The markets where we operate are undergoing significant structural changes, not least the continuing shift from vehicle ownership to rental. We are well placed to capitalise on this and other changes, ensuring we tailor our comprehensive product offering to each particular market’s needs.
There are c.8 million LCVs in operation across all our markets with annual revenues in the sector of c.£15bn. Our comprehensive offering ensures that we have full access to this exciting market opportunity.
1.4% GDP growth in the UK
2.4% GDP growth in Spain
Our key markets
Customers in this market have no contractual or capital commitment, and so enjoy the most operational flexibility. Vehicles are usually supplied inclusive of maintenance and other services. There is generally strong demand from customers who want the ability to return a vehicle at short notice due to changes in demand through their business cycle. When businesses have more certainty in their outlook, there is a natural shift of customers moving from flexible rental into longer-term commitments in minimum-term rental. Northgate is a market leader competing typically against regional operators.
Our competitive advantage comes from our scale and unique understanding of our customers’ requirements.
We aim to defend and grow our share of this market, through emphasising our superior service levels and product offer, as well as defending on price where necessary.
Minimum-term rentals require customers to commit to a rental period for a minimum of 12 months. This offers them similar benefits to vehicle ownership while limiting their exposure to residual-value risk and initial cash outflow. It is the natural landing point for customers who shift out of the ownership model, and the market is seeing a clear trend out of ownership and into rental. Minimum-term hire is a substantially larger market than flexible rental, approximately twice the size, and continues to grow.
We are well placed to capture the significant market opportunity through:
a range of minimum-term offers with levels of service and flexibility typically associated with flexible rental, and additional service enhancements distinguishing our products from our competitors;
cross-selling minimum-term rental to a core base of flexible rental accounts, as most medium to large fleet operators have a requirement for both; and
targeting an increasing proportion of our marketing spend toward taking advantage of the structural shift from vehicle ownership to rental.
Sales of used LCVs in the secondary market generate transactions of c.£5 billion a year. End users are typically individual business owners. Being a highly fragmented market, opportunities exist to consolidate to make the market more efficient and transparent.
We continually explore opportunities to make markets in used LCVs in each territory more accessible to our customers.
We use our Group-wide expertise to optimise the disposal route for our vehicles, thereby minimising holding costs.
Through our national networks of retail sale locations we can offer customers the widest range of vehicles and service in the market.
SOURCE: based on research conducted by OC&C using data from MSI BVRLA, DFT. SIMI. Market defined as LCVs only. As reported in 2018 annual report.