Vehicle Hire Market Challenges

As we enter a new calendar year, The CHO looks at the challenges facing the rental industry and what they may mean for the credit hire sector.

While traffic volumes increased during 2021 compared with the previous year, they are yet to return to ‘pre-pandemic’ levels. Levels will continue to fluctuate for a number of reasons, including as the public responds to the Omicron variant and government guidance on home working. In line with broader supply shortages, due to Brexit and the pandemic, members are also seeing challenges accessing parts and a significant increase in lead times for obtaining new vehicles.

Members of the CHO have also reported seeing an increase in hire rates across the market to sit alongside the problems faced by both the public and credit hire companies in getting hold of appropriate vehicles.

The CHO spoke to Ron Santiago, managing director of CHO associate member Europcar Mobility Group UK, to gain his perspective on the challenges facing the hire industry, including some of the reasons behind these and how they are working to address them for their partners.

“2021 was unquestionably a difficult year. From the global shortage in semiconductors, which had a significant impact on all parts of the automotive sector, to the changes in the make-up of the UK workforce which impacted pretty much every part of the economy.

“Very quickly at Europcar Mobility Group UK, we saw how the semi-conductor shortages affected every part of the supply chain. From new vehicle manufacture to parts for vehicle repairs, the picture became quite challenging quite quickly. It didn’t take long for lead times on accident vehicle repairs to extend considerably. And we were all in the same boat when it came to accessing new vehicles coming off the production line.

“However, with double the vehicles on rent in 2021 compared to 2020, we worked hard to limit disruption in the sector throughout 2021. This meant giving insurers and credit hire companies certainty of vehicle supply as well as helping manage and prepare for any cost increases exacerbated by skills shortages as well as the vehicle and parts supply issues.

“Now, as we head into 2022, much like the insurance and credit hire sectors themselves, rental providers are also facing an increasing challenge to manage increased costs.  Our goal, therefore, is to work with the sector to provide the greatest possible transparency over supply and cost for the next year.

“We are also not allowing the current challenges to dent our ambition for innovation. At the heart of that ambition is the Europcar Mobility Group global initiative to have a fully connected fleet.  It’s already at more than 80% in the UK and is delivering really important benefits for all our customers.

“Fundamentally it means we can manage our fleet more efficiently and effectively because we will always know where our vehicles are at the end of a rental for collection. And we can optimise internal processes such as fleet inventory management and vehicle maintenance so that unscheduled downtime becomes a thing of the past.

“So whilst the immediate future looks like more of the same, we know we are in good shape to support the credit hire sector in 2022 and beyond.”