Fleet News

Avis suffering as firms tighten up

CORPORATE belt-tightening has hit revenues at daily rental giant Avis Europe more seriously than the terrorist attacks in the United States last September.

The company claims business clients are controlling travel spend much more tightly, driving down revenues by 15% between January and June, compared to a 9% fall in the period between September 11 and the end of 2001. In the UK revenue was down by 13% during the first six months of the year, due to a decline in corporate business.

Fleet-specific rentals also declined sharply during the same period, with Avis reporting 7% lower volumes overall. Its corporate longer term rentals business suffered from the decline in expenditure in the IT and telecoms industries, with demand down 16% in the first half of 2002.

Revenues from accident and insurance replacement business were also down by 5% across Europe, although there are signs of optimism in both Germany and France. However, Avis did see a 9% rise in its leasing related business, driven higher in particular by contract wins in the Netherlands, and overall it succeeded in increasing its revenue per corporate rental by 8% (10% in Germany) during the first half of the year, largely as a result of contracts negotiated last year coming into fruition.

The hire company has reduced the size of its European fleet by 7% from about 115,000 vehicles last year to 108,000 in the first half of this year, thereby achieving no increase in the ratio of fleet cost to revenue over the same period of 2001. It has also reduced its headcount by the same percentage over the same period.

Avis has also tightened its procedures for identifying and recharging damage costs to hirers, and has reduced its vehicle maintenance bills in the UK, Germany and Spain.

The company is also on track to drive more bookings through efficient online channels, with internet reservations accounting for 8% of the total. And new deals with online travel agents Expedia and e-bookers will increase this share in future. However, Avis has rejected ideas to develop a second 'cheap and cheerful' brand for online business.

Mark McCafferty, Avis Europe chief executive, said: 'We have looked at a second brand but because we have good yield management techniques if we want to distribute product at lower cost we can do that. In the main we can achieve most things under the Avis brand – there is an image that brands such as ours are expensive which is not the case.'

Overall, Avis Europe reported revenue down 5.8% to £345.2 million, and pre-tax profit down 22.4% to £32.1 million for the first half of 2002.

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