The projection is that the truck rental business for 2010 will still be tough but more stabilized than in 2009. That trend started in the last quarter of 2009 and should continue throughout 2010.
Like most businesses, the truck rental market is highly susceptible to economic changes. When the economy is growing strong, the truck rental business usually benefits. But when the economy is in a downturn or stabilizing after a recession, the truck rental industry also suffers. And that's exactly what the findings from TLS Vehicle Rental shows.
According to TLS, a leading specialist in the field of vehicle rentals, the year 2010 will prove to be as tough as it was in 2009, but with some caveats. In late 2008 and throughout most of 2009, truck rental companies lowered their rates to entice potential customers. This created an unfortunate situation in the market, as prices were not uniform, nor even close to that. And that created an expectation among customers that prices would continue to fall or at best stabilize at the lower rates. But even more unfortunate, the lowering of rates meant that truck rental companies were not always able to properly maintain their fleet of vehicles or purchase new vehicles. And since profitability for most companies was non-existent, many of them shut their doors.
However, in the last quarter of 2009, rates started stabilizing and becoming more uniform across the board, no doubt do to the economy turning around. And customers realized that they were only hurting themselves by insisting on lower and lower rates since more and more truck rental companies would be forced to close if there were no profitability. In 2010, TLS believes that the rental market will be flat and that prices would stabilize, creating an overall orderly market. But it would still be tough times ahead, as it takes time to recuperate from an economic downturn.
TLS also noted that one of the reasons for their success of riding out the storm basically unscathed was that their prices were sustainable during the recession. Another factor that helped them weather the storm was that their utilization rate of their fleet remained high (as high as 95%). Basically, that meant using all of their unused vehicles for truck rental purposes, since trucks that remain unused in the lot still cost money.
