Control your cash flow with rented vehicles

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.