‘Optimistic’ van hire firm to buy 20,000 new vehicles

8:54am Saturday 13th February 2010

By Stuart Arnold

VAN hire firm Northgate has signalled its confidence in an economic recovery by saying it intends to buy almost 20,000 new vehicles this year.

The Darlington firm, which is Britain’s biggest van hire company and a market leader in Spain, said the decision to replace almost a third of its fleet of more than 60,000 vehicles would bring a series of benefits to existing customers and attract new business.

It added that the multimillion pound investment was also major evidence of the company’s financial standing and demonstrated its optimism that the UK economy would continue to recover throughout this year.

Northgate had been hit hard by the downturn, as were many of its customers in sectors such as construction and manufacturing, and in the second half of 2008 made a £195.6m loss.

However, a review of the group’s businesses last February – described by chief executive Steve Smith as taking all its medicine in one swallow – subsequently returned to the group to better health and it made a £5.7m profit before tax in the six months to October 31, last year.

Northgate said that even in a difficult economic climate the company was able last year to successfully renew the majority of its bank lending agreements, giving access to new credit facilities that enabled borrowing of up to £880m.

These facilities were now being used to fund the new vehicles and make further improvements to the network.

Gareth Jones, Northgate Vehicle Hire’s UK sales director, said: “Investors and banks showed last year that they have confidence in Northgate.

“Our multi-million pound vehicle investment this year underlines our financial standing and our confidence in economic recovery.”

Northgate said the new cars and vans, the majority of which will be Ford, Mercedes- Benz, Peugeot and Volkswagen light commercial vehicles, would be powered by the latest engine technology and mean improved fuel economy.

Mr Jones said that the company’s flexible vehicle rental package Norflex, an alternative to cash buying a vehicle or committing to a long-term leasing agreements, was likely to drive increasing demand for its services.

He added: “Our decision to invest in the fleet gives us a significant competitive edge over our rivals in terms of being able to respond to customer requirements.”

Ross Clarkson, Northgate’s marketing director, said: “We have turned things around and we see that trend continuing, giving us the confidence to invest in vehicles and network.”