February 2010 - NORTHGATE SIGNALS ECONOMIC RECOVERY WITH MULTI-MILLION POUND INVESTMENT IN 20,000 NEW VEHICLES
Northgate Vehicle Hire, Britain’s largest rental company, is expected to buy almost 20,000 new vehicles this year.
The multi-million pound investment is major evidence of the company’s financial standing and its optimism for UK economic recovery through 2010.
Northgate currently operates a fleet of more than 60,000 vehicles from around 75 locations across the UK.
The decision to replace almost a third of the fleet this year with new cars and vans - the majority of which will be Ford, Mercedes-Benz, Peugeot and Volkswagen light commercial vehicles - will bring a series of benefits to existing customers and is expected to attract new business opportunities.
The new vehicles will be powered by the very latest engine technology which means first-class MPG and low carbon dioxide emissions - both key requirements for fleet customers.
Additionally, new vehicles are more reliable and require less maintenance than older vehicles and, alongside improved fuel economy that translates into reduced operating costs for customers.
A further feature of new vehicles is that they will be fitted with the very latest safety equipment, which is crucial for fleet operators as they continually look to comply with occupational road risk management best practice.
Gareth Jones, Northgate Vehicle Hire’s UK Sales Director, said: “The majority of our direct competitors do not have the finance in place to invest in new vehicles. As a result, our decision to invest in the fleet gives Northgate a significant competitive edge over our rivals in terms of being able to respond to customer requirements.
“As well as the operational benefits of operating new vehicles, our business customers are also very conscious of purveying the ‘right’ image to their clients. Organisations like to be associated with other successful businesses and operating smart new vehicles is one way of achieving that recognition.”
Northgate’s optimism for 2010 is also fuelled by its belief that an increasing number of companies will turn to the flexibility of Norflex rather than using their own cash to buy fleet vehicles or commit to a three to five-year leasing agreement.
Mr Jones said: “Most businesses have conducted their own financial reviews and will have spoken to their lenders about borrowing levels. As a result, having cash tied up in vehicles or committing to long-term vehicle contracts as the UK emerges from recession is far from appetising.
“We believe that companies want to manage risk and retain a degree of flexibility and that all points to our Norflex service, where cars and vans can be hired or handed back without penalty according to business demand. As a result, we anticipate the demand for our services increasing through 2010 and beyond.”
The credit crunch sparked by the crisis in the banking sector in 2008 and the onset of recession impacted on all business in every sector of the global economy.
However, even in this difficult economic climate the company was able to successfully renew the majority of its bank lending agreements last year giving access to new credit facilities that enabled borrowing of up to £880 million. These facilities are being used to fund the new vehicles and make further improvements to the network.
As part of the lending conditions, Northgate also successfully completed a fully underwritten placing and rights issue, which raised £108 million after expenses.
Mr Jones added: “Investors and banks showed last year that they have confidence in Northgate. Our multi-million pound new vehicle investment this year underlines the financial standing of Northgate, our confidence in economic recovery and the fact that businesses will look to the flexibility of Norflex for their transport requirements.”
