An efficient key to company transportation problems
An efficient key to company transportation problems
Prodjo Sunaryanto, Managing Director of TRAC
The protracted economic crisis, which this country is still in
the throws of, has forced companies to be cost-efficient.
Company cars, for example, are important for corporate image,
but the price of new cars continues to soar as does the cost of
car maintenance. If a company needs 100 cars at a price of
Rp 150 million apiece, for instance, a huge amount of money must
be allocated for transportation alone.
Besides which it will have to spend more money on car
maintenance, drivers' salaries, insurance and vehicular taxes.
Obviously, this company, the core business of which is not
transportation, will need a separate division to handle car
registration and the maintenance and repair of the cars.
Unless a company operates taxis -- and as such can run a
business with only 100 cars -- it is cheaper for this company to
rent cars rather than purchasing them. If it rents cars, the car
rental company takes car of any repair work that might be
required.
Renting a car means that routine maintenance, the replacement
of the lubricant, the renewal of the motor vehicle registration
certificate and even insurance are taken care of.
In fact, renting cars is basically advantageous for a company.
For many companies, while it is apparent that transportation
costs are high, a clear account of transportation expenditure
cannot be produced.
These are some of the problems companies may face:
- There is difficulty in drawing up a budget because there is
no certainty about overheads, i.e. when the cars must be sent to
a workshop for maintenance.
- A problem in cash-flow management arises when the company
decides to buy cars because it must allocate a significant sum of
money for the downpayment.
- The company's debt increases as it must pay back its car
loan in installments.
- Return on assets will be lower because investment in
operational cars will only augment the assets and reduce the
chance for investment in areas more strategic for the company.
- The company must pay taxes such as the annual tax on
motorized vehicles, the Value Added Tax on the purchase of cars
and the expenses arising from the maintenance of the cars.
Besides which, the company must also keep a file of the standard
tax invoices for the collection of the Value Added Tax, for
example.
- The company must spend time and money on processing its
insurance claim and other important documents related to
insurance.
In view of the aforementioned problems, it is clear that
renting cars is more cost- and time-efficient than purchasing
them.
It is common today for a company to employ domestic and
foreign experts on a contractual basis for a period of two to
four years only. Therefore, it is better for a company to hire
cars along with their drivers rather than buying cars for these
experts. When the contract expires, what happens to the cars and
the drivers?
Obviously, the car rental business can profit both the
companies hiring the cars and the car rental companies
themselves.
TRAC Astra Rent A Car, for example, has enjoyed a favorable
growth since its inception in 1986. This company was set up to
support PT Astra International Tbk, an automotive company and the
sole agent for several car makes. However, it rents both Toyota
and other makes.
A low rent is not the main consideration for a company when
renting a car. Before a company rents a car, it must find out if
the car rental company can give an integrated solution to its
transportation needs.
A bonafide car rental company must be supported by a skilled
and hospitable staff, reliable cars, professional drivers and
personal services. The staff must always be ready to lend a hand
and understand the needs of their clients.
As a guarantee of its excellent service, a good car rental
company usually has a customer-care division. The customer care
officers will professionally and personally attend to the needs
of the customers and listen to their complaints.
The more branches a car rental company has and the more
workshops it cooperates with, the better it can serve its
customers.
The format of business in the future will be greatly
influenced by the ability to apply standard procedures in all
corporate operations, as well as by the extent to which these
procedures can be applied continuously and consistently to
support all corporate activities.
Another obligation that constitutes the prime concern of a
business is the development of information technology. Bonafide
companies, including those in the car rental business, must meet
all the requirements set for this format of business.
Since 2003, TRAC has applied the Astra Management System and
implemented Balanced Score Card as its management tools to
strategically communicate TRAC's performance to the stakeholders.
The application of this system refers to four perspectives,
namely:
- A financial perspective, which is aimed at obtaining a
strong and solvent financial structure.
- A customer perspective, which is aimed at ensuring good
quality and satisfaction for the customers.
- An internal perspective, which shows reliance on an
innovative attitude in products and services, a strong business
network, an excellent corporate operation and quality management
and technological systems.
- A perspective of learning and growth, which is aimed at
producing competent human resources with strong teamwork.
At this juncture, three parties deserve equal treatment: the
shareholders, the employees and the customers.