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The Present Situation of the Car Rental Business in UK: Understanding Problems and Shaving Off Expenses

The Present Situation of the Car Rental Business in UK: Understanding Problems and Shaving Off Expenses

The car rental business in the United Kingdom can be a profitable venture for sure, but there are a number of challenges that present themselves continuously, making it harder to both earn and save money. As mentioned already, it is still a booming business sector nonetheless, which means that with clever planning, the benefits also apply to your own business.

Understanding the problems and unnecessary expenses that cut into the profits of a car rental company is essential to formulating a better business plan to tackle the present situation.

Leasing is Often a Better Solution Than Buying

If you are only just starting out, you should consider leasing your cars, rather than buying the entire fleet outright. Leasing does have a number of advantages over buying when it comes to commercial grade investments, some of which can be summarised as follows:

  • You will save a ton of money in initial investment, which is crucial to early stage capital management
  • By leasing your fleet for business purposes, you will be able to recover 50% VAT on each car
  • Every time a car will need to be replaced down the line, you will save a fortune
  • Upgrading to a modern fleet with better fuel efficiency in the future will be a lot more affordable
  • As the leasing payments do not appear on the balance sheet, they are all expenses which will reduce your taxable revenue down significantly

Even if you have already purchased a few of them, consider leasing the rest when the venture is ready to expand further. Those that need more details on the benefits of leasing and whether it can be actually beneficial for their car rental business should checkout this article on the Telegraph that was published last year.

Most Car Rental Companies Can Reduce their Fleet Insurance Premium Significantly

Many rental car companies fail to shop around when it comes to insuring their fleet, which can be a very costly oversight. Particularly when you consider that comparing fleet insurance policies and quotes is fast and straightforward if you use a site like Quotezone to do the comparison.

When comparing fleet insurance policies its important to ensure those policies include ‘self-drive hire cover’, which is the type of cover that insures car hire customers to drive the vehicles.

The Competition: It’s Tremendous

Many of the world’s leading rental car companies operate in the UK, and smaller rental companies will be going head-to-head against these well-known brands – and their very large marketing budgets.

That’s why it’s critical that you develop a great reputation with your existing customers if you own a smaller rental car company, because the word of mouth marketing you’ll enjoy as a result will help you to compete.

There is Still Room for Growth

Competitive as the rental car market is, there is still a lot of room for growth – particularly in the country’s major cities like London, Manchester and Birmingham, where many people are shunning car ownership in favour of renting as-and-when they need a vehicle.

As long as you acknowledge the problems that face you in the rental car industry, take adequate steps to tackle them, and design your business to be dynamic enough to adapt with sudden changes, the money is still there to be made.


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by Lottie Pritchard // Lottie Pritchard is a contributor to Businessing Magazine.

Opinions expressed by contributors are their own.