Hire and Rental News - May 2019

INDUSTRY IN FOCUS Considering your ROI – why it matters Platform Sales Australia believes it is important to be able to identify a valuable fleet asset versus a financial burden on profitability. B alancing a wide-range of assets to meet customer needs is a critical component that impacts the success of any hire business. More importantly however, is ensuring those assets generate enough income to build sustainability for the future. In many cases, when purchasing a new asset, the initial investment can overshadow the bigger picture, such as total cost of ownership (TCO), utilisation, hire- rates and resale value at end-of-life. These much broader considerations are what will truly impact the return on your investment. TCO considerations might include finance costs (such as leasing/depreciation), ongoing service and maintenance, downtime, labour costs (wet hire), as-well-as the expected resale value of the asset at end-of-life. Taking the time to investigate and understand these costs will ensure you are able to apply accurate hire rates, based on utilisation. Here are some considerations, based on our experience. Finance Costs Shopping around for the best interest rate is usually a given, however it’s important to consider the residual too. Further research should be undertaken on the current sale price of your potential asset at a similar age to when you would consider disposing of it; the value should ideally exceed any residual you may be liable for. Service and Maintenance Most equipment will require quarterly and annual servicing/ inspections. Depending on how long you plan to keep the asset, a major inspection will likely be required as well. When investigating costs, ask the supplier to provide a quote for the asset’s maintenance someone said. This will provide increased visibility into costs, allowing for more accurate budgeting and determining suitable hire rates. Downtime Let’s face it, equipment breakdowns happen. This doesn’t usually mean your asset is inferior, however, the frequency of breakdowns and the supplier’s ability to repair the equipment in a timely manner will impact your customers, and therefore your business. Researching both supplier and equipment reliability will go a long way in reducing overall downtime associated with breakdowns. Parts availability and supply history will also provide valuable insight into the commitment that comes with your asset. Common parts should always be available. Remember, every day an asset is out of service, impacts both customer satisfaction as-well-as your ability to generate income. Hire Rates The market can often dictate hire rates, so we found it important to research current hire rates for the same/similar equipment while comparing this with the costs we detailed earlier. The margin you add to these costs should also consider your overheads. If you decide on a 30% margin and your overheads are 20% of your revenue, then your actual margin is only 10%. Will this sustain your business while maintaining a competitive hire rate? Utilisation Determining the correct hire rate to cover your total cost of ownership with a potential margin is one thing, but it also needs to link to an expected minimum utilisation rate. When we research our own ROI, we explore expected minimum (required), and maximum (optimal), obtainable utilisation days and factor this into our hire rate equation. Platform Sales Australia supplies a range of innovative powered-access platforms built by leading manufacturers worldwide. n Visit: www.platformsales.com.au Honda Power Equipment has launched its redesigned HRX lawn mower series for 2019 Redesigned lawn mower delivers more Honda Power Equipment has launched its redesigned HRX lawn mower series for 2019 in either HRX217HZU (Electric start) or HRX217HYU (Recoil start). The HRX Series are the first Honda mowers to incorporate an all-new GCV200 engine, the most powerful lawnmower engine in the Honda range, delivering a power (HP) increase of almost 12%. The new engine delivers 10%more torque, which means more force is delivered to the blades. A brand new Brake Blade clutch (with 14%more capacity) has been designed to cope with the increased power. Honda’s Blade Brake system safely stops the blades from spinning, allowing users to step away from the mower and keep it running. The GCV200 engine has a larger fuel tank filler (a fuel spout with a 60% larger circumference than the GCV190 engine) for quicker and easier re-fueling with fewer spills. It also has a larger oil fill tube for more convenience when adding and draining oil; a more easily-accessible, tool-less air filter that protects the engine from yard debris and dirty conditions; more direct access to spark plugs for quicker changes and a carburetor with a simpler and more rugged stud bolt design. Design features include an improved combustion chamber shape, advanced auto choke design, and easier fuel and oil filling, make the GCV200 engine convenient to use and operate. The GCV200 also features the CycloFlow design, which strengthens turbulence in the cylinder and provides more stable combustion. The newly enhanced HRX Series features the Honda Versamow System with Clip Director which features a lever located behind the engine cowling, to operate a sliding door between the lawn mower deck and the grass bag, allowing the operator to easily choose or change the preferred mowing option. The configuration also offers a setting for leaf shredding that recirculates leaves until they are small enough to pass into the rear-discharge grass bag, allowing the operator to vary the ratio between mulching versus catching. n Visit: https://powerequipment.honda. com.au/Premium_Domestic It is important to identify a valuable fleet asset versus a financial burden on profitability By Natalie Sargeant & Andrew Satterley, Complete 360 for Platform Sales. P58 HIRE AND RENTAL NEWS MAY 2019