Growth in the car rental business is proving elusive for Germany’s Sixt. The company is now looking to diversify into complementary businesses to reduce
its dependence on its highly competitive – and sluggish – core market.
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Moving into used cars might not help boost margins, but providing a one-stop-shop mobility package could help get Sixt back on track.
Times are tough in the car rental business. Transatlantic tourist volumes are still suffering from America’s post September 11 fear of flying.
Meanwhile, economic growth in Europe remains sluggish, and businesses are
continuing to constrain their business travel expenditure as a consequence.
In a highly competitive market, Europe’s market leader, Avis, has warned on the prospects for market recovery during the remainder of the year.
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By GlobalDataThe US parent company of National Car Rental and Alamo entered Chapter 11
bankruptcy protection late last year.
Budget Car Rental of the US followed National into Chapter 11 earlier this year and late last week the company’s UK operation was put into administration.
Against this backdrop, Germany’s Sixt has stated its intention to build up its non-rental activities. The used car market is a complementary area for development, as car rental companies generate a steady stream of ‘nearly new’ cars.
This market is, however, also highly competitive and has suffered from falling prices.
The provision of ‘mobility solutions’ for its corporate customers perhaps offers a better opportunity for growth and profits, encompassing short-term rental, long term car leasing and air travel.
By offering an integrated package, Sixt hopes to add value for its clients and profits to its bottom line.
SOURCE: DATAMONITOR COMMENTWIRE
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