Navigating Turbulence: Understanding the pressures on the car rental industry supply. 

Car rental prices have reached record levels already in 2024 due to higher car prices, high interest rates with residual values consistently dropping while the used market continues to suffer from a restricted supply of 12-24-month-old stock reports Liquid Fleet’s MD Ismael Aumeerally 
Many parts of the automotive sector have experienced more changes in the last four years than the last four decades thanks to the global pandemic. 
One of the sectors most affected since 2020 has been the daily rental mainly due to vehicle manufacturer production volumes being compromised by a global microchip shortage. 
The transition from pre to post pandemic for the rental market has been massive. A plentiful supply of vehicles from the manufacturers at healthy prices dried up overnight alongside a healthy supply of 12-24-month-old cars into the used market. 
This major shortage of new cars continued until 2023 when manufacturing volumes began to improve alongside an easing of microchip supplies. 
However, although new car supplies have improved, manufacturers have chosen to restrict their supply to the rental industry, favouring instead to supply more cars into the higher margin retail sector. 
The impact of this behaviour is already hiking up daily rental rates which is making them less competitive whilst continuing to restrict the used market from a steady supply of good quality ex-rental cars. 
Liquid Fleet has seen wholesale vehicle purchase prices rise by an average of 29% since 2019 while interest rates have gone up 189%. When combined, this has put a huge pressure on monthly daily rental rates. 
The average value of the 12-24 months old used car market dropped by an average of 12% between September 2023 and December 2023 led by valuation organisations attempting to correct their own over valuations in the months/years prior. However, this adjustment has been too severe in too short a period of time thus causing the holding cost of these cars to skyrocket. The fear within the industry is that automotive trade valuation organisations are trying to dictate future values rather than report on values achieved. 
Wholesale monthly cost to rental brokers of a typical mid-size SUV has risen by 83.3% over a relatively short period of time which is a challenge the entire rental industry, including its customers, who are struggling to come to terms with the impact. 
The time has come for rental suppliers to change consumer expectations on price when renting a vehicle by educating them about how the market has changed post Covid. Rental brokers could look to focus on added value and customer service to justify the increase in rental prices, rather than constantly looking to achieve the best possible daily or weekly headline hire rate. 
We also cannot underestimate the impact on franchised dealers of OEM’s current behaviour. Their forecourts are missing tens of thousands of used ex-rental cars. We will go as far to say that the industry is impacting consumer choice as companies like Liquid Fleet are the largest source of 12-24month old used stock in the country. There are major shortages of this type of stock for dealers to sell. 
But what happens when the vehicle retail market softens? Will manufacturers start re-prioritising the rental market again to take up that slack in volume? As a business Liquid Fleet will strive to keep our customers abreast of the industry changes and we will continue to be as flexible and creative in our approach so that our customers carry on receiving added value at all times. 
Vehicle procurement company Liquid Fleet limited have reported an upturn in clients addressing their grey fleet issues with short term rental providing them with significant savings and reduced risk and improved Carbon use in the last 6 months. 
With an estimate 14 million grey fleet vehicles on the road travelling an estimated 12 billion fleet miles each year this is a significant problem for fleet managers who can eradicate a lot if the issues that grey fleet users cause by looking at short term rent return/pool fleet for their staff to utilise for business travel. 
The average age of grey fleet vehicles is estimated to be 8.2 years old in comparison to the average lease car at 1.6 years and rental at only 0.7 years. The high pollution of the grey fleet alone has been reason enough for many fleet managers to look at changing their policies with many companies very conscious of their carbon footprint and desire to be running a sustainable business. 
Employers spend around £5.5billion a year on grey fleet highlighting the need to address the issue and find ways to reduce grey fleet costs. 
In a recent case study two separate corporate clients of Liquid Fleet looked in partnership at the real cost of the grey fleet miles and the additional management time spent on ensuring the grey fleet vehicles were insured for business use and of a road worthy condition and have managed to reduce their costs significantly by running 4/6 rent return vehicles on their fleet for the sole purpose of grey fleet miles. 
When the company calculated the number of trips and miles being travelled by grey fleet users it was quickly established that by running 4-6 vehicles in each case study the fleet significantly reduced its costs, improved its carbon usage and the staff were driving less than 12 month old vehicles that represented the company in a much better light and reduced the burden of insurance and roadworthiness overnight. 
If you are a fleet manager who also has concerns over your grey fleet usage, please do not hesitate to contact one of our sales consultants to discuss your companies’ circumstances. 
Liquid Fleet works closely with Ford Pro to assist its customers with data driven efficiencies. 
The entire fleet of Ford commercial vehicles being connected is providing exceptional data for Liquid Fleet to add value to its customers in many ways. 
The data provides detailed information about the utilisation and journeys taken by the fleet assisting in better logistics routing as well as highlighting driving patterns that have saved on fuel costs and decreased servicing costs as a result. 
By sharing the data with its customers and consulting with them after analysing the data Liquid Fleet have been able to reduce costs, improve fuel efficiency and reduce PCN fines and administration costs for many of its commercial fleet customers. 
Ismael Aumerally the Managing Director if Liquid Fleet commented that with much of the fleet now being connected it is giving valuable information about the fleet that previously was difficult to gain and now this information is available at the push of a button and is adding tremendous value to our customers and helping them to run a far more efficient fleet. 
We have traditionally been the preferred choice for many commercial customers for vehicle procurement, but we are finding our long term partnerships are benefiting from the connected data information which is ensuring that we are adding value throughout the life of the vehicle for our customers. 

Media Centre 

For any press inquiries or information relating to any articles published , please contact us on  
Our site uses cookies. For more information, see our cookie policy. Accept cookies and close
Reject cookies Manage settings