Reduced or even zero availability of rental vehicles is beginning to impact fleet operations. These range from maintenance and repair replacement hire to vehicles for new starters during probationary periods.
James Pestell, a director at the Association of Fleet Professionals, says that the availability of vans for spot hire has been an issue for a while, but it has now spread to cars as well.
“The problem is that many daily rental companies defleeted large numbers of vehicles during the pandemic," Pestell says, "and, because of the semiconductor shortage affecting car and van production, have found difficulty in replacing them. Even when they can get stock, they are having to pay something closer to list price, which has not historically been their business model.
“As a result, fleets have found themselves in a situation where booking rental is very difficult, prices are rising quite quickly and, even if you can get hold of a vehicle, the supplying company will often ask for it back at some point to fulfill other pre-existing bookings.
“This is happening at a time when fleets need more cars and vans from rental companies because of the vehicle shortages. It is becoming a genuine headache on a daily basis for many operators.”
Thrifty Looks to Service Business Clients But Not Leisure Customers
Martin Wilson is the managing director of Thrifty Car & Van Rental in the U.K.. He says that unlike many rental companies, Thrifty did not de-fleet during the pandemic. Nevertheless, he adds:
“The whole automotive sector has been hit with many challenges, including the pandemic, which slowed up car production, then the much-publicized semiconductor shortage and now the impact of the horrific scenes in Ukraine and beyond. Managing a fleet of vehicles has become more and more challenging, however at Thrifty we have been able to maintain a fleet size capable of servicing our loyal corporate customer base. In our efforts to protect our corporate customers, we envisage that we will not be able to service much leisure business, if any, during the peak summer 2022 period.”
Impact of Extended Running of Rental Cars
While Thrifty has been able to provide vehicles for its existing corporate customers, there has been a price increase as a result of extended vehicle cycles. Wilson adds:
“As our vehicles start to get older than we would normally expect, we see further challenges around additional costs and delays on SMR. Parts and technician time is becoming increasingly hard to obtain, meaning that more vehicles are off the road for longer. I do believe we are now at the bottom of this crisis, and we will see supply slowly return in 2023. That said, the transaction prices will far exceed pre-pandemic levels. We are in regular contact with our corporate customers, working with them to ensure they understand the challenges, so they are able to plan accordingly.”
Short-Term Car Management
While fleet managers continue to pick their way through the many issues caused by lack of rental availability, Mike Manners - the managing director of fleet management provider, CBVC Vehicle Management - offers this advice to fleets:
“While there is no immediate fix to the issue of rental availability - the underlying cause is simply too few vehicles at the moment - there are short term ways to overcome the issue.
“Our advice is not to defleet cars at the end of their term but to enter into an extension and use such vehicles as pool cars. It’s important to ensure that end of lease pool cars are correctly maintained and properly managed, which will mean additional administration for the fleet manager.
“But it does offer a way through at the moment and at least allows fleets to manage vehicle demand while the rental shortage continues.”
Nevertheless, while good advice, it still doesn’t meet the immediate needs of many fleet managers. James Pestell once more:
“One of the main issues is around sudden breakdown and van engineers who need emergency hires. Many rental firms are not keen on providing very short term hire because of low stock, but this is something which is vital for many businesses to remain operational, otherwise large losses are incurred with drivers off-road. And where we are seeing hires being fulfilled, the rental companies have raised their rates significantly.”
It all means that fleet managers have to play a new rulebook to ensure their fleets stay operational, balancing risk management against operational requirements. Because the lack of rental vehicles looks set to continue until at least Q1 2023.