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Car rental companies react to Sixt's Internet brand Sixti

Avis, Budget and Europcar to start discounts

Dusseldorf. German car rental leader Sixt's move to offer low-price car hire via the Internet has unsettled rivals, according to research by Automobilwoche. Several are planning to challenge the Munich-based company.

"The market has become more competitive. We are also working on a low-cost brand now," said an Avis official in Oberursel.

Sixt's Internet initiative -- Sixti GmbH -- was founded at the end of May. It has 22 rental stations in Germany and currently offers 1,000 vehicles at rental prices starting from just 5 euros per day, with insurance and a car wash extra.

Sixt sales director Hans-Ulrich Sachenbacher predicts the low-price branches will have an annual turnover of between 10 million euros to 15 million euros. It cost around one million euros to launch the business.

Sachenbacher is not concerned by the fact that Sixti's low-cost strategy is spawning imitators.

"Competition revives the business," he said.

Avis and Europcar are planning to position sub-brands on a low-cost platform. Avis is aiming for its subsidiary Budget to become a worldwide low-cost car rental provider as soon as possible.

Since April 10, InterRent, a subsidiary of Volkswagen-owned Europcar, has been offering VW Golf rentals in Berlin at prices starting at 8.99 euros per day. Originally the low price was aimed at tourists and was meant to rival a similar offer by the low-cost rental company Navicar in Berlin, but now there are expansion plans. InterRent will set up business in Cologne, Munich, Hamburg and Frankfurt "within the next few weeks," according to an official.

Navicar is also planning to expand. The new division of MVS Miete Vertrieb Service AG, a specialist in the rental of construction machinery for 25 years, is hoping to extend its German-wide network of 23 branches.

Alag Auto-Mobil AG, which has bought Budget Germany, is also "observing the market and making plans," according to board member Alexander E. Kowatsch. He declined to disclose details.

There are doubts within the industry that a move into the low-cost sector is profitable.

"The whole thing is just a PR and marketing gimmick," said Antonio Pardo, stockholder at UniRent Autovermietung GmbH in Nuremberg.

Klaus Langmann-Keller, manager at the German Association of Car Rental Companies, Bundesverband der Autovermieter Deutschlands, also doubts that low cost brands will be profitable.

"I don't believe that this will be economically viable in the long-run," he said.

For this reason Remy Keijzer, managing director at Hertz car rental in Eschborn, does not believe in low-cost rentals. He is also aware of image problems.

He said: "There is no way for Hertz to offer low-cost rentals. Our name stands for quality."

Tags: Retail

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