Is managing your own car hire deal worth the reward?
Car hire all comes down to volume, time and knowledge.
Deciding whether to manage your own car hire deal is worth it comes down to a few factors. This is not different from any category and it pays to be honest with yourself.
- Do you have the volume to justify the time (which is a cost) of an RFP?
- Are you using the right data to enable a fair response from suppliers?
- Do you understand the category specifics and current market conditions to make a choice
If you cannot answer yes to all three questions, you have another simple choice – either stick with what you have or let other forces determine your preferred supplier. If you are still keen to do it yourself – read on, otherwise, scroll down for the quick and easy way to save now./p>
Data is critical
Supply Clusters provides transparent reporting on Car Hire through our member portal. Simply sign up to our Standing Offer arrangement and your data will be available 24/7. Members have access to all of their data including detail on every single transaction. Join today, start saving on Car hire and see all the detail you need to manage your expenses:
- A breakdown of all car hire expenses
- Details by cost centre in your business to identify the travel offenders
- Transparency on all fees
What should be on your radar when choosing a car hire supplier?
The market for car hire in Australia is saturated with options. We have more brands in the market than some of the largest markets in the world. The cost of entry to start your own car rental company is limited to your ability to generate finance and get exposure across travel platforms.
There are many charges that make up the real cost of hiring a car including:
- Base rate (Usually what companies negotiate on and protects you from demand pricing fluctuations)
- Insurance liability and options (a missed opportunity for many) as roughly 5% of all car rental occasions instigate some form of claims process.
- Location, administration and other charges
- Other fees and items such as vehicle recovery fees, additional or young drivers…
If you have bad data or no data other than a rate card – then performing due diligence on any form of comparison or RFP is close to impossible. It also benefits the incumbent who has access to all the details that make competitive pricing exercises effective.
There is also a limited ability to influence certain elements of charges such as Premium Location charges. Surcharges at airports are driven by the conglomerates that own the airports in Australia.
Should you strike a deal on car hire yourself?
If car hire represents a significant spend for you, then possibly. Assuming your spend is greater than $200,000 a year in Australia – there might be an opportunity to save. This makes even more sense if you have not received competitive pricing. However, even a modest amount of time spent running an RFP can quickly erode low percentage point savings.
However, if you are not up to date with market dynamics, the gaming going on or have poor data – you are unlikely to achieve little other than spreadsheet savings. So where can you save?
Choose smaller cars – small to mid-size cars are significantly cheaper per day as well as attract much smaller liability fees
Negotiated rates – This is a no brainer, negotiate fixed rates that are available at every location of your chosen supplier 365 days a year. You may not always pay the cheapest rate available in low-demand periods but it more than pays for itself in high demand times or locations.
Insurance – Choosing premium insurance on your car hire can save you significant unforeseen costs if an accident or damage occurs. Damage to a rental car happens in as often as 5% of occasions so hedge your bets on the lower liability insurance products.
Fill up your own fuel – Leaving it to the car rental company to fill up your fuel can cost 150% more per litre than doing it yourself. It is up to you whether this is worth the time imposition on your staff but it can quickly blow costs out.
Supply Clusters Offer
We have been long-time partners with Europcar. Together we have delivered many savings for members. Not only direct through our member rates but also through cost avoidance. It many cases the benefits of savings do not eventuate in the cost of running your own RFP. Our standard member offer includes:
- Rebate on all spend with Europcar (premium members)
- Locked-in rates across most types of passenger vehicles
- Includes additional driver, third-part cover, young driver surcharges, and, licenses and fees
- A significantly reduced damage liability fee (DLF) across all rentals for Supply Clusters Members
- Highly competitive pricing on reduced excess and zero excess cover
- Pricing available at the website, at the counter & via your travel management company platforms
- Pricing extends for Bleisure travel or staff benefit