous article here on cheapvaninsurance.co.uk, we highlighted many of the uses that van drivers use their vehicles for that are not work-related and ferrying children was one of the more common admissions. It does make you wonder how many parents are running the risk of losing more than their jobs if they are involved in an incident whilst doing their children or the school a ‘favour’. For the moms and dads out there who feel obliged to do this or, as is often the case, once you’ve done it the first time, it is suddenly expected of you to do it time and again, using the ‘van insurance’ clause is one hell of a get out for you.
With the onset of winter, with patrols more wary than ever of suspicious driving activity, perhaps now is as good a time as any to ditch the school run if you are a commercial vehicle driver or, at the very least, try to find a cheap van insurance policy, even if it is just 28-day cover, to tide you over the festive season and help ensure it is a merry Christmas, after all.
Evaluate and reciprocate – van insurance knowhow
It has been brought to my attention that the S.I.L.V.E.R. series of articles was never completed (thanks Steve in Dorset). This was a short collection of articles highlighting small, step-by-step amendments you can add to your vehicle or incorporate in your daily running of your business to significantly help reduce the cost of your van insurance premium.
A range of adaptations that, over time, return a greater return on investment than the actual outlay itself has got to be the way forward for any business. Especially with the still uncertain future of the UK economy, every penny we can put back towards our bottom line has got to be a spankingly good idea.
It’s been a while, so here’s a quick recap:
S – steering wheel lock. For its minimal outlay, as well as being an effective method of protecting your van in your absence, just the sight of one of these contraptions can be a deterent to any casual or opportunist car thief.
I – immobiliser. Does what it says on the tin. Fit one of these, and your van is going nowhere. From a basic twist & lock to a comprehensive installation that even allows you to leave the engine running, you can nip out to make a quick delivery safe in the knowledge that, unless it’s you, your commercial vehicle will be there when you get back.
L – lock away your van securely. It sounds obvious but, the more secure your lock-up, the more chance you stand of attaining cheap van insurance.
V – Vehicle tracking. If you fit a tracker to your van, it can be traced anywhere in the UK. It may not stop someone having it away with your motor if you’ve ignored the above three steps, but van insurance providers will look favourably on you, as the likelihood of getting it back once stolen is greatly improved.
So, lastly we have the E & R, evaluation and reciprocation, which really do go hand in hand with all of the above measures to deliver you and your business the cheapest possible van insurance deal you’ll find.
Evaluation: van insurers are, after all, in the business to make money. Don’t let them get their bonus out of you. There are many ancillary products which you can add to the basic policy – disqualify any that do not apply to your business when you are constructing your van insurance quote. It is important that you know exactly what you do need before you start to compile your renewal policy; there is a fully comprehensive, six step guide on our site, if you need clarification.
Reciprocation: van insurers will work with you to reduce your premium if you can prove that you are doing everything possible to tick all of their boxes. As well as the steps outlined above, check out why we think van insurance matters even at the conception stage of your business. Furthermore, how once your business grows, you can use this to great effect to drive not only your fleet insurance down, but your field sales and privately owned vehicles, too.
We strive to bring you the best guides and most up to date news; drop us a line with any topic you would like us to cover or how we can improve our service, in general; we’d love to hear from you.
Van insurance matters – think before you buy
Okay, you have done the impossible and squeezed a business loan out of your bank and those pound signs are positively twinkling at you as you stare at your online balance. In the other two windows, you have a new van that would suit your purposes, in the other, a bigger van slightly older but still within your budget. Which do you choose?
The temptation is to opt for the larger van ‘just in case’ you take on other contracts. The likelihood is, when trying to get your business off the ground, you will be concentrating so hard on developing the products within your brand, other contracts will be the last thing on your mind.
The bigger the van, the larger the van insurance policy
There are many aspects that affect the eventual total of your van insurance quote. Smaller vans are more manouverable and easier to handle and proven to be less accident prone than a larger version. Also, the more varied the scope of what you want your van insurance policy to cover, the more incremental components will be added as ancillary costs to your basic premium. Both are excellent reasons for choosing the van more suited to your business rather than go for larger capacity vehicle on the off chance of extra jobs.
The drive or do conundrum
As your business expands there will be a period where you’re caught between the devil and the deep blue sea. The orders are starting to come in, but, as well as needing processing, they also need delivering – you can’t do both.
The temptation is to hire a young gopher; the role may only be part time or purely to do the driving. However, you need to be aware that, although you may save on a youngster’s salary, the van insurance for a young driver may seriously jeopardise the economy of employing someone of that age.
Postcode penalty
Where you base your business may also have an effect on your potential to find cheap van insurance. The price for premises may be slightly higher in a well-to-do area, but it may be a worthwhile exercise running a few postcodes through the insurance comparison facility to see how different areas affect all aspects of your insurance.
Show the insurance company you care
What’s on the outside of your van can have an effect on a van insurance policy. Yes, if you are carrying precious cargo or your product is excessively high in value, that will have a bearing when retrieving a van insurance quote. But if you have taken the time to have your new van dressed with your company’s insignia and logo, the insurance broker will take you more seriously and probably discount the policy in your favour.
It is key to get into good habits at the start of your business life; anyone of these will not only get you thinking like a businessman before you start splashing your capital, but will hopefully save you hundreds of pounds in the long-run, too.
Bulk buy discounts for fleet van insurance
Despite the stuttering economy, there are companies, especially in the automotive sector, bucking the trend. The lack of confidence shown in other sectors seems to have bypassed the vehicle industry as registered van sales grow and component manufacturers struggle to keep up with line-side supply.
As automotive production ramps up, so does the requirement for continuity of supply. As ‘stopping a line’ can cost your business up to £15,000 an hour or more, you need to know you can deliver on time, every time. It is of little use having the product on your shelf if it is needed on the production line.
More vans, more investment, higher van insurance?
With the competitive nature that supplying in bulk encourages, if you are taking your business in that direction, you need to save costs in all other areas to guarantee your organisation remains profitable. One of the biggest investments is in your commercial vehicle fleet of delivery vehicles. For every single one, you need to have the relevant van insurance policy; however, you do not need individual van insurance policies, but take out ‘fleet’ insurance, instead.
Bulk discount for fleet insurance
If you are touting bulk business before your van insurance broker, you can expect them to concede a degree of their usual rigidity. What many organisations don’t realise is the power they potentially yield by having this level of bulk fleet cover to buy.
Include field sales vehicles and some private cars
To further boost your leverage, there is nothing stopping you dangling the carrot of your other vehicles, which obviously also need commercial cover. The more business you have to place, the greater the flexibility you will find within your van insurance quote. You may even be able to add the private cars or 4 x 4’s owned by the company shareholders or directors.
Other differences between singular and fleet van insurance
As a payoff, if you like, for the extra discount, your van insurer will expect a little more from your fleet. No claims, for instance, will be recalculated depending upon the number of vans you cover in one policy. Multiple vans increase the probability of one or more being involved in an accident; therefore, you will more likely have a no claims based upon a percentage of incidents involving your entire fleet.
The conditions for drivers will also be more stringent. Specific information for every named driver will have to be recorded and periodically checked, maybe as often as every six months, to maintain the duty of care entrusted by the van insurance broker on your fleet to the world at large. This will especially be the case if there are many drivers below the age of 25. This is perhaps one of the last remaining avenues for finding cheap van insurance for young drivers.
Every insurance broker operates slightly differently, something that has attracted the attentions of the OFT recently. But, just to make you aware that, if you are considering expending your fleet of commercial vehicles, do not settle for the existing rates you have for just one or two delivery vans. Even if you have no issue with your broker, it is worth putting your new insurance business-to-place into a ‘compare cheap van insurance‘ facility online and using that as a yardstick to get the best deal from your existing broker for your new, bigger business.
There is never just one for the road
Winter is, without a doubt, the most treacherous time of the year for van drivers up and down the length of the UK. If there is any time of the year that van drivers are likely to dent an impeccable van insurance policy, this side of Christmas and the New Year is it.
And we’re not just talking about sleet, snow, ice and fog – big enough threats to a no claims bonus in their own rite. No, this is something altogether more deadly than a bout of inclement wintry showers and definitely more avoidable, yet no less deadly.
Drink driving remains the scourge of UK roads and, for the businessman who relies on his wheels to carry out his job, the single most likely cause to increase costs if and when a lost license is returned. One of the standard questions on any application form when searching for online van insurance quotes is ‘do you have any prior disqualifications?‘. Whether it was a moment of madness that cost you your license or not will have no bearing on the outcome. Your first van insurance premium, when returning from a drink-drive ban, will be a headache worse than the one after you were caught behind the wheel above the legal limit.
your license, your job, your livelihood
As a domestic driver, being drunk whilst in charge of a motor vehicle can bring shame on the household and, for a while, lose you certain losses of privileges. But, other than a hefty fine, the household income may be largely unaffected. For the sole trader or the driver as part of a fleet for a larger organisation, the affect can have deeper ramifications.
Usually, the big corporation will not appreciate the slight on their reputation; even if you are offered a position elsewhere in the company, it may be on lower pay and you will always have that stigma hanging over your head.
For the self-employed commercial vehicle driver, especially if your sole trade is along the lines of a taxi driver or courier service, you may as well shut up shop and call it a day if you’re found guilty of driving under the influence.
There are many costs to consider. As well as writing off the prospect of ever finding a cheap van insurance policy again, will you be able to fund your vehicle if it is paid for through a loan? It will, in effect, become a non-productive burden on your capital, as will any road-tax, MOT or van insurance that you will have paid for, but is now useless as a tool to adding profit to your bottom line.
The message is simple. Enjoy Christmas, of course, but as soon as you reach into your pocket to buy that first drink (there will inevitably be a festive ‘one for the road’), take out your keys and leave them with someone who will not let you have them back until you are in a fit condition to get behind the wheel, again.
