Getting Into Vans?

Did your parents ever warn you not to get into strange vans? The same wisdom might hold true when it comes to renting 12- and 15-passenger vans.

Revenue per unit of $2,500-or higher-is possible in good months. However, a limited rental season, maintenance issues, increased time and labor, high insurance premiums and liability exposure should make you think twice about getting into this challenging business model.

No Van for All Seasons

The overriding factor that steers business decisions about 12- and 15-passenger van rentals is its highly seasonal nature. Summer weekends are sell outs, with other peaks around spring break, Thanksgiving and Christmas. At other times business can be virtually non-existent.

Because the rental period is so well defined, the up- and down-fleet periods are the exact opposite of the strong and weak selling months. Rental demand ramps up in the spring when wholesale prices are high. Vans flood the resale market after the summer when demand is soft.

"I need to be wise enough to understand how much fleet to have when my utilization goes up and how much cost I'm going to eat when demand dries up," says Yaz Irani of Airport Van Rentals, a van specialist serving four California airport locations.

"Ideally you should sell them before July 4, though that's the beginning of your biggest month in rental," says Dave Capps of Capps Van and Truck Rental, who rents large passenger vans, cargo vans, pickups and flatbeds out of 15 locations in Texas, Oklahoma and Arizona. "It's a conundrum. I've been trying to get around that for 35 years," he says.

This strict seasonality is managed in part with a mix of risk and repurchase units. However, for a normal summer season, a six-month repurchase program will still encompass two slow months, says Irani.

Verc Rentals serves Boston's south suburbs out of six locations with a mix of passenger cars, SUVs and vans. Jack Vercollone, president, de-fleets repurchase units at the end of summer and holds the risk units, a third of his van fleet, to rent through the winter.

"The minute school starts, [demand] drops like a hot potato," says Vercollone.

CONTINUED:  Getting Into Vans?
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  1. Walter E. Welch [ September 20, 2010 @ 06:16PM ]

    Makes you think about why no one gets into Vans.

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