THE shortage of new cars caused by global supply issues has resulted in a 40% rise in the cost of hiring a vehicle and this is impacting the collection and delivery of new and used cars.
Birmingham-based national vehicle movement and inspection firm DMN Logistics said the lack of rental vehicles is resulting in extremely limited availability of one-way rental vehicles, which logistics firms rely heavily on when transporting vehicles.
The logistical headache caused by an unprecedented shortage of new vehicles is also leading to an increase in costs, which to date are being absorbed by delivery firms but at some point, will have to be passed on to companies and retailers.
Europe’s largest listed rental firm Europcar warned earlier this year that the squeeze on the industry was likely to be “prolonged”.
Nick Chadaway, managing director at DMN Logistics, said: “With carmakers prioritising selling to dealerships rather than into the rental sector, which typically buys in bulk, rental firms are left scrambling to find stock to meet the demand to replace older cars.
“Rental companies update their fleets every six months, so they are now struggling to find new cars to replace older stock. They are having to hold onto vehicles longer, which makes them more costly to run and also limits their use, and that is directly affecting the logistics sector.
“One-day hires, even on return-to-originating branch, are becoming harder to source which leads to longer lead times on new car delivery. We are also seeing many rental companies exit the one-way rental business altogether or increase their charge structure, typically by adding anything up to £50 per transaction on top of the daily rental pre-covid charge.
“As a result, we are having to find other ways to transport delivery drivers, like sourcing larger vehicles to carry more drivers and also support social distancing or taking on longer-term hire cars, which is not very cost-effective or environmentally friendly.”
The situation shows no signs of improvement in the short term. Rising costs of vehicle collection and delivery continue as operators work hard to meet demand.
Chadaway added: “Whilst customers are seemingly accepting of the pressures currently within the sector and despite the challenges we are facing and for long term viability, it’s vital that businesses focus on managing their vehicle collection and delivery service and continue to prepare services for a sudden demand once the chip shortage eases.”
