SMEs could benefit the most from full-service car rental

March 17th, 2015

When thinking about full-service car rental or outsourcing car fleet management services, then we usually imagine large-scale enterprises with enough vehicles and total expenditure as the likeliest clients, as it allows them to save the most by economies-of-scale. However, when investigated more carefully, those who could benefit the most from full-service car rental are actually small and mid-sized enterprises whose annual vehicle purchases don’t amount to much in order to get any noteworthy discounts.

When buying a vehicle for corporate use, one must keep in mind that the total cost of car ownership is actually determined through a myriad of various factors. This is why one shouldn’t be fooled by the incredible discounts that seem very favourable at first, or be tempted by the very friendly residual value levels that the car dealers offer. Every car manufacturer has established their warranty conditions differently, which is why the actual total cost of ownership during the whole lifespan (or period of active use) of the car is much higher than it may seem initially.

Anyone who has ever bought or sold a car understands the importance of residual value in calculating monthly rental or lease payments. Thus it’s safe to say that the price tag and even the looks of the car or its comfort level become secondary. Residual value depends first and foremost on the aftermarket value of the vehicle and it’s unfortunately inevitable that within just a few years the value of some car brands and models decrease more rapidly than snow levels on midsummer’s eve.

In any case it’s sensible to seek help from independent experts who offer competent advice on the effects of the aftermarket on the vehicle’s total cost of ownership. Car rental firms are some of the biggest fleet buyers who deal with buying and selling cars from different brands on a day to day basis – and that’s why it pays off to heed the suggestions of car rental and lease firms by paying attention to their most commonly used cars when choosing a company car for yourself.

Choosing a company car is also undoubtedly affected by the repair and maintenance service quality and the warranty clauses of the particular brand. With full-service car rental the clients rid themselves from the (sometimes) frustrating hassle with car services and authorises the rental company to communicate and solve problems on their behalf. However, the monthly rental payment is also determined by the maintenance and repair service’s hourly fees and the availability of spare parts for that particular vehicle. The value of several well-known premium car brands diminishes quickly because they have no B-spare parts available and one would have to make do with original parts only. With some other brands it’s believed that their vehicles are utterly reliable and almost never break down, however, in reality their parts are silently changed with every service and that’s how the illusion of an everlasting machine in perpetual motion is created.

There’s reason to believe that the terms and conditions of standard contracts are thoroughly read only by young lawyers and professional consumer dispute initiators. The same unfortunately applies also to warranty clauses – pages and pages of small print and complex wording will confuse even the brightest of us. Car manufacturers have all chosen different components that are covered by the manufacturer’s warranty. For example with some car brands, the warranty also covers lights, brake shoes and other wear and tear components. Nevertheless, no manufacturer has a warranty that covers absolutely all spare parts. There are manufacturers that at first seem to offer amazingly long warranty periods, but upon closer look they have fewer components covered by the warranty and as a rule the mileage period is also shorter, which voids the effect of the added years you’d think would benefit you.

With full-service car rental the client hands all the troubles associated with owning a vehicle over to the rental firm and is left to enjoy the driving. The full-service arrangement differs greatly from financing solutions or leasing agreements because it’s all about providing services that include tyre changing, tyre storage, car surveillance systems, replacement cars, solving insurance cases and many more. A hardworking small or mid-sized enterprise usually tries to tackle all those problems by itself, but it takes focus away from everyday primary activities and demands too much time and resources.

Rentest is one of the biggest buyers of vehicles and related services in Estonia, with a car fleet of over 800 vehicles. With the volume of outsourced services on that level, it is considerably easier for Rentest to achieve substantial discounts than it would be for any other standalone company. This is why small and mid-sized enterprises could benefit the most from full-service car rental services, drawing parallels here from the sale of petrol – the more you buy through joint procurement, the cheaper the petrol will be and that’s also the case with buying vehicles and accompanying services. A car rental firm can be your experienced partner to share objective and competent advice on matters related to choosing vehicles and to help calculate the total cost of ownership for a vehicle, highlighting all the hidden expenses as well.