5 Common Problems Every Commercial Vehicle Owner Faces

Interest rates are rising, COE prices are up, inflation is soaring and oil prices increases are simply merciless. For some businesses, these hit particularly hard, especially those where transportation is a main or even ancillary part of work and owning a fleet of commercial vehicles is crucial. These transportation costs comprise expenses associated with the movement of raw materials, finished goods, or retail products to customers and businesses. Direct costs such as fuel, maintenance and payroll are the primary components but also indirect costs like support vehicles and structures, distribution networks, and other overheads. Of these, the biggest problems a commercial vehicle owner would face come with the high upfront cost of building a fleet and maintenance costs. This is because either of these issues would mean a stoppage of business. Engaging a third-party company specialised in truck rental or commercial vehicle rental in Singapore would go some way towards managing these costs but otherwise, here are 5 common problems that keep commercial vehicle owners awake at night.

 

1. High Upfront Cost of Acquisition

As of May, 2022, COE for commercial vehicles stands at SG$51,0002, having been on a mostly steady climb for the past 1 year. Based on a brand new light commercial vehicle (LCV) such as the popular Toyota Hiace, listed at about SG$55,0004, a business owner is looking at forking out a whopping SG$106,000 on average per vehicle. This quickly multiplies when building up a fleet of vehicles. Using a commercial vehicle rental company would be a viable solution, as it frees the business owner from large front loaded cash outflows and breaks it down into smaller payments. An added benefit is that contract lengths can be customised so whether the lease duration is for a couple of months or years, it is equivalent to paying for a vehicle according to usage. This added flexibility can be liberating, especially in economic downturns where downsizing may be vital for survival or if exploring a new business venture.

 

2. Rising Interest Rates

Borrowers beware! The US Federal Reserve announced earlier that interest rates would be raised5 and promptly increased the Fed funds rate by 25 basis points. It was also said that interest rates would be increased 6 more times in 2022 and that 3 more were planned for 2023. This typically has a knock-on effect on borrowing rates in Singapore as well6. While leverage is one of the most common ways to finance a new or used commercial vehicle, those choosing to borrow to buy a van or truck will be offered car loan packages with ever higher interest rates with each Fed rate hike. A pertinent point to note, is that car loans come with fixed interest rates. This means that once accepted, the interest rate is locked in for the duration of the loan. This can be a good or bad thing, depending on the prevailing rising or falling interest rate environment.

 

3. Finding the Right Employees

Staff turnover can be a real show stopper. Without properly qualified or properly experienced staff to operate commercial vehicles such as panel vans and even larger trucks, business operations would come to a halt. Drivers need to be educated in taking care of the vehicles under their charge. Reckless driving or failure to give due care to its daily upkeep can easily diminish the life of a vehicle. Simple things like dragging gears and driving at a high RPM can put undue strain on engines. Not slowing down on uneven roads can damage vehicle suspensions too.

 

4. Breakdowns

Time is money to businesses, and every second lost is an opportunity cost. Breakdowns result in the vehicle being immobile and disrupts operational efficiency, resulting in loss of income.

Some of the most common causes are listed below.

Commercial Vehicle Breakdowns

Overheating can severely damage your van’s engine. It does not immediately cause your vehicle to stop working so if the driver ignores the overheating alert and keeps on driving, eventually the temperature under the hood would rise to the point where extreme heat warps the engine cylinders and pistons. Once this happens, the engine is a total loss.

A Flat or Damaged Battery causes ignition problems and malfunction of the vehicle’s electrical systems – the vehicle cannot start, or the engine starts then quickly dies, the headlights flicker amongst other signs. Although it can easily be rectified by changing the battery, it still takes some time to buy and install one.

A Faulty Alternator is related to a flat battery but much more serious is a defective alternator. Without one in working order, the battery that is used to start the vehicle and power the electrical systems will not work.

Electrical Problems come in a variety of flavours but they all spell trouble. A fatigued starter or solenoid, bad battery cable, blown electrical fuses or failed spark plugs can all cause a car to fail to start.

 

5. Maintenance

Maintenance costs can add up especially when managing a fleet of several vehicles. Aside from the expenses, it takes time away from its essential functions in the business. However missing servicing appointments could lead to greater mechanical problems down the road. It is a catch-22 situation that puts any business owner in a bind.

 

Maintaining Commercial Vehicles

Vehicle Inspections are a required part of vehicle ownership. It is a government mandated inspection regime that ensures that vehicle owners properly maintain their vehicles up to operational and emissions standards.

Servicing is a self imposed regiment that aims to mitigate potential mechanical failure and extend the service life of the vehicle. This averts the situation in which a vehicle is not repairable and lessens business disruption.

Tyre Replacement is recommended when the tyre thread reaches the minimum depth. Age, as well as usage determine if it is time to buy a new set of tyres. Using worn out or old tyres can be dangerous due to the compromise of the wheel’s structural integrity and traction.

Worn Gaskets, Seals and Valves form flexible joints between components. They prevent leakage or spills of liquids or gases. These ensure proper functioning of vehicles that may otherwise lose power or stop working altogether.

 

6. Benefits of Commercial Vehicle Rental

It is said that, “Amateurs hope, while professionals work”. When it comes to managing just one or even a fleet of commercial vehicles, ensuring that a company’s transportation and logistical needs can be absolutely business critical so why not leave it to the professionals to take care of it? By engaging a commercial vehicle leasing company to be in charge, there is efficient division of labour according to expertise. This is beneficial as it frees up the company from the hassle of owning commercial vehicles. Employees can be fully engaged in the principal business of the company, thereby fully utilising its manpower and maximising resources.

A commercial vehicle rental company also has the advantage of scale and related business contacts over a single owner. For example, the company that chooses to purchase its own commercial vehicle may be constrained by cost. The vehicle rental company is likely to have a larger quantity and variety of vehicles in its inventory. This gives it the ability to provide more flexibility to suit the business requirements of its clients, especially if the needs change from time to time. In this way, the leasing company can be said to be more specialised; customised to a company’s needs and requirements, and able to provide more personalised service.

Other than the daily management of the deployment of commercial vehicles, ownership also entails the burden of repair, maintenance and servicing. Fortunately this is a task that vehicle leasing companies can take on as well. With an expert team of professional automotive technicians it can easily undertake full maintenance servicing, freeing up valuable operational resources that would otherwise be needed to manage the vehicles. It truly is an absolute solution to overcoming the hassle of vehicle ownership.

The Advantages of Cheap Car Rentals With a Reputable Company Versus Unestablished Ones

The brands that are synonymous with short term car rentals have long been household names. When most people think of such short term car rentals in Singapore, names such as Hertz, Avis and Europecar are likely the first that spring to mind. Having been founded in 1918, 1948 and 1949 respectively, these names hold a lot of cache and are amongst the weightiest in the industry. Their business networks span the globe and seem to be at every airport and in every major city, ready to serve clients’ every need.

In Singapore, the car rental market has grown steadily. With car prices consistently ranked the highest in the world, it comes as no surprise that many are opening up to the idea of renting rather than owning. In a study completed in March 2020, the market was projected to grow at a CAGR of 3.71% between 2018 and 2024. After spending 2020-2021 in the doldrums, a sharp 20% rebound is expected in the following year, before levelling off to a more subdued but respectable average of about 7% year-on-year growth up to 2025. Capitalising on the strong demand for both long and short term car leasing, Singapore has seen the rise of many enterprises offering such services. Apart from the traditional car rental companies like the ones mentioned above, resale car dealers, car manufacturers and financing companies have built up a car leasing segment in their business. Even car leasing companies that had long been serving only corporate customers have also begun to open their doors to regular consumers.

As with any well developed business, an established brand comes with many advantages for customers. Want to return a rental car in a different city, enjoy cruising in a luxurious sedan or just like having more options? These are differentiated product solutions that these large brands are able to cater to.

 

Why Enter a Long or Short Term Car Lease With an Established Company

The list of reasons to engage a reputable company when deciding where to rent or lease a vehicle from can be categorised into 3 groups; product offering, convenience and support. Each in itself may not make a compelling enough proposition to a customer but together, the combination of the 3 delivers robust solutions for every need.

In larger, more established companies, the vehicle fleet is often bigger when compared to smaller set ups. Finding the perfect car that meets every requirement without having to compromise would be less of a challenge. Prefer an SUV over a sedan or looking for a sportier ride? With a larger fleet of vehicles, chances are that there’s something in the inventory that fits the bill.

Apart from a wide range of vehicles there could be other services like chauffeured services, flexible tenure options and also different leasing types too.

Personal Contract Hire (PCH) is a medium term rental agreement that typically lasts between 1 to 4 years and the vehicle is returned at the end of the tenure. There is no option of buying the car and the monthly rental amount depends on the length of the contract, the upfront deposit placed with the rental company and the final mileage racked up.

Personal Contract Purchase (PCP) is similar to PCH in all aspects and to a hire purchase (HP) contract which is the way most people buy cars in Singapore. The main differences are that in a PCP, the monthly repayments are lower than that of a HP contract and at the end there is a balloon payment option to take ownership of the vehicle.

Leases can also be open-end or closed-end. This is a way of apportioning the loss when the market value of the car at the end of the lease falls below the residual value as calculated at the start of the contract. This risk can be shouldered by either the lessee or lessor and the monthly repayments are adjusted according to which party bears the brunt of that risk.

Beyond vehicle model selections and different convenient payment options, established car rental companies could have a workshop for repairs and maintenance or they could have a network of workshop partners that clients can choose from. Likewise, there might be breakdown support or towing services and a customer hotline to reach out to in the event of an accident or when mechanical problems arise such as a dead battery that can leave drivers suddenly stranded in an unfamiliar area. There could also be a replacement vehicle available so clients would not be left without transportation while the car is being fixed. These services make it a one-stop-shop that makes the experience of having a vehicle extremely easy and takes out all if not most of the hassles.

However, all these frills come with a price and if one could do without some of the bells and whistles, there are cheaper alternatives.

 

Long or Short Term Car Lease With an Unestablished Company

Whether it is to an individual or a company, costs always form one of the biggest considerations of any decision. If one is willing to deal with some of the occasional inconveniences or able to handle some of the recurring chores like servicing, opting for a cheaper rental vehicle from a smaller company could be a good choice.

Due diligence, especially with companies that are not a recognisable brand, always pays off. In the worst case scenario, the cheap deal from an unestablished rental company may not be properly licensed to operate such a business. This is a more likely scenario these days when service providers can operate solely online or through a phone app without much of a physical presence.

A more likely scenario are hidden costs and inadequate insurance coverage. If there is inadequate insurance coverage, the driver may be liable for any damages that exceed the amount of coverage. Likewise, this lack of transparency can also cost the driver a substantial amount of money if it is not clarified beforehand. Some examples include a surcharge for younger drivers, no unlimited mileage option, extra costs for breakdown services, lack of maintenance logs or simply adding charges for prepaid petrol. The list can be quite extensive and easily overlooked if one does not know what to look out for.

Smaller companies may also have a smaller range of vehicles or vehicles that are older and not in as good a condition either cosmetically or internally. It is important to note that cost savings may seem to be a priority at the expense of comfort initially but it depends on the duration of the rental. A few days with a vehicle that is a compromise could be ignored or even barely noticed but over a longer duration can prove to be a larger bugbear.

That said, the industry for long term as well as short term car rentals have grown to be extremely competitive and even some smaller companies bring a lot of value to the table but one should always be mindful of the potential trade-offs.