DRIVERS’ appetite to replace ownership with long-term leases can get a vehicle rental firm back in gear after profits stalled, bosses have told The Northern Echo.

Northgate says the cash benefits of lasting agreements, coupled with a turnaround plan to improve sales, will help it grow again and stop competitors “nibbling” away at its finance sheet.

Officials’ revealed their bullish outlook after latest annual results, released yesterday, showed group underlying pre-tax profit was down ten per cent to £75m after being knocked by a dip in UK-based hires.

The company, headquartered in Darlington, had 39,500 vehicles on hire across the UK in the year ended April 30, which was below the 42,400 recorded 12 months previously and a contrast to performances in Ireland and Spain, where deals were up.

The figures also come after the firm last year told the Echo how construction sector malaise and the paring back of renewable energy installation tariffs had reduced flexibility on pricing, and improvements to its online presence will have a positive effect.

He also pointed to the increasing desire of motorists and firms to lease vehicles as a catalyst for growth, saying the latter offers steady payment options and maintenance assurance, rather than costly down payments and service bills.

He told the Echo: “It has been a difficult year and one of mixed results.

“We are seeing growth in the rental and contract hire markets through the shift of customers from owning vehicles and we have seen really strong growth coming through in terms of vehicles on hire in the Spanish and Irish businesses.

“However, we have also seen the UK drag on profits.

“That is somewhat frustrating because the market has been growing.

But we are focused on what actions we can apply to the UK to turn around the business and get it back into growth.

“We have not had the sales and marketing machine working as efficiently and effectively across the business and we’ve had competition nibbling away too.

“But I’m absolutely confident the changes will have a big impact.

“We have put in what we believe is the right leadership team to take us forward and are getting the sales team much more connected with the customer base.

“We are giving them more flexibility on price to get deals done, so they don’t have to come back and get permission (like they have previously had to).”

Mr Bradshaw also confirmed Northgate, which started life as Noble Self Drive in 1981 when Alan Noble set up business from his Darlington home, will further target the second-hand market.

The business already operates the Van Monster venture but Mr Bradshaw, who replaced Bob Contreras, said the potential to make further gains remains great.

He said: “The second-hand market in the UK is worth about £5bn a year and we have a 2.5 per cent market share.

“Van Monster is still the market leader but is under exploited, and there is a great opportunity to invest and improve the business.”

Mr Bradshaw, who was formerly chief executive at Wyevale Garden Centres and UK managing director of Avis Europe, also pointed to an eight per cent increase in Northgate’s proposed full-year dividend to 17.3p per share as a marker of his conviction in the firm’s future.

He added: “To have increased it in such a way is an indication of my confidence of the growth opportunities and how strong the business is.”

Northgate has scores of branches across the UK, including depots in Darlington, Stockton and Blaydon, near Gateshead.