Control your cash flow with rented vehicles

Sudibyo M. Wiradji, The Jakarta Post, Jakarta

More companies are turning to vehicle rental companies for their transportation needs rather than purchasing new vehicles, not only to reduce operating costs but also help ensure that operations proceed smoothly.

Using rented vehicles frees companies from making large investments, especially when several cars are needed all at once. Compared to buying new cars, renting vehicles is more efficient and practical as extra money does not need to be spent on maintenance, drivers and various unanticipated costs.

In short, using rented vehicles can help a company to better manage its cash flow.

"For a company, operating its own cars might be okay in the first one or two years but after being used for several years, the cars can begin to create problems that can disrupt business operation," said Donny Hendrawan, general affairs manager of PT Tatasolusi Pratama, a customer of a vehicle rental company.

Tatasolusi Pratama is a company involved in trading and distributing US-made air conditioners.

Donny said that as part of the company's efforts to maintain customer satisfaction, Tatasolusi Pratama used rented vehicles as "we have to be ready anytime our customers need technicians for repairs or regular servicing purposes," he said.

Apart from that, purchasing new cars requires extra time to handle associated matters, such as vehicle documents, driving licenses and insurance, which is frequently time-consuming, he said.

The number of companies taking advantage of vehicle rental services increased following the financial crisis that hit Indonesia in mid 1997.

The crisis, which left many companies in financial trouble, forced them to carry out massive restructuring programs, including cutting their overheads so as to enable them to remain afloat. As a result, many companies decided to use rented vehicles to support their daily activities rather than buying new ones.

Even though the economic situation has improved, many companies have continued to use rented vehicles after discovering how beneficial they were for their businesses.

Customers of vehicle rental companies are now more varied in terms of business lines, and come not only from the service industry but also the manufacturing sector. Regular users of vehicle rental services include textile producer PT Tokai Teksprin Indonesia, contractor PT Adikarya, insurance firm AIG Lippo and telecommunication firms PT Telkomsel and PT Indosat.

The companies have become regular clients of major local rental companies such as GKBI Motor, Cipaganti Rental, Golden Bird Metro, Pusaka Prima Transportation, Astra Rent A Car (TRAC) and Indorent.

These companies generally rent their cars for between three and five years. But many companies also rent cars based on one- year leases or on an hourly or daily basis.

Commonly, the contracts with vehicle rental and leasing companies also cover maintenance, car replacement, periodic servicing and insurance. The rental companies also provide a driver if required.

The rental fee varies, depending on the term and factors like the make, model and condition of the car. The kinds of cars rented by companies depend on customer requirements. For example, companies that need to transport goods or equipment hire pickups, wagons or trucks. They also rent luxury sedans for board members.

PT Tatasolusi Pratama started to use a vehicle rental service in 2001 when the management realized it was important to have several cars available at the same time without having to make a large investment.

Donny of Tatasolusi said that the number of cars rented by the company in Jakarta depended on pressure of work. "When we have more orders or service requests, we rent more cars. But on average, we use eight rented cars per day," he said.

The company rents vehicles, mostly Kijang pickups and vans, from different rental firms, including GKBI Motor, TRAC and PT Trimita Adikarya Prakarsa, for practical reasons.

"We need pickups that always work well to deliver heavy goods, such as AC units and heavy parts like compressors," Donny said.

Like Tatasolusi Pratama, PT Tokai Teksprin Indonesia has also taken advantage of rented vehicles to support the company's activities.

PT Tokai Teksprin Indonesia's general affairs manager said that using a vehicle rental service allowed the company to maintain a fixed budget for its transportation needs, and help smooth out the company's operations as with rented vehicles, its transportation problems could be minimized.

"When a rented vehicle is damaged in an accident, we just inform the vehicle rental company which will later pick up the vehicle for repair," he said. "If the maintenance take more than four hours, we will be given a replacement," he added.

When the company started out in business back in 1991, it had three cars of its own to support its day-to-day operations. However, in line with its growth, more vehicles were needed to transport textiles to and from Tanjung Priok Port and to other garment factories both in the city and outside the city.

Currently, the company uses seven rented Kijang vans for transporting textiles and six Accord and Camry sedans for use by the company's directors.

Many companies also rent vehicles on a daily basis even though they have their own vehicles for business operations.

PT Adikarya, a building firm, said that the company had rented several vehicles from different rental companies to support its expansion.

The rented vehicles are generally used to take guests, mostly construction project teams from different provinces to the relevant ministries, according to the company's marketing manager, Hari Mardiono.

The number of vehicles the company rents on a daily basis depends on the number of guests. "But on average we rent eight Kijang vans per day," he said

He said that the vehicle rental company charged Rp 375,000 for one Kijang van per day. The charge included a driver.

"The important thing is that the vehicles are available any time we want them for our transportation needs. Therefore, we do not rely on one vehicle rental company alone," he added.

Meanwhile, freight forwarder PT Aerospeed uses two rented six- wheeled trucks as the company does not want to concern itself with the maintenance of vehicles that require special treatment.

The rented trucks are used by the company to transport parts for construction equipment, such as for forklifts and excavators, according to the company's operations manager, Saiful Kodri.

The company pays around Rp 6.5 million for a box truck per month.