Avis Europe has announced first half results that reflect a ‘twin track’ European economy. While European consumer spending has held up reasonably well, companies are vigorously seeking costs cuts wherever they can. So Avis needs to hope that the non-transatlantic leisure market will continue to hold up until corporate demand returns.
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At car rental firm Avis Europe, in the first six months of the year, revenues from the leisure market were down 3% on the previous year, the replacement rental market down 7% and the corporate sector down 15%. Furthermore, conditions in the corporate rental sector have deteriorated when comparing the first half of 2002 with the period from September 11 to year-end.
The car rental business has been hard hit in the past 12 months. With its dependence on tourists – including the important transatlantic visitors – and the corporate sector, the industry has had to cope with the continuing impact of September 11 and the economic slowdown.
Corporate customers are seeking ways to vigorously cut costs, and expenditure on car rentals has clearly suffered. With fears of a ‘double dip’ recession mounting, companies are unlikely to loosen their grip on the purse in the short term.
One area that has held up surprisingly well has been the non-transatlantic leisure market. In part this reflects a ‘twin track’ economy, with consumer spending remaining surprisingly resilient. The rental companies will be hoping that this remains the case, at least until corporate demand rebounds.
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