Reducing Rental Costs While Maintaining Flexibility

The Challenge

A large utility company was conducting business on a contract basis. While some contracts lasted a matter of months, others were extended for years. To accommodate for this, the company had a mix of long-term leased assets and rental units, but the rental units cost almost twice as much as a leased asset.

The Solution

Merchants was able to put a rent-to-lease option in place so the company could easily convert rentals to long-term leases once contract positions were solidified. When a contract was secured, the company used Merchants ReadyFleet, a pool of vehicles ready and available for immediate short-term rental, to source a secure a vehicle within days. These vehicles were then converted to long-term leases when a contract was extended. The company incurred a depreciation credit for each month a vehicle was rented that was applied to the cap cost at conversion, which further lowered the long-term lease payment. Rentals that were no longer needed were simply returned to Merchants at no extra cost.

The Results

The company is on track to save nearly $100,000 annually in lease payments, plus $853,000 annually in rental vehicle cost avoidance. In addition, they have mitigated administration from rental vehicle turn-ins and lease on-road activities.