Accident Exchange reports reduced days of car hire
Credit hire company the Accident Exchange group says increased use of public transport, fewer accidents and faster repairs have cut hire lengths, hitting its profits.
The West-Midlands-based firm said: “Reports have cited consumers faced with materially increased fuel costs leading to increased use of public transport, reduced traffic volumes and, consequently, reduced accident volumes. Our recent experiences are consistent with this, with claims activity through the second quarter being lower than both our expectations and the levels seen in the first quarter.”
It warned: “As a consequence of the slowdown in referrals and shorter rental periods experienced in the second quarter, profitability for the six months ended 31 October 2008 will be significantly below management expectations.”
The company warned that it would continue to use litigation to successfully recover credit hire charges. “Cash collections from the litigation process continue to improve, leading to in-house settlement discussions with certain insurers continuing beyond the expiry of the 90 day GTA period and litigation only being used where all reasonable avenues of compromise and negotiation have failed. Litigation will therefore remain a core part of the Group's collection strategy in order to drive cash flow, which is the Group's primary objective. Cash collected through the litigation process increased by 41% in the six months ended 31 October 2008 compared with the prior period. Total cash collected in the period was a record £80.9 million,” it said.
Cutting costs was a problem, the company said. “A large proportion of the Group's costs are either fixed in the short term or are driven by the number of rental cases rather than rental days,” it said. Plummeting second hand car values had also hit it hard.
