Fleet News

Budget plans for growth after year of huge change

WITH a new head office, new team, new owners and even a new website, Budget Rent a Car is getting down to business as it turns up the heat in the battle for fleet customers.

From offices housed inside the main building of its new owner Avis, fresh campaigns are taking shape designed to make the most of the changes that have been introduced in the past 12 months.

Budget has seen major upheaval in the past few years, one of many casualties in an increasingly tough global market.

Long-term growth and new initiatives, including the launch of the country's first-ever car club, was halted in 2002, as Budget Group filed for Chapter 11 bankruptcy in the USA, an announcement which was quickly followed by the global group's sale.

Cendant Corporation acquired Budget's operations and franchised locations in the Americas, Caribbean, Australia, New Zealand and rights to franchise and operate in Asia.

Avis Europe bought assets including rights to use the trademark and name, along with existing franchisee agreements and royalty streams throughout Europe, Middle East and Africa.

At the time of the deal, Avis Europe chiefs said they felt the deal would free up the business to exploit its full potential.

Behind the scenes, key efficiencies have been made through the buying power of Avis, while still keeping the independence of the Budget brand. For example, it could acquire cars through the massive £4 billion Avis deal with General Motors – the biggest-ever fleet supply deal.

The five-year pan-European deal will see General Motors supply Avis with 350,000 vehicles from its Opel/Vauxhall, Saab and Daewoo brands, with the two groups expected to introduce new fleet initiatives and combine brand marketing.

But at the same time, Budget has the independence to make alternative brand choices, as do its franchisees.

Even the Budget offices are hived off into a separate area of the Avis building in Bracknell, reaffirming Budget's role as a separate brand in the Avis empire. The move to Bracknell came with the closure of its Hemel Hempstead site, which also saw the firm's call centre transferred to Salford, moving into Avis Europe's call centre.

But those looking for signs of a negative impact from the move would be disappointed. The Budget Rent a Car call centre was listed as third in an in-depth investigation into quality standards this year, just behind Ford in second and Britvic, which came top.

For Des McCann, director of UK operations, the Budget fight-back has already started.

He said: 'We are a value brand and we have a name that for travel markets is fantastic. It is also a truly global brand, which combined with Avis gives a huge world presence.'

Although the two firms are not sharing rental sites, in locations where Budget does not have a presence, it will still be able to use Avis as a supplier.

Budget is predominantly based around a franchised network with core airport sites in Edinburgh, Glasgow, Manchester and Birmingham owned by the company – Heathrow and Gatwick are also targets – but the rest of its 76 sites are owned by franchisees.

Coverage is soon set to expand to 80 with the appointment of Regal Vehicle Rentals in Chester from April.

McCann said: 'There are some areas where we have got to fill in gaps in the network, but we will continue to expand.'

Despite the upheaval, which might have persuaded less dedicated franchisees to jump ship, throughout the sale McCann said its network had been immensely supportive, reflecting a long-term commitment to the brand. 'We have been tremendously fortunate in the people we have retained. There are some franchisees that have been with the system for 10,15, 20 and even 30 years,' he said.

They are part of a huge global success story which started in 1958 in America and has now grown to a global rental giant, the third largest, offering 150,000 vehicles from 3,000 locations worldwide.

McCann added: 'Our franchisees are extremely loyal and many have been round the industry a long time. They have been very strong at serving small to medium businesses, which they retain with their local focus, giving real value to customers.'

Overall, about 60% of rentals are to business clients and 40% are to leisure customers. Budget is also geared up to serve national rental accounts, with a team of four national accounts managers, while franchisees also have their own field sales teams.

Services include CorpRate, a business user programme offering guaranteed fixed rates worldwide, along the Budget Business Club, for smaller businesses and Fastbreak, which avoids long waits at the rental desk.

McCann knows a lot about loyalty, having stayed with Avis for 27 years, working mainly in franchising and operations.

For three years before moving to the newly-acquired Budget business, he was operations director for the Avis business in Italy, living in Rome.

He said: 'There is a really strong management team in place and although the UK network has been through difficult times, we have achieved a lot.

'I can't emphasise enough how important the support of the franchisees has been and their commitment to the brand and loyalty has helped everyone achieve a huge amount.'

The next steps to building the business are already being taken, with a relaunched website, at www.budget.co.uk.

'We are delighted at the response so far, as it has only been live for just over a month. It offers a very quick process for bookings and transparent pricing, which is what our customers wanted,' said McCann. 'There is also a discount for pre-payment.

'We are encouraging business customers to use this service, as it is ideally suited to their needs.'

As well as online quotes, the site also includes advice on business rental and driving abroad.

McCann added that although Avis held a major part of the UK market, there was room to expand at rivals' expense.

He said: 'When you look at the available market, there is still 80% we don't operate in and that is a big sector of the market to concentrate on. We are complementary to the Avis brand, with a name of our own and a market of our own.'

the budget story

  • 1958 – Morris Mirkin opens first store in Los Angeles with three 10-year-old cars and a $24,000 investment – choosing the name Budget and offering cars for $4 a day or four cents a mile
  • 1959 – Four locations. Mirkin leases 100 new Chevrolets
  • 1960 – Lederer forms Budget Rent a Car Corporation in Chicago to franchise the car rental concept
  • 1963 – Fleet hits 2,000 mark
  • 1964 – First European franchise opens in Switzerland
  • 1965 – Budget Rent a Car International formed
  • 1966 – First UK operations in Croydon and Ilford
  • 1968 – Budget bought by Transamerica
  • 1969 – Budget becomes fourth largest rental company in the world
  • 1979 – Becomes third largest rental company in world, with 62,000 vehicles and 1,200 locations
  • 1989 – 225,000 vehicles worldwide, 3,500 locations and 100 countries
  • 1999 – Launch of Edinburgh City Car Club – the first ever UK commercial car club
  • 2001 – Restructure of networks in France, Spain and UK
  • 2002 – Budget Group files for voluntary Chapter 11 bankruptcy in USA - Cendant Corporation acquires Budget's operations and franchised locations Americas, Caribbean, Australia, New Zealand and rights to franchise and operate in Asia
  • 2003 – Avis Europe completes acquisition of certain assets of Budget Rent a Car, including rights to use trademark and name, along with existing franchisee agreements and royalty streams throughout Europe, Middle East and Africa

    FACT FILE

  • Budget operates in more than 120 countries and territories
  • It has more than 3,000 locations worldwide
  • It has 800 airport locations
  • The worldwide fleet size is 150,000 vehicles
  • About 16,000 people work for Budget
  • Approximately 70% of Budget's rentals take place at airports with 30% local markets
  • 60% of rentals are business and 40% leisure

  • Subscribe to Fleet News.
  • Get the news delivered to your desktop
  • Leave a comment for your chance to win £20 of John Lewis vouchers.

    Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

    Login to comment

    Comments

    No comments have been made yet.

    Compare costs of your company cars

    Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

    What is your BIK car tax liability?

    The Fleet News car tax calculator lets you work out tax costs for both employer and employee