{"id":6892,"date":"2014-12-02T16:35:11","date_gmt":"2014-12-02T16:35:11","guid":{"rendered":"http:\/\/www.vanrental.co.uk\/vanblog\/?p=6892"},"modified":"2014-12-02T16:35:11","modified_gmt":"2014-12-02T16:35:11","slug":"northgate-flags-rising-demand-for-van-hire","status":"publish","type":"post","link":"https:\/\/www.vanrental.co.uk\/vanblog\/archives\/6892","title":{"rendered":"Northgate flags rising demand for van hire"},"content":{"rendered":"<p><img loading=\"lazy\" class=\"alignright size-medium wp-image-5962\" src=\"https:\/\/www.vanrental.co.uk\/vanblog\/wp-content\/uploads\/2014\/03\/northgate-300x193.jpg\" alt=\"Northgate Vehicle Hire logo\" width=\"300\" height=\"193\" srcset=\"https:\/\/www.vanrental.co.uk\/vanblog\/wp-content\/uploads\/2014\/03\/northgate-300x193.jpg 300w, https:\/\/www.vanrental.co.uk\/vanblog\/wp-content\/uploads\/2014\/03\/northgate.jpg 310w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/>Demand for UK van hire is rising, according to business hire giant Northgate, which operates a fleet of 57,000 vans and minibuses\u00a0in the UK, along with 40,000 in Spain.<\/p>\n<p>In its half-yearly results, Northgate reported\u00a0that utilisation of its UK fleet had risen from 88% to 89%, despite\u00a0the number of vehicles on hire rising by 1,800 since 30 April 2014.<\/p>\n<h3>Growth story?<\/h3>\n<p>The company has opened five new sites since the end of April, and plans a further three before the end of April 2015. These new sites accounted for 1,100 of the 1,800 new vehicles on hire, suggesting that Northgate&#8217;s growth is largely being driven by expansion, rather than\u00a0organic growth.<\/p>\n<p>This conclusion is backed up by the firm&#8217;s admission today that <em>all\u00a0<\/em>of its\u00a0growth so far this year has been driven by its regional sites &#8212; i.e. those away from the London area. Growth at existing branches was a relatively modest 1.3%, and although the company believes this can be increased, I reckon this low number highlights the intense competition between van hire suppliers, especially in large urban areas around major cities.<\/p>\n<h3>Bumper profits<\/h3>\n<p>Northgate reported a 33% rise in operating profit for the first half of the year, despite\u00a0revenue only rising by 5.6%.<\/p>\n<p>How do they do that, you might ask? Well, one area\u00a0where the firm has made big improvements is in reducing the holding cost, or depreciation, of each vehicle &#8212;\u00a0the difference between its purchase price and its eventual resale price.\u00a0Northgate says that it has managed to improve residual values over the last five years,\u00a0with an emphasis on several key areas:<\/p>\n<ul>\n<li>Van Monster\u00a0retail network expanded from 7 to 11 branches &#8212; ex-rental vans sell for more at retail than through auctions or trade sales;<\/li>\n<li>Using <em>&#8220;customer profiling and pricing&#8221;<\/em> to target\u00a0rental customers who won&#8217;t trash their vans;<\/li>\n<li>Increased marketing, especially online;<\/li>\n<li>Using\u00a0expert in-house sales professionals to select the most appropriate\u00a0disposal channel for defleeted vans, rather than\u00a0obeying a fixed formula.<\/li>\n<\/ul>\n<p>As a result of these changes, 29% of Northgate&#8217;s ex-rental vans are\u00a0now sold through the Van Monster network, up from 18% in the year ending April 2009.<\/p>\n<p>Of course, this rate of profit growth is\u00a0unlikely to last forever &#8212; as a general rule, profits can only grow faster than sales for a limited time, before the two come back into line. It&#8217;s also worth noting that <a href=\"https:\/\/www.vanrental.co.uk\/vanblog\/archives\/6839\">if used van prices weaken<\/a>, Northgate could\u00a0be affected.<\/p>\n<p>However, despite these risks, Northgate&#8217;s near-term outlook does appear\u00a0to be pretty healthy.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Northgate plc (LON:NTG) unveiled a strong set of half-yearly results today, emphasising profit growth through expansion and higher resale values..<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[7],"tags":[1890,1678,1431],"_links":{"self":[{"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/posts\/6892"}],"collection":[{"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/comments?post=6892"}],"version-history":[{"count":1,"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/posts\/6892\/revisions"}],"predecessor-version":[{"id":6893,"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/posts\/6892\/revisions\/6893"}],"wp:attachment":[{"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/media?parent=6892"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/categories?post=6892"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vanrental.co.uk\/vanblog\/wp-json\/wp\/v2\/tags?post=6892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}