All the Right Moves

Why go to the trouble and expense of buying, when you can rent? It’s a proposition fast appealing to a changing consumer market and one Thrifty seeks to master in its endeavours to become the best rental company in Australia.

The capital investment and operating costs of commercial vehicles are a major factor in the sustained growth of the rental vehicle industry, as regular and casual users take advantage of the ‘as needed’ proposition rather than going through the process of purchasing an expensive vehicle which they may only require the occasional use of.

In recent years Thrifty has emerged as a genuine competitor in the burgeoning commercial vehicle rental market.

Fully owned by the NRMA (National Roads and Motorist’s Association) and operated by a number of franchisees, Thrifty’s vision is to be the best vehicle rental company in Australia and not necessarily the largest.

The organisation aims to achieve this by offering its customers the best service, the best rates and the best experience. The NRMA’s ownership of Thrifty provides a degree of confidence to customers knowing they are dealing with one of Australia’s most trusted and reliable brands.

Murari Rijal operates a Thrifty franchise from a base in the Sydney suburb of Caringbah which now extends to include 28 branches throughout New South Wales.

Originally from Kathmandu in Nepal, Murari may describe himself as a ‘corporate tax accountant’ yet he brings to the business a diverse background including working for the BBC as a financial reporter, owning and managing a retail bakery franchise and as a niche importer of fine crystal homewares.

As with any business, the attention to customer requirements and effective cost management are two key elements in determining whether the operation becomes a success or a failure.

“If you compromise the quality of the customer service then you compromise the long term success of the business.” Murari says. “You have to put your feet in the customers’ shoes to the point of performing a cost analysis from their point of view.”

That attitude, which permeates through the staff at all levels, has seen the total fleet size of passenger and commercial vehicles grow from 1,300 in 2013 to 3,500 of which almost 1,000 are classified now as commercial vehicles.

Based on customer feedback, Murari finds that Caringbah customers’ requirements are, for example, different from those in the Hunter region and it is crucial business-wise to find what is important to each. Thrifty truck rental customers can be diverse but are usually local businesses and couriers.

Hino vehicles are preferred at Thrifty for their automatic torque converter transmissions.

Increasingly, the customer profile has included people who want to move “home” themselves rather than going to the expense of engaging professional removalists to relocate their furniture and household effects.

A lot of growth in the business has come from Sydney’s newer suburbs where families are frequently moving into freshly constructed houses after moving out from residential areas closer to the city.

Following their move to the outer suburbs up to a third will relocate again within a few years, providing repeat opportunities for truck rentals.

The potential of this opportunity for more sustained business has led to Murari establishing branches closer to these emergent residential areas.

“It’s important to have a branch nearby to return the vehicles to,” he says. “After moving they’ll be tired after a hard day and may have family to consider, so they don’t want to be getting an Uber back home after returning the truck across to the other side of the city.”

Hino is the brand of choice for the business. During the first half of 2021, more than 100 new Hinos have been ordered, even though the majority are replacements they represent a significant increase in the size of the overall fleet.

The relationship with top-level management at Hino is good for both parties and provides benefits for the customer who are the people who actually drive the vehicles with Thrifty serving as the bridge between manufacturer and the customer.

“I go to Hino because I want a fully automatic fleet,” says Murari in reference to Hino’s offering of fully automatic torque convertor transmissions. “Most other rental operators keep trucks for five or six years but I only want to keep them for two and half, with a maximum of three years.”

At the conclusion of their relatively short period of being a rental vehicle, the trucks are sold through a small number of select dealers and represent an excellent value proposition for the businesses which subsequently purchase them.

One of the 100 new Hino units Thrifty has purchased already in 2021.

Most vehicles are still covered by the balance of the Hino factory warranty which is transferrable to the new owners. The system also leads to the potential of future transactions.

“We on-sell many trucks to ‘mum and dad’ businesses because they are less than three years old and are cheaper than buying brand new. As their own business expands, they come to us to hire trucks again, with the likelihood they will ultimately buy an additional ex-Thrifty truck. It’s a long-term strategy and we’ve been doing it for the past three years and its working for us and the customer.”

The passenger vehicles in the fleet are kept for a maximum of nine months and may have between 6,000 and 20,000 kilometres showing on their odometers. Trucks have usually covered 80 to 90,000 kilometres at the time of their disposal.

The occasional example may have been subjected to a lot of hires involving interstate trips showing 100,000 kms which leads it to be taken out of service and sold regardless of
its age.

Murari is also able to provide long term rental leases with the likes of courier companies who appreciate the benefits such as better safety features and fuel economy of new vehicles without the expense of having to purchase them.

“We used to do it over five years but found after three years the operating costs were getting out of where we wanted them to be,” he says. “These days there are a lot of technological change and everyone wants new trucks.”

Considering the frequency of purchasing new vehicles, Government stamp duty can become a big expense and on a $50,000 truck stamp duty can be as much as $1,800 which Murari considers may be one of the reasons some competitors choose to retain an older fleet.

“People ask: why do you buy brand new cars and trucks? Because that’s what I do,” he says. “I’m looking at the long-term benefit.”

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