Fleet News

Daily rental: Europcar bucks rental gloom

AT face value, the economic environment in which rental firms currently operate seems destined to make profits as elusive as Lord Lucan.

For years, there has been a relatively unstable economic situation with extreme contrasts around the globe. Everything from the spectre of terrorism discouraging travel and environmental disasters has an impact on the rental industry.

According to Europcar, in the past year consumer activity in the service sector has fallen, reflecting a half-hearted attitude to consumer spending, while the increase in the price of oil has had a tangible effect on costs and consumption.

The direct consequence for the rental industry as a whole has been a drop in bookings, part of a long-term trend in the market.

As a result, excess capacity among rental firms competing in the market forced a drop in rates and although the situation has stablilised, many companies have found themselves in a delicate position.

Considering this background, the performance of Europcar on the international stage has been more remarkable than its impressive financial figures first suggest.

During 2004, the company saw the number of customer rental days, the measure of how many days its cars were on hire, rise to 32.4 million from 29.5 million during 2003.

Actual rentals rose from 5.9 million to 6.3 million, while the average fleet rose from 121,000 to 130,000.

But all this would mean nothing if the company did not turn a profit and its balance sheet is significantly in the black, with pre-tax profits hitting a new record for 2004 of €83.9 million, up from €72.3 million the year before.

This is despite the price per rental falling by 2.7%, reflecting the intense competition in the market.

For Salvatore Catania, chief executive officer of Europcar, its performance is the result of striking the right balance between managing risk and making the most of opportunities. He said: ‘We have, in general, taken advantage of the situation, primarily as a result of customers coming over to us, and we have been able to consolidate our position as market leader.Moreover, our marketing strategy was suited to this context. This success is all the more spectacular as some of our rivals are still finding it difficult to move back into profitability.’

Europcar has set itself the target of being the number one operator in its key markets and has already achieved this in Spain, Portugal and Italy, while it holds second place in France.

Fleet NewsNet reported last month that it already has its sights set on China and the United States as future expansion targets.

Fast expansion is possible because of the company’s mix of corporately-owned locations and franchised outlets, with its corporate operations covering Germany, France, Italy, Spain, Portugal, Belgium and the UK.

Although Germany and France together represent nearly 60% of corporate turnover, one of its key profitable markets is the UK, which operates 14,425 cars and 250 vans, with 127 rental locations.

The firm revealed that profits more than doubled in the UK last year, leaping to £6.5 million.

Catania, chief executive officer of Europcar International, put the massive growth down to the quality of the firm’s services and staff, its mix of corporate and franchised sites and a focus in innovation and quality (Fleet NewsNet, March 15, 2005).

Catania added: ‘Becoming the European leader in our sector is not an end in itself. It is the consequence of a global strategy.

‘We are concentrating all our efforts on gradually becoming the market leader in every single country in which we are present.

‘Our aim is to reinforce our leading position in each and every country in order to consolidate our position as number one in Europe as a whole. Europcar no longer has to prove its credibility. We are as good as our word and that is the best guarantee that we can give to our shareholders, to our customers and to our partners.’

Gerhard Noack, chief financial officer, added: ‘Not for one moment do we take out position as European leader for granted.

‘For this year, we have set ourselves an ambitious challenge for the entire organisation to continue in 2005 with a two-figure percentage increase in our results.’

Europcar worldwide

Year Pre-tax profits Employees Average fleet Rentals Rental days
(€ million) (000) (000)
2001 26.2 4,601 122,116 5,608 28,904
2002 51.6 4,727 120,287 5,570 28,501
2003 72.3 4,780 121,693 5,919 29,590
2004 83.9 4,998 130,193 6,388 32,465

City firm to global network

EUROPCAR was founded as a car rental company in 1949 in Paris. It has since grown into one of the world’s largest rental companies, operating nearly 200,000 vehicles worldwide.

It is currently wholly-owned by Volkswagen, but has been in the hands of other manufacturers in the past, having been bought by Renault in 1970.

In 1974, the firm expanded into Great Britain, along with Italy, Spain and Portugal, while it also started developing a new franchise network.

In 1988, Wagon-Lits Group and Volkswagen AG became the new joint shareholders and a year later, the logo changed from orange to its now familiar green.

In 1998, Europcar acquired British Car and Van Rental (BCR), creating one of Britain’s largest car rental networks. The Europcar identity was also modernised.

In 1999, Volkswagen AG became sole shareholder in Europcar as part of a commitment to expanding from a car company to offering mobility solutions.

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