Like most sectors of the Motor Industry in Ireland, the commercial vehicle rental sector in Ireland has seen a sea-change in activity over the last couple of years: some companies have gracefully bowed out, others not so gracefully but John Murphy notes another very interesting development.
Since the beginning of the recession the natural instinct of business owners has been to pare back on spending and get longer out of the various resources available to them. The biggest resource in this business is the vehicles themselves, so you would expect during these times we would keep the vans and trucks longer on fleet than in more buoyant times.
This has however not proved to be the case. When analysing the data of the last 2500 hires that we provided in 2011 an interesting fact has come to light and this is simply just how much driving the average Irish person is putting up on rental vans. To crunch the data into something usable, I eliminated all hires over 1 day from the sample and this left us with 1670 1 day hires to examine. The average mileage travelled over this sample was 392km per rental. To put this in perspective I went back to 2005 and took the first 2500 hires and noticed that only 1240 were one day contracts. Of this sample the average mileage was 215km per hire.
This information was interesting for me on two levels. Firstly the average van hire duration has declined significantly between 2005 and 2011 and the distance travelled has increased by well over 50% per rental. The effect of this on the industry has been quite profound, more modern, fuel efficient vehicles are necessary for this type of work and people are prepared to push hire vehicles harder in an attempt to reduce the perceived cost of hire.
Speaking to Insurance company representatives in Ireland, this has resulted in far higher insurance premiums on short term truck rental contracts. The increase in premiums has started to cause an increase in daily hire contract insurance costs.
The demands that are currently being placed on rental vans have resulted in a shorter vehicle lifespan. This means that the rental company must provide new vans at a faster rate than before. This is where those excess mileage charges come from to offset the cost of premature vehicle replacement.