Car rental
BUYER’S VIEW
and negotiating deals proves to be a thorny – and polarising – issue. “Contracts can be a challenge,” says Portman’s Dick. “A car rental company might tell you they have given you the best rate and no one else has got it, so we encourage clients to share with us details of the offer they have, and we benchmark that against other clients’, to make sure they get a comparable deal.” Emma de Lange is unimpressed with suppliers’ intransigence. “There is not a large choice, and if you want to give business to a global vendor, it’s like getting blood out of a stone,” she says. “When the time comes for them to come back with rates or issues regarding service delivery, I don’t find them very responsive. Maybe our spend didn’t appeal to them.” She adds: “Prices are going up now and that is not open to negotiation – they know there is not a lot of competition. In my region, our biggest spend is in South Africa, and trying to get better rates is tough, not just in lower
edged sword. “It keeps cost down and we don’t have to wait for delivery, but it makes it too easy to rent cars.” The organisation spends Ð35 million on car rental, much of which is in Europe, but consistency of supply and pricing are sorely lacking. “It would be helpful if there were more suppliers, as competition may not be hot enough, and there have been a lot of mergers,” says the manufacturer.
THINKING LOCALLY Most of the major players claim to be able to offer a global service, largely through partnerships. “Thanks to strong relationships with our global supplier partners, we are able to negotiate regional and global deals on behalf of our larger customers. However, we are best represented in the US and Europe, so we can offer particularly competitive market rates in those areas,” says Hitachi’s Whittam. But when Alcatel-Lucent was looking for global coverage, Mike
“There is not a large choice, and if you want to give business to a global vendor, it’s like getting blood out of a stone”
prices, but in that the value is not there in either mileage or add-ons, like GPS.” And worse: “Contracts are like the old telephone directories,” she says. “They are lengthy and consist of pages and pages of nothing. I feel sorry for our legal team, who has to review them.”
An aerospace manufacturer Buying 98
Business Travel spoke to mitigates rising costs through negotiation and requests for proposal (RFP), and the organisation’s travel manager monitors usage. “We follow up on some departments that might ask us about long-term rental: leasing might save money, particularly on medium- to long-term hires,” he says. The company’s volume of car rental use is such that it has a supplier location on many of its sites, but this is a double-
Butcher found “only two could handle that”, and they were Avis and Hertz. Thrifty offers “significant coverage” in the UK with 94 branches. “Sometimes there is more strength in a country-by-country offering because a region that is expensive to supply would increase the rates overall,” says Gallagher. In fact, density of local coverage
is a salient matter. Portman’s Dick says: “A driver may have problems en route and will need a good local network in the country they are operating in.” Enterprise has over 370 branches in the UK – 24 at airports – while Europcar has increased the number of its locations to more than 250 in the
RISING COSTS
Buying Business Travel spoke to a travel and fleet manager for one of the major banks, who questions the business model of the car rental companies
“I THINK COSTS are going to increase as most of the core components of rental are going up. Car rental is unique in the way that it works, in that the second-hand value of the car dictates the companies’ profit and, therefore, pricing. It can sometimes make prices lower, but I think that has gone on too long. Increasing car costs and a second- hand car market that can’t go much higher mean that costs are going to rise. “The best way to mitigate this is to look at those
costs that you can influence, such as delivery and collection, out-of-hours deliveries/collections, damage, vehicle rental groups and so on. “But car rental companies are their own worst enemies in one way: car rental costs, in reality, are far too low. As an example, a dinner suit costs about £150 to buy and £50 to rent, whereas a Ford Focus costs roughly £16,000, but I can rent one for £42 and just pay for fuel on top – where’s the sense in that?”
UK. “We have also introduced pop-up stations to cater for travellers on an ad-hoc basis and have created super- sites in five major UK cities, to support smaller rental stations should demand increase,” says managing director of Europcar UK Group Ken McCall. And Thrifty adds staff and fleet at servicing locations to meet needs; however, Gallagher says: “Depending on the number of hires required, it may be more feasible to consider opening a new location in an area, which we will do on a case by case basis.We also offer a ‘no turndown’ service by utilising local rental companies, if this suits the end user.” There may be less competition
in the car rental sector as the market consolidates, but some of the major players are changing up a gear to meet customer demand in an apt and innovative way. After the buyers’ requirement for fair prices, dedicated service will go a long way to retain customers. ■
MARCH/APRIL 2014
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