EVs putting independent rental firms at risk of closure

Insurance, chargers and resale costs make EVs pricey for indie firms Electric vehicles could spell the end of independent vehicle rental companies, a leading family-owned UK firm has warned, amid a wider backdrop of waning demand for EVs generally among hire companies. Kendall Cars, a rental group with 14 branches in the south-east and a fleet of 1500 vehicles, says businesses like it are closing partly because of the high insurance costs associated with electric cars. Group managing director Mark Kendall said: “Like a lot of smaller hire companies we self-insure our cars to keep our rates low, but EVs are high risk, and a lot of hire companies are giving up because they calculate that as their proportion of EVs increases, they won’t be able to afford to cover them. “The national rental firms are stepping in by ignoring the retail market and renting the vehicles to business customers, who put them on their company insurance. But rental firms like ours can’t survive by ignoring retail customers.” Underlying Kendall’s comments is a lack of enthusiasm in general for EVs among rental firms, which are also worried about the high cost of installing chargers and limited rental demand. His prediction that firms will close won’t please car makers, which sell thousands of cars to the rental sector and regard it as a convenient safety net when other areas of the market are depressed. For example, in 2024 there were 228,000 rental vehicles on the road, an increase of 21% since 2020. “Rental has always been a release valve for car makers wishing to sell cars, and although there is some [demand] for EVs, it remains low,” said Adam Forshaw of UK rental and leasing trade body BVRLA. The main issue for his members is installing chargers. “This is expensive for rental firms and there are no financial or tax incentives for their customers to choose an EV over a petrol or diesel car,” he said. Kendall agrees that charging his EVs is a costly headache. He said: “We’ve just installed four expensive charge points at our Wimbledon branch but, elsewhere, when customers return our EVs with very little charge – as many do – we have to drive to a charge point, which costs us time and money.” He added: “To encourage customers to recharge their cars, we’ve had to impose a £50 surcharge when the battery’s return level is below 50%.” Kendall’s experience of rental EVs raises other issues. Like many independent rental firms, his company buys its cars new for cash and the aim is to resell them later for a good price. But that’s not possible with EVs, he said: “We can get good discounts on new electric cars – a lot more than for the petrol and diesel vehicles we also buy – but they lose a lot of money very quickly. For this reason, I prefer to buy used ones.” However, Kendall’s biggest challenge is keeping rates competitive at a time of rising costs. “We’ve had to increase our rates by 5% but that’s nothing compared with the increases in operating costs and new car prices that we’ve had to absorb,” he said. “To help boost revenue, for the first time we’ve introduced a collision damage waiver fee of £10.” This challenge has been seen Europe-wide, according to Tom Dickinson, head of commercial at Zest, a car hire broker. He said: “Rental prices haven’t kept pace with the rising costs of purchasing, maintaining and repairing vehicles, as well as increasing operational expenses.” Dickinson warned that UK holidaymakers need to watch out for expensive add-ons as rental firms battle to keep rates down. He said: “For example, across 11 major airports, the average daily vehicle rental this year is £47 compared with £55 in 2024. While this may appear benefi cial to consumers, to compensate for lower rental prices some car hire companies may resort to aggressive upselling of insurance and upgrades or infl ate damage and repair charges. UK holidaymakers should book their rental with reputable companies offering proper insurance cover to protect their excess.”

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