Jan 2009 - Comments from Phil Moorhouse, Managing Director, Northgate Vehicle Hire, for Van Fleet World contract hire feature
"Many cash-strapped companies hit by the economic downturn and under pressure from their banks to reduce borrowings are failing to appreciate that they can free-up much needed capital and cut themselves from the shackles of owning or leasing vehicles by simply turning to the flexibility of rental.
"Whether owning or leasing vehicles, businesses have funding and contractual commitments that can leave them financially exposed, particularly if vehicle demand reduces in the event of a further business slowdown and/or job losses.
"The real alternative, therefore, for financially astute companies and fleet decision-makers is to turn to non-contract flexible rental. That is why in addition to our long-standing flexible NORFLEX rental solution we also offer a sale and rentback solution.
"Amid the economic turmoil this has triggered significant interest from businesses and has so far involved more than 1,000 vehicles across many deals with a wide range of companies, notably in the SME sector. Companies are able to convert depreciating assets into cash and benefit from having another source of working capital; reducing their exposure to falling residual values and continuing costs at a time when leasing rates are increasing. Finally, instead of worrying about fleet issues businesses can concentrate on their core business."
One company that has completed a sale and rentback with Northgate is Middlesbrough-based shopfitting contractors Full Spec Solutions. The company operates a fleet of 25 vehicles.
With an ageing owned fleet depreciating in value and the image of the vehicles reflecting poorly on the company, the firm decided sale and rentback through Northgate was the best fleet solution for future business success.
The arrangement saw the disposal of the ageing vehicles and the renting of a new, reliable fleet, which will be replaced every two years. Full Spec director Dave Thompson said: "Sale and rentback fits perfectly with the Full Spec business model.
"Image is an important factor in our continued growth and success and Northgate, through its sale and rentback service, has allowed Full Spec to dispose of ageing vehicles and rent a new fleet. This released capital locked up in the vehicles and operational expenditure."
Mr Moorhouse added: added: "Vehicle rental provides flexibility, while still leaving companies such as Full Spec in full control of their operations with a fully utilised fleet. We need to convince more organisations of those benefits and to focus them on the idea of vehicle usership."
