We’ve already seen large van hire companies forecasting that they will do well out of the economic downturn. They expect businesses to shun buying and leasing vans in favour of more flexible van rental deals.

[Update: Here’s another van rental company predicting the same]

Now it’s time to examine the current reality.

A new survey of UK van owners by the Department for Transport has found that just 12% of vans are leased or hired – with almost 90% owned outright by businesses or individuals. Of these, 59% are owned by businesses and 28% owned by private individuals (presumably including sole traders).

Of the owned vehicles, 53% were purchased second hand and 46% new. That makes sense – intuitively it seems likely that most vans will have one or two secondhand owners after their new owner – but probably not more than this, on average.

What does this mean for van hire companies?

While 12% may seem like a small proportion, it is a small slice of a very large pie. In 2007, there were 3.2 million licensed light goods vehicles (vans) in the UK. 12% of 3.2m is 384,000 – enough vans to keep a lot of lease and hire companies in business.

The DfT report didn’t mention the split between short-term rental and leased vans, but it’s probably a reasonable assumption that lease or contract hire vehicles form the bulk of the 12%, with short-term rentals taking a minority share.

I believe that the van hire companies are right in predicting strong business during the downturn – especially if they can provide the cost-effective, low risk flexibility that businesses will want and need.

With credit in short supply in the UK, rental companies who are able to facilitate the removal of multi-year vehicle leases and finance deals from a company’s books by offering flexible short-term rental services should attract new customers.

Companies who are lucky enough to own their vehicles outright might also be attracted by the possibility of reducing their fleet size and overheads and benefiting from increased liquidity instead – perhaps using this to fund areas of credit shortfall.

I don’t believe anyone (me included) can really predict how the economy will pan out over the next couple of years. However,  I do believe that flexibility and the ability to cost-effectively scale operations up and down will be an essential ingredient in the tool kits of businesses that survive.

Van hire should be able to play a part in this for many UK businesses.

What do you think?