Northgate sees improvement in fleet hire

Vehicle hire group Northgate reported an improvement in utilisation rates of its fleets in the four months to 28 February in the UK and Spain.

In the UK, it achieved an average utilisation rate of 91% during the period, a 5% improvement on the rate achieved for the same period the previous year. In Spain, where economic conditions have been even more severe than those in the UK, the rate climbed by 6% to 86%.

In the UK, the improvement was partly due to a reduction in the fleet to 60,000 vehicles from 61,000. Hire revenue per rented vehicle increased by about 3% in the quarter to February 2010 from the quarter to April 2009, Northgate said.

'The used vehicle market remains strong and we have maintained the improvement in residual values that we achieved towards the end of the first half of this financial year,' Northgate said.

'We expect these market conditions to remain favourable for the remainder of our financial year. '

In Spain, where the fleet has been slashed to 49,700 vehicles from 55,200 the company expects to achieve a utilisation rate of 90% by April 2010. It said hire revenue has remained relatively stable.

The firm said that, while the economic outlook remains tough in Spain, there has been a moderate improvement in bad debts.

'As expected, the macroeconomic conditions continue to adversely affect the Group's markets, with the outlook for the UK remaining uncertain and Spain continuing to be very difficult,' Northgate said.

'Our focus therefore remains on hire rate improvement, efficient fleet management, further cost reductions and cash generation.'