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Subscription economy yet to reach fleet industry

SubscriptionUK businesses continue to be wedded to outdated asset ownership models, and are therefore missing out on the benefits of the subscription economy according to a research study commissioned by Northgate Vehicle Hire. The findings show that 81% of business owners buy their vans rather than rent or lease them, with 48% of respondents revealing that they aren’t comfortable with not owning their assets. This is despite the growth of the subscription economy in almost every other sector, from software, TV and music to IT infrastructure.

Businesses of all sizes are under pressure to be agile and react quickly in today’s volatile economic and political climate. Yet, their fleet often fails to reflect the current reality as it continues to be a significant burden on resources. Businesses are faced with significant financial outlay at the point of purchase, but the costs do not stop there. When making a decision about their vehicles, business owners may be initially enticed by the van price, however, they are not considering the total cost of ownership – including insurance, maintenance and servicing.

This sentiment resonates throughout the survey with respondents’ commenting “I’m presuming it would be more expensive to hire the vehicle than to buy it”, whilst almost a fifth (18%) of respondents admitting that they do not understand the pricing. This causes a greater barrier to businesses hiring their vehicles, as there is a worry around additional costs being incurred if the van gets damaged. However, products on the vehicle rental market, such as Northgate’s VanHire+, already factor this in and provide damage allowance as part of its offering.

Tim Bailey, Fleet Director at Northgate Vehicle Hire says “There is clearly a lot more that we all can do to educate businesses about the benefits of vehicle hire. Whether it is purely financial, or by removing the administrative burden, organisations can release valuable resources by opting for vehicle hire. At times of great political and economic instability, this model of van ownership gives businesses the much-needed flexibility and allows them to focus on what’s at the heart of their business.”

2 Comments

  1. I run a body shop and I see these leased vans all the time, after the three years is up the van has to go back and unless its immaculate the owner will get charged a fortune,ask any builder or tradesman if they have had a van for three years it’s going to get the odd bang or two but the lease company’s expect it to be like new still.

  2. As a former client of Northgate we disposed of our owned fleet to renew with them on a hire basis with new trucks and vans. This seemed workable and cost effective at first but we were soon hit with punitive charges for repairs, servicing and maintenance. On top of the hire charges, this made this a very expensive method of running a fleet. Northgate were unapologetic and we were only too glad to get away from them .

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