Car rental costs might be rising, says Beverley Fearis, but with some skillful manoeuvring, it's possible to minimise the worst
There was a hotelier, an airline and a car rental firm in a recession. The hotelier, unable to knock down its bricks and mortar, had to cut its rates to fill its rooms. The airline was able to cut its capacity slightly, but still had to offer seats at a reasonable price to keep its business in the air. The car rental firm, meanwhile, simply cut back the size of its fleet. After all, the price of buying new cars had increased considerably, too, so it just wasn't viable to have as many cars. As a result, it managed to keep its rates the same, and on some occasions, even put prices up.
Unfortunately, for corporate travel buyers looking to cut car rental costs, this is no joke. While they might now find themselves in a stronger position when negotiating with other suppliers in the current economic climate, when it comes to renting cars, they will have to look beyond discounted prices to keep costs down.
Those who haven't already might find it's time to change the way they buy car rental. Here, we explore some of the ways corporates can get more out of their car rental deals.
The long game
In an uncertain climate, the natural inclination is to opt for short-term rentals, but the best prices will be achieved if you can make longer-term commitments. Avis sales director Anthony Ainsworth says using a pool rental car can deliver a 25-30 per cent cost saving to a business: "There are a lot of organisations requiring one-day rentals, but this is not cost effective for them and is unappealing to the rental industry due to the downtime on vehicles and handling costs. In the past, we have introduced a pool car option to a client instead."
Fabrice Quinquenel, vice president of sales Europe for Hertz , said the company is also aggressively promoting monthly pool car solutions to its corporate customers.
"If we are servicing one of your offices where you have 60 people travelling, the cost is high because you are paying us on a daily basis for delivering and pick-up, and because we have to have 60 cars at your disposal. But by renting 10 cars for the whole month, they will be available 24/7, there is no pick-up fee, and no other extra costs. The big winners in this environment are going to be those corporates who commit on volumes."
Fully automatic
"Forget paper - we are in an age now when every aspect of the process can and should be managed online," says Lorraine Farnon, UK sales director Europcar UK Group. "If a rental company isn't exploiting these technologies it isn't being efficient in its own business and is, therefore, unlikely to be able to offer any worthwhile cost-savings."
She says millions of invoices are issued by car rental companies annually, wasting resources from paper to postage. "The process of e-billing means that invoices may be queried and corrected online with duplicate invoices produced and management data provided straight to the customer's desktop," she says.
Neil McCrossan, CEO of brokers Nexus Vehicle Rental, suggests some corporates might be put off automated systems because traditionally the rental industry hasn't had a good reputation for its billing. "There are many variables - fuel, insurance - and people raise a lot of queries. But trusting in an electronic system can save a load of time and trouble," he says. Hertz believes companies should also make better use of corporate cards, such as those offered by AirPlus and American Express. "These bring a lot of benefits to both sides," says Quinquenel.
Getting it together
Consolidate all of your car rental spend with one supplier, advises Nexus's Neil McCrossan. "Don't let the drivers or HR do their own thing. If you've got a chunk of business, give it all to one supplier," he says. "In the current climate, you need to be a big hitter, so take a little bit of time and thought beforehand and strike supplier deals for all your car rental needs."
Europcar's Lorraine Farnon says suppliers need a good understanding of the volume and profile of their business, such as what vehicles are rented, how many rentals are generated, the average length of rental and use of ancillary services, like delivery and collection.
"Give them details such as how many airport rentals you use, how many rentals take delivery and collection, and the split between home and business delivery and collection as often the charges vary, she says. "Also give them your requirements for specialist or prestige vehicles. Providing this level of detail will help ensure that the tenders you receive are realistic, deliverable and sustainable."
Size matters
When fleets are being trimmed, it's more vital than ever to work with a supplier that can supply your rental needs, whatever your size.
"Talk to the rental companies to find out where you are in terms of importance, and ask for guarantees that cars will be available when you want them," says Neil McCrossan.
He believes smaller companies should not be afraid of switching to automated billing and payment systems. "There is no reason a small company can't use the same process as the big players," he says. "Don't spend time and money checking over a pile of paper invoices to spot you've been overcharged by £20 only to find out that you haven't. There are booking platforms and portals out there that are very efficient." He says although some suppliers will only give access to their portals to their larger customers, some will also make them available to smaller companies. "Although you might not get the cars at the same price as the big boys, you will get the same service level guarantees."
Some suppliers have introduced initiatives specifically aimed at small and medium enterprises (SMEs) in recognition of their particular needs. Andy Lewis, head of marketing and e-commerce for Budget Rent-a-Car, says: "We understand that in the current economic climate, there is a particular need to support SMEs which may be more vulnerable to the downturn. To this end, Budget offers a free, 'no contract' loyalty programme called Business Connections." This offers members a five per cent discount on every rental made, alongside regular offers and free upgrade vouchers.
Europcar's recently re-launched Business Advantage Card, meanwhile, offers 15 per cent discounts on car, van and prestige rental, one free additional driver and flexible deals with no tie-in or credit check.
Educate your drivers
Making your driving employees understand the extra costs of rental can help keep spending down. According to Avis, many corporates are losing out because their drivers are not paying congestion charges, parking and speeding fines, or refueling their cars. In all these cases, car rental companies have to pass administration costs on to the client.
"Damage charging is also another key problem area, with around four per cent of cars returned with some form of damage, at an average cost of around £350," explains Avis's Anthony Ainsworth. "Drivers have to be more accountable for their rental vehicles."
He says it is also worth reminding drivers that a rental period is 24 hours, and that out-of-office-hours deliveries can also incur additional costs.