Opportunity Sales
There are fewer manufacturers' repurchase programs these days; they're expensive and they come with more restrictions, these operators say. Because vans accrue miles quickly, negotiating mileage caps with the manufacturer can get tricky.
For risk units, the auctions are still the primary remarketing outlet. Some try retail, though the vans can sit for awhile. "The advantage to auction, even though it could cost us $1,500 to $2,000, is the quick cash," says Irani.
Capps holds his risk vans for a year to 15 months, though he looks for opportunity sales when the market is right. Capps once found that he'd make more money selling off much of his van fleet in May instead of holding through the summer.
The depreciation curve on large passenger vans is steep in the first year. This suggests longer hold times, though maintenance issues and potential liability temper the desire to run up the miles. These operators say it is ideal to remarket at 30,000-40,000 miles while still under manufacturers' warranties.
Forget Utilization
Vercollone says it's not uncommon for 75 percent of his fleet to sit during the week. "You can't give them away if no one wants them," he says. "You almost want to short yourself and be out on the weekend." Vercollone cuts his rates in half during the week in the winter.
"If you're going to rent any type of commercial vehicle - big pickup, box truck, stakebed, 15-passenger or cargo van - throw the utilization table out the window," says Capps. "It's not a meaningful scenario because there's nothing you can do to increase it."
Instead, Capps uses RPU as a benchmark. Still, "You can't force the RPU," he says, noting that commercial vehicle and van rentals are driven by need, not rates. "Fooling around with rates to compete with the guy down the road is not going to work," says Capps.
No Margin for No-shows
Overbooking to compensate for no-shows will get you in trouble, because there are no alternate choices or upgrades to accommodate 12 to 15 travelers. "A 20 percent overbook on a van is the kiss of death," says Capps.
No-shows are harder to swallow because of the specificity of the equipment. Confirming the reservation is essential. Capps always follows up online reservations with a phone call to double check.
It is common to take a credit card with the reservation. Most operators take a cancellation fee ($50, $100 or a day's rental) in advance, with a 48- to 72-hour cancellation window.
Slow Down and Educate
With passenger van rentals, extra time and labor is required in each part of the process, from the initial phone or Internet reservation to vehicle prep, driver education, check-in inspection and cleaning.
Capps performed a time-and-motion study on prepping a 15-passenger van for rental. He calculated each van costs him $23, compared to $6-$7 for a car.
These operators take extra time with the customer at checkout to ensure they're comfortable driving the van. Irani spends 10 minutes going over the vehicle, explaining ride height and van width, side-mirror settings, how to make turns, speed and braking tips and weather and road conditions.
"In car rental you're used to a fast pace and it's hard to adjust from that," Irani says. "[The renter] is responsible for 14 other people's lives. If you don't take the time to educate the customer, you open yourself to liability. You have to put the fear of God in them."