Volkswagen will review all options for its wholly-owned car rental business Europcar International and its IT-services unit gedas, the company said on Friday, according to Reuters.
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VW reportedly said its options ranged from a strategic expansion to an initial public offering. A spokesman told the news agency: “There is no clear tendency for one option or the other”.
Reuters noted that VW’s decision to reconsider the future of Europcar, the continent’s largest rental agency, follows US carmaker Ford’s disposal of its Hertz rental unit earlier this month to a private equity group for $US15 billion including debt.
HVB analyst Albrecht Denninghoff reportedly said he did not believe a full disposal of Europcar would make any fundamental difference to the share price, since he values it at between 600 million to 1 billion euros ($728-$1.21 billion) or just €3 per VW share, nor did he feel it was strategically necessary.
“It makes no sense to sell without cause a very profitable business that enjoys robust annual growth along with a 20% return on equity,” Denninghoff told Reuters.
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By GlobalDataHe told the news agency it would make more sense to give Europcar more independence as Volkswagen does with LeasePlan, one of the world’s five largest fleet management companies, which it bought 50% of in 2004.
“Then the unit’s management wasn’t directly linked to the company and could negotiate more impartially (with other carmakers),” Denninghoff reportedly added.
Reuters noted that one third of Europcar’s fleet consists of vehicles from the Volkswagen group and added that, when Volkswagen bought the LeasePlan stake, chief executive Bernd Pischetsrieder said VW would continue to support its neutral multi-brand approach, which was key to its success.
The report said a complete sale of Europcar would be unusual in view of Pischetsrieder’s interest in building a strong position throughout the value chain as part of his stated goal to develop the group as a “mobility service provider”.
A company source told Reuters a decision on the strategic review would probably not be finalised before next year and affirmed that an expansion of Europcar could also be on the cards.
“After Ford’s sale of Hertz, though, we came under pressure to justify what kind of added value Europcar provides. But whereas Ford sold Hertz to bring in cash and get rid of debt, that is definitely not our situation,” the source told the news agency.
“The market is just forcing us to reassure ourselves on all the positive effects of owning Europcar,” it said.
