Europcar’s acquisition trail in recent years highlights its determination to ready itself for a changing company car landscape and the wider mobility market.
It acquired majority stakes in Ubeeqo, a French start-up specialising in car-sharing, and E-Car Club, a UK plug-in car hire company, in 2015.
Further acquisitions followed, including Brunel, a London-based ride-hailing chauffeur service, and Scooty, a scooter-sharing start-up.
The company has also taken minority investments in Snappcar, the second largest international peer-to-peer car-sharing player in Europe, and Wanderio, a multi-modal search and comparison platform.
Backed by new services designed by its ‘innovation lab’ in Paris, it has ensured a diverse product portfolio which, according to UK managing director Gary Smith helps it offer the choice and flexibility a changing market demands.
“Car rental is a vital part of what we’re going to do going forward, but it’s not the only thing,” says Smith.
To reinforce this changing dynamic and its multi-modal transport model, the business was recently renamed Europcar Mobility Group, and launched a new mobility portal, earlier this year.
An important digital development for the business, Europcar One is designed to give travel managers and fleet decision-makers easy access to the company’s range of services on one platform.
“It was important for us to draw all this together into one single solution,” explains Smith. Car-sharing services, daily rental and longer-term products are all available via the booking portal, as well as taxi bookings both in the UK and abroad.
Business users are also able to offer discounted rates for employees’ personal travel, as well as giving them access to the Europcar Deliver and Collect service, where the vehicle is delivered to their home or work.
At the heart of Europcar One’s design was a requirement to give fleet and travel managers a 360-degree view of every journey – from initial booking through to vehicle return and invoicing.
For Smith, the back-end processes of the system are as important as the look and feel of the portal’s front end. “We can transmit all of the services on to a single invoice and that’s ultimately what I’d want as a customer,” he says.
“I would want to know what the spend is and how it’s being spent. Bringing everything together into a single invoice is massively important to achieving that for our customers.”
At a time when an increasing number of employees are looking at alternatives to the traditional company car, Europcar hopes its mobility offering will tap into that demand.
It also believes it is well-positioned to take advantage of the growing uncertainty around future benefit-in-kind (BIK) tax rates, driven by the new vehicle emissions testing regime, the Worldwide harmonised Light vehicle Test Procedure (WLTP), and the impact of new lease accounting rules, which take effect from January 2019.
The rule changes will mean leased assets (including vehicles on operating leases) will be brought on to companies’ balance sheets for those reporting under international rules. Keeping vehicles off-balance sheet helps to keep the debt-to-equity ratio low.
Smith believes it is the “flexibility of the offer” however, which is changing people’s perceptions. He explains: “Rather than tie yourself into a two- or three-year lease, where you’ve got exit penalties etc., you can choose a flexible rental.”
Advantage Long Term, for example, offers four monthly mileage options of 1,000, 2,000, 2,500 or 2,800 every 28 days. Vehicle excise duty (VED), service, maintenance and roadside assistance are included, while it is available with own company insurance or Europcar’s collision damage waiver (CDW) insurance.
“Where there is uncertainty, rental is the best solution because it gives flexibility. You’re not committing yourself to any long-term contract and the pricing is not as different as you think,” says Smith.
‘Business ready’ vehicles fitted with Bluetooth and sat-nav can be provided from three to 36 months – a longer-term hire solution without any long-term commitment, he says.
“It’s a real area of focus for us now. We’re starting to put the resources from a UK perspective behind it and we’re starting to see it grow. The opportunity is not only there for both traditional cars and vans, but for specialist vehicles as well.
“We’ve made the investment and now we’re starting to see the fruits of our labours.”
Smith explains that once fleet decision-makers “open their minds” to a rental product, they see the benefits. “It’s a great opportunity for employers to change the way they manage their company car schemes,” he says.
“Employers want to give flexibility and not everybody wants a company car.”
Furthermore, the potential financial impact of clean air zones, as towns and cities across the country target pollution hotspots, could fuel further uptake in its short-term car-sharing products.
Replacing traditional pool car services with car clubs, which can be accessed by employees on a pay-as-you-use basis during the working week and by the public outside office hours, are driving improvements in air quality.
The idea first gained traction with councils and now, says Smith: “Companies are starting to see the advantages of not tying up scarce resources and the benefits of operating the latest vehicles.”
On average, Europcar’s 50,000-plus vehicles are less than five months old. The majority are bought on a buy-back arrangement from manufacturers.
“By having that cycle, they are always the latest models, have the latest safety equipment and the latest emissions and fuel efficient technologies,” says Smith.
Europcar also expects the share of pure electric and hybrid vehicles on its fleet to reach 5% by 2020.
Its plug-in fleet share currently stands at around 3%, with vehicles bought outright by the business, complete with the residual risk.
Smith says: “The latest technology comes at a cost and you’ve got to try and make sure there’s a market for them.”
However, he admits that has not been easy, with customers less keen to make the switch. Research conducted by Europcar revealed that four out of five (78%) respondents said they would not want to hire an electric vehicle (EV).
Instead, it showed diesel remained the fuel of choice for almost two-thirds (63%) of its car hire customers.
Smith is confident that will change over time and says the business will continue to find “the right solution” for its customers, whatever the powertrain of choice.
Car rental industry is ‘in the blood’
Managing a UK fleet of 50,000-plus vehicles across 175 locations, serving both corporate and leisure markets, in a low margin business is not without its challenges.
Leisure pricing, for example, moves several million times a month, while vehicle demand can shift dramatically from one location to another.
“Capacity management is a vital part of the retail business and Europcar is both a retailer and a B2B provider of rental services,” explains Gary Smith.
“They operate in different spaces, with the leisure business more focused to the weekend and the corporate business more mid-week.”
Matching vehicle numbers to demand in different geographical locations, when there is a cost consideration in moving product, requires a tactical approach akin to a military operation. “That’s the thing about rental,” says Smith. “It’s fascinating.”
Smith has worked in the vehicle rental industry for more than 25 years, working his way up through Avis Rent a Car’s ranks to become financial director, before embarking on a career in consultancy looking at other industries.
However, within a year, the draw of the rental industry was too much to resist and Smith joined Europcar UK Group as financial director in 2012.
“It is one of those industries that is in your blood,” explains Smith. “If you like a dynamic, fast-paced business, where you have to have your finger on the pulse, car rental is absolutely for you.”
Smith was appointed managing director for Europcar UK as part of a number of board level changes in 2016.