Van Hire / Self Drive Business
Discussion
I have "a friend" who is now considering opening a small Van / lorry hire Business.
Does any one have any experience in this area.
My only experience is when ever you want to hire one at short notice they are fully booked so there must be room in the market for more companies.
Apart from the purchase of the vans, insurance costs and office/parking costs I can't think of much else that would stop it being quite a good business and fairly easy to run cheaply.
Any comments or opinions would be greatly appreciated.
Sam
Does any one have any experience in this area.
My only experience is when ever you want to hire one at short notice they are fully booked so there must be room in the market for more companies.
Apart from the purchase of the vans, insurance costs and office/parking costs I can't think of much else that would stop it being quite a good business and fairly easy to run cheaply.
Any comments or opinions would be greatly appreciated.
Sam
My friend worked for one, the big scare is the insurance of the vans, then theres collection, loads of people dont return them for days after the expiry, meanwhile, another client is waiting to pick it up...
most of the money seemed to come from insurance co's who offer replacement vehicles during repairs.
most of the money seemed to come from insurance co's who offer replacement vehicles during repairs.
If your looking to use vehicles over 3.5 tonnes GVW (Gross Vehicle Weight) basically anything bigger than a Transit van, you may well require a Standard National operators licence, and person holding a Certificate of Professional Competence (CPC), suficent funding must also be proven, this is about £3000 per vehicle. Best stick to vans really.
What I really need to know is a rough figure for insurance costs. The self Drive insurance market seems to be very small and I am having a bit of trouble getting the info.
The company plan to purchase 10 vans to start off with.
3x Transit
3x Hi-Top Transit LWB
3x Luton with Tail lift
1x Side Tipper Truck Jobby.
All high Milage and all about -10 years old. Total Value of fleet to be around 15-20K give or take a couple of grand.
If anyone has any ideas on insurance costs it would be great.
Rgds
Sam
The company plan to purchase 10 vans to start off with.
3x Transit
3x Hi-Top Transit LWB
3x Luton with Tail lift
1x Side Tipper Truck Jobby.
All high Milage and all about -10 years old. Total Value of fleet to be around 15-20K give or take a couple of grand.
If anyone has any ideas on insurance costs it would be great.
Rgds
Sam
Breadline Racing said: If your looking to use vehicles over 3.5 tonnes GVW (Gross Vehicle Weight) basically anything bigger than a Transit van, you may well require a Standard National operators licence, and person holding a Certificate of Professional Competence (CPC), suficent funding must also be proven, this is about £3000 per vehicle. Best stick to vans really.
Breadline- Thanks for the info.
Do you mean 3.5 Tonnes with or without load?
Does a Luton fall into this category?
Funding? Do you mean we have to have 3K in the bank for every Van we have? Or do you mean that is the cost of the certificate? Sorry I don't quite understand what you mean by funding.
Sam
We don't have hire fleet but we do have a fleet of similar vans for courier use, I would imagine as we are the highest risk group imaginable the costs may be broadly similar. Across the board figures should fall about the £3-4K Bracket for each van with no previous record and could go as low as 2K if it were left claimless for a period (highly unlikely!).
The 3.5 limit is a GVW ie loaded as will be the limit on all commercials ie a 7.5 tonner will weigh about 4 tonnes and carry 3.5 tonnes etc.
Hope that helps a little, there are currently only two underwriters for courier companies and I would imagine it may be the same for Hire companies.
Nick
We don't have hire fleet but we do have a fleet of similar vans for courier use, I would imagine as we are the highest risk group imaginable the costs may be broadly similar. Across the board figures should fall about the £3-4K Bracket for each van with no previous record and could go as low as 2K if it were left claimless for a period (highly unlikely!).
The 3.5 limit is a GVW ie loaded as will be the limit on all commercials ie a 7.5 tonner will weigh about 4 tonnes and carry 3.5 tonnes etc.
Hope that helps a little, there are currently only two underwriters for courier companies and I would imagine it may be the same for Hire companies.
Nick
Well that's the thing isn't it? If I had paid market rate and then went to pick up the van and found it to be a 10 year-old high mileage clunker with bits falling off and in a generally shabby state of repair then I would feel justifiably peed off.
However, if I had paid significantly less than that then I might feel that I was getting what I had paid for.
Bear in mind that it is quite a tightrope to walk between having vehicles available and having vehicles sitting around doing nothing and losing money.
Your business plan seems to revolve around a perceived market need stemming from the fact that whenever you have phoned up for a van they are all booked up. Yes, from a customer's point of view it certainly is annoying. However from a business point of view it is excellent - the vans are all earning money and none are standing around idle.
The ideal place to be is at or near capacity and you will have to plan carefully to make sure that you are making enough money to justify having spare vehicles available for people who have been unable to hire elsewhere.
>> Edited by JonRB on Wednesday 23 April 16:49
However, if I had paid significantly less than that then I might feel that I was getting what I had paid for.
Bear in mind that it is quite a tightrope to walk between having vehicles available and having vehicles sitting around doing nothing and losing money.
Your business plan seems to revolve around a perceived market need stemming from the fact that whenever you have phoned up for a van they are all booked up. Yes, from a customer's point of view it certainly is annoying. However from a business point of view it is excellent - the vans are all earning money and none are standing around idle.
The ideal place to be is at or near capacity and you will have to plan carefully to make sure that you are making enough money to justify having spare vehicles available for people who have been unable to hire elsewhere.
>> Edited by JonRB on Wednesday 23 April 16:49
We ran a small hire fleet alongside our Haulage and Distribution vehicles for a few years. It was a load of grief for a very small profit. Basically the private hirers cause damage, return things late and generally cannot handle anything bigger than a car. Business hirers tend to do massive mileages, and if you run old stuff you can guarantee that they will blow it up hundreds of miles away from you. Then you have to supply a replacement, subcontracted from a local (to the breakdown) rental co. You have to get your own one back or repaired, and at the end you have to get the subcontracted vehicle back to the other company, which usually takes an extra day of hire at your expense. In the current market place you will be lucky to make more than a tenner a day profit on a Transit, but even a broken fanbelt on the side of a motorway will cost two weeks profit. I had run a fleet of commercials for twenty years when we did this and I could not eke out a worthwhile profit.
You (categorically) do not require an operators licence to run a hire fleet as you are not moving goods for hire and reward. It is the responsibility of the hirer to hold the licence as they are seen as the operator in law - you are simply the owner. Similarly any defects on a vehicle will impact on the hirers licence, so if your fleet is not decent the business customers will steer clear. I am happy to give you more as I am a Road Transport Consultant by profession (nowadays), but would hope you will think carefully as it is only a worthwhile venture with more than a dozen fairly new vehicles. Today I could hire a brand new Sprinter from a National rental co. for £22 per day unlimited mileage - that is very hard to compete with.
You (categorically) do not require an operators licence to run a hire fleet as you are not moving goods for hire and reward. It is the responsibility of the hirer to hold the licence as they are seen as the operator in law - you are simply the owner. Similarly any defects on a vehicle will impact on the hirers licence, so if your fleet is not decent the business customers will steer clear. I am happy to give you more as I am a Road Transport Consultant by profession (nowadays), but would hope you will think carefully as it is only a worthwhile venture with more than a dozen fairly new vehicles. Today I could hire a brand new Sprinter from a National rental co. for £22 per day unlimited mileage - that is very hard to compete with.
samn01 said:
Breadline- Thanks for the info.
Do you mean 3.5 Tonnes with or without load?
Does a Luton fall into this category?
Funding? Do you mean we have to have 3K in the bank for every Van we have? Or do you mean that is the cost of the certificate? Sorry I don't quite understand what you mean by funding.
Operators licences are only required when your vehicle/s exceed 3.5tonnes GVW, Transit vans of whatever body type are all below this threshold. What are commonly refered to as 7.5ton vehicles do fall within the scope of operator licencing. The Sufficent funding is per vehicle, more for the first, then drops a little for each subsiquent. The CPC cannot be bought, it is an exam which must be sat and passed. When I hire vehicles over 3.5 tonnes, I have to show my operators licence, so maybe hire firms are exempt? Worth checking out though, or just sticking with the Transits.
Ruf, and others thanks for the insight. I have phoned around quite a few of the hire companies and the prices I have been quoted have been a lot higher than £22 per day for a transit, more like £49-60 - I guess this is because I am not a transport consultant and I don't have a large corporate account with a hirer. In saying that I expect most of my customers to be private or hirers from SMEs (or am I just being naive?).
I am interested in your reaction to the thought of the 10 years old vans. I have hired 4/5 transits over the last 12 months, all of them from smaller hire firms rather than nationals and none of them have been newer than 5 years old. Would the thought of hiring a 1993 Ford transit be that bad, I mean it is just a van and probably only being used once or twice and if it works for me it would not make a difference.
Has the Transit really come on that much in the last few years?
For me having no experience in this industry purchasing an old fleet reduces the risk attached to this venture. I could understand if you were renting a car for a holiday etc but when renting a Luton to move house does age matter, if the answers yes I will have to re-think this perhaps.
Again thanks for all your thoughts, keep them comming.
PistonHeads - Market research matters.
Sam
I am interested in your reaction to the thought of the 10 years old vans. I have hired 4/5 transits over the last 12 months, all of them from smaller hire firms rather than nationals and none of them have been newer than 5 years old. Would the thought of hiring a 1993 Ford transit be that bad, I mean it is just a van and probably only being used once or twice and if it works for me it would not make a difference.
Has the Transit really come on that much in the last few years?
For me having no experience in this industry purchasing an old fleet reduces the risk attached to this venture. I could understand if you were renting a car for a holiday etc but when renting a Luton to move house does age matter, if the answers yes I will have to re-think this perhaps.
Again thanks for all your thoughts, keep them comming.
PistonHeads - Market research matters.
Sam
Does anybody know any commercial estate agents in the Essex area that work with retail property?
I am really struggling to find any. Perhaps I am not searching correctly but after many hours on yell.com and Yahoo I have only found one and that was though a referral.
Thanks in advance.
Sam
I am really struggling to find any. Perhaps I am not searching correctly but after many hours on yell.com and Yahoo I have only found one and that was though a referral.
Thanks in advance.
Sam
samn01 said: Would the thought of hiring a 1993 Ford transit be that bad, I mean it is just a van and probably only being used once or twice and if it works for me it would not make a difference.
Sam
I can understand your concern about keeping start up capital to a minimum but your point re vans being used once or twice concerns me. Do you mean once or twice per week? Surely if the vans are going to bring in a profit they need to be rented more than 2 days per week, a target of 5 or 6 days per week is probably required, the alternative is low rental time at higher (uncompetitive) daily rental rates.
The other point is that old vans will have high mileage resulting in higher risk of breakdown. Some days they'll be driven for a few hundred miles and others just local miles. So if one assumes that a van puts on 500 miles in a week, that's 26k miles a year, which makes over 250k miles in 10 years, which will need higher costs for repairs and regular maintenance and greater risk of breakdown than newer vans.
You could of course set yourself up as a niche - similar to rent a wreck in the states where the selling point is cheap rental in a banger, which may be appropriate for low mileage rentals, but not for long trips, where the risk of breakdown would be too high.
sgee said:
samn01 said: Would the thought of hiring a 1993 Ford transit be that bad, I mean it is just a van and probably only being used once or twice and if it works for me it would not make a difference.
Sam
your point re vans being used once or twice concerns me. Do you mean once or twice per week? Surely if the vans are going to bring in a profit they need to be rented more than 2 days per week
Sorry, I was not clear, what I ment to say was I was supprised that people that maybe hiring a vehicle to uses only once or twice (I.E two trips bofore returning it to me) would worry about the age of the vehicle they were hiring as long as it had no problems.
The other point is that old vans will have high mileage resulting in higher risk of breakdown. Some days they'll be driven for a few hundred miles and others just local miles. So if one assumes that a van puts on 500 miles in a week, that's 26k miles a year, which makes over 250k miles in 10 years, which will need higher costs for repairs and regular maintenance and greater risk of breakdown than newer vans.
You are right, I have decided to invest a little more money and aim for vans that are 6 years oldish.
I obviously plan to upgrade them once the business is up and running and I will not have these for more than a year or so. Keeping overheads low at first is one of my golden rules of business.
You could of course set yourself up as a niche - similar to rent a wreck in the states where the selling point is cheap rental in a banger, which may be appropriate for low mileage rentals, but not for long trips, where the risk of breakdown would be too high.
Not quite what I had in mindbut thanks for the idea
More free info. Stick to Transits. We ran some Transits and some Sprinters on distribution. The Sprinter is no better than a Transit in terms of reliability, but if they go wrong (and the 5 cyl Merc diesel is prone to after 150k) the maintenance costs are very high. Do not use Turbo Diesel engined Transit Panel Vans - they are fairly quick and accordingly get hammered. Do not buy a Non Turbo Luton as it will struggle to maintain any decent speed and annoy the user so much they will not readily return. If you buy a Luton with a Tail lift, make sure it is an alloy platform on the lift as a steel one puts too much weight on the back axle and loses payload. Do not buy a Luton with a Glasonite body as it is too heavy and loses paylod again. Alloy bodies are much lighter and easier to fix if bumped. Buy everything in white and use stickers for your signage. Unstickered white vans are easier to get rid of for decent money. Mark all your tyres and check them carefully every time the vehicle comes back - it is a popular hobby for rogues with old Transits to hire and swap parts about - tyres are the easiest, and its a couple of hundred quid for a new set. When we bought secondhand it was always at about two years old - greatest depreciation suffered by the original owner (usually about 50%) but still a modern and hopefully reliable vehicle, which after another three years will still have a reasonable value.
Your biggest profit takers are depreciation and repairs. Old vehicles have low depreciation, high repair costs and the added breakdown, hassle, reputation problems. Newer ones have high depreciation, small maintenance and little other hassle. Overall the true costs in money terms are much the same, but the grief factor does not exist with the newer option. If I am stating the obvious, I do apologise, but over 22 years of running my own transport business and having bought, run and sold in excess of 400 commercials have taught me a bit.
Also, Transport and Rental companies usually sell off vehicles for a good reason - usually because they are beyond economical and reliable use - buy from companies who have used it as a delivery vehicle for their own goods - usually they are better cared for as profit from their operation is not where the company makes its money. We used to sell off new 3.5T vehicles aafter4 years and normally showing 300k plus miles. They were not worth buying, or we would have kept them !!
Your biggest profit takers are depreciation and repairs. Old vehicles have low depreciation, high repair costs and the added breakdown, hassle, reputation problems. Newer ones have high depreciation, small maintenance and little other hassle. Overall the true costs in money terms are much the same, but the grief factor does not exist with the newer option. If I am stating the obvious, I do apologise, but over 22 years of running my own transport business and having bought, run and sold in excess of 400 commercials have taught me a bit.
Also, Transport and Rental companies usually sell off vehicles for a good reason - usually because they are beyond economical and reliable use - buy from companies who have used it as a delivery vehicle for their own goods - usually they are better cared for as profit from their operation is not where the company makes its money. We used to sell off new 3.5T vehicles aafter4 years and normally showing 300k plus miles. They were not worth buying, or we would have kept them !!
Gassing Station | Business | Top of Page | What's New | My Stuff