Rental company says businesses are focused on extracting more value from their LCV fleets

Rental company Liquid Fleet has reported growing demand from businesses to extend van hire contracts from 12 to 24 months in reaction to higher new vehicle prices.

The firm said businesses were choosing cost certainty over frequent van replacement cycles but sticking with rental deals to retain operational flexibility. It claimed the trend reflects a change in market conditions triggered by the Covid pandemic, which saw inflated manufacturer pricing drive up the cost of new vans.

Liquid Fleet said the increase in new van prices, however, was not mirrored by rising residual values with some models being worth just 30% of their purchase price after 18 months, putting pressure on total cost of ownership for rental companies. It said another reason for operators to move to longer rental contracts was to reduce the costs of replacing the likes of internal storage systems or external livery.

“As businesses review their fleet strategies, many recognise that extending rental contracts provides a practical way to maintain operational flexibility while managing rising vehicle costs,” said Martin Potter (pictured), Liquid Fleet’s commercial director.

“By moving to a 24-month rental term, customers can spread costs over a longer period while avoiding the impact of repeated vehicle replacement cycles such as replacing vehicle racking and signage. In the current market, that combination is proving highly attractive.”

Despite the increasing number of electric vans coming to market, Liquid Fleet’s LCV fleet remains entirely comprised of diesel models.

“We have looked at plug-in petrol hybrids, specifically the Ford Transit Custom, for customers but no one currently has approached us for a full electric vehicle and that’s despite diesel prices rising dramatically during 2026.” said Potter.

He argued customers were holding off from investing in eLCVs until models with longer range batteries become available, giving them more operational certainty.

With customers seeking to keep a tight control on costs, Liquid Fleet said it has mixed up its purchasing strategies in recent months to reflect the changing market; bringing in the VW Caddy, Renault Trafic and Toyota Proace, while moving away from vans like the VW Transporter.

Summarising the growing preference for longer-term agreements, Potter said: “It’s not about having the newest vehicles on the fleet, fleet managers are increasingly focused on extracting greater value from every vehicle while protecting their businesses from market volatility. Extending rental contracts to 24 months is becoming an important part of that strategy.”