An uncertain economic outlook, such as the one caused by the Brexit vote, can see investments deferred or scaled back, particularly in the public sector. This has a knock-on effect for the wider industry, which often results in deferred investment in new vehicles and extended replacement cycles.
There is another option, however, which rises up the agenda at such times: short-term rental.
According to a Fleet News confidence survey carried out during the last recession, one in five fleets expected to spend more on rental during the economic uncertainty.
Danny Glynn, vice-president and general manager of Enterprise Flex-E-Rent thinks this trend will reappear and sees it as a major growth opportunity.
He says: “When there’s an uncertain economic climate, companies tend to look for more short-term, lower risk agreements that don’t swallow up capital and can be terminated or up-scaled quickly. We’re obviously conscious that there is a degree of uncertainty at the moment and believe that we have a product that’s attractive for those who want to preserve capital and reduce risk.”
Flex-E-Rent customers have the choice between short, fixed and long-term rental options. This means operators can rent one vehicle, 100 or even 1,000 with contract lengths from just one day.
Flexible rental contracts can provide operators with a fixed cost but without the commitment of traditional hire contracts – vehicles can be returned at any time without any early termination penalties.
If a business is concerned about being locked into a lengthy lease or having money tied up in vehicles if they outright purchase, flexible rental could provide the get-out-of-jail-free card if economic changes were to affect operations.
Enterprise Flex-E-Rent is in a good position to capitalise on this situation after parent company Enterprise Rent-a-Car acquired Burnt Tree in August 2014, adding 17,000 vehicles (including commercial vans, HGVs, refrigerated trucks and accessible minibuses) to its fleet, plus Burnt Tree’s proprietary fleet management technologies, its network of 20 branches and its team of 400 employees.
The integration of the two companies – which took the Flex-E-Rent fleet to 25,000 vehicles – was relatively straightforward, according to Glynn.
“Enterprise and Burnt Tree shared many values as well as a commitment to delivering exceptional customer service,” he says. “The decision to locate the joint business at Burnt Tree’s old HQ also addressed many potential concerns.
“The focus for Flex-E-Rent, as with the rest of Enterprise, is on growth, profitability, customer service and the development of our people. By merging the two companies we have targeted accelerated growth compared tohow it would be if both businesses were separate.
Burnt Tree was successful in its own right – by implementing Enterprise best practice and using its global branding, this can only provide growth.”
The acquisition is a key part of Enterprise’s larger plan to become the UK’s largest mobility solutions supplier.
Glynn says: “Enterprise as a business is all about providing flexible access to mobility, covering every type of vehicle and time period. We want to help organisations whether they need a car for an hour or a day, a van for a week or a refrigerated truck for 18 months.
“Flex-E-Rent is a vital part of that offering because so many businesses use commercial vehicles but don’t always know exactly how long they’ll need them. We want to be able to go to a business and tell it that we can handle every type of mobility it might require, even if that means bespoke equipment on a van or truck.
“Burnt Tree has unique expertise in this area of rental and has benefited from our global presence. Some of its staff have moved into Rent-a-Car and vice versa giving a real breadth of experience across Enterprise. It feels like we’ve made real progress in that area.”
According to Glynn, the business is now at a stage where it has a ‘normal working environment’ and he feels that gives it a great opportunity to innovate.
He adds: “Over the next 24 months our staff will have the opportunity to bring new ideas to life. The focus will be on developing existing technology and looking at ways to achieve better operational efficiency.”
A key area for Glynn is to find ways to improve customer interaction. “We continually review how we interact with customers and look for ways to enhance our service offering,” he says.
“Where appropriate, we will consider technological solutions, but above all Enterprise is a service driven organisation and, in our experience, exceptional customer service is best when delivered by our people.
“We also listen to our customers. If there was demand for a particular service offering that complemented our existing business we wouldn’t rule it out.”
Moving forward, Glynn plans to strengthen the network to support extra business. Flex-E-Rent currently has 20 depots spread geographically around the UK.
Each location supports rental fleets of 1,000 to 3,000 commercial vehicles, according to Glynn, and in the next two years the plan is to grow substantially with five or six additional sites and supporting staff.
Glynn believes the demand for specialist vehicles is increasing. “Our studies both prior and post-acquisition have shown there is a real opportunity in the market to provide these vehicles,” he says.
He adds that welfare units, HGVs and accessible and temperature controlled vehicles currently make up around 10% of the fleet. But more than 80% could be defined as specialist – vehicles that would not be available through normal rental suppliers.
Nonetheless, market needs are ever changing. Glynn says the light commercial vehicle (LCV) market has increased demand for smaller city-use vans more recently. However, truck demand has remained fairly static.
Enterprise invested £20 million in HGVs last year, helping to “address concerns that Enterprise was exiting the HGV category post-acquisition”, according to Glynn. “Enterprise is committed to the growth of Flex-E-Rent in all areas and investment continues in line with our objectives,” he adds.
“We have also seen an increase in demand for low-emissions vehicles and I think everyone in the industry is fully aware of the importance of this type of vehicle.
“In terms of zero-emission vehicles, they are more popular in car rental than commercial vehicle rental where the technology still doesn’t meet the needs of many operators.”
The ever-changing and often confusing subject of vehicle compliance is another area fleets could benefit from if they switch to rental, says Glynn.
He feels operators who choose to rent can stay abreast of changes such as the upcoming Euro 6 regulations without making significant investments.
“New legislation for low emissions has bought about a lot of changes for the fleet industry,” he says. “There are also considerations around safety for HGV operators, especially when travelling into London where vehicles may require additional equipment or modifications to comply.
“Added to that is uncertainty over diesel fuel taxation which could further increase costs. Fleets have to adapt and respond to these changes, but compliance often requires significant investment.
“We can simplify their operation and could save them money by ensuring they have the right vehicles for their requirements. If they need a vehicle for a short or long-term we can provide it with the assurance that it meets any regulations required.”
Glynn adds: “Our customers get access to expertise and support that they wouldn’t usually be able to get elsewhere.
“We offer a total fleet management service which some customers opt for but we also offer singular or multiple vehicle rentals to any business with varied support levels, including maintenance.
“Our expectation is to be able to say ‘yes’ to any customer request, and we manage our vehicle fleet to support that.”