Low-cost rental boom

Business is good for car rental companies Navicar, Sixti and InterRent

Berlin. The competition between budget online car rental companies Navicar, Sixti and InterRent is intensifying.

Navicar, for example, has just launched a cut-price midweek car rental deal. Every Wednesday, Navicar is now offering a car for rent at just 0.99 euros per day -- including 100 free kilometers, liability insurance, navigation system and air conditioning. There are six different car models from which to choose. There’s just one snag -- the offer is only available to customers who book three months in advance.

Nevertheless, the demand for the deal "is overwhelming," said a spokeswoman for Navicar's parent company, MVS AG.

About 85 percent of the Navicar's fleet of 1,200 vehicles is being used at any given time, the spokeswoman added. She did not want to disclose further details due to the fierce level of competition in Germany's car rental sector.

Meanwhile, Sixt subsidiary Sixti -- a budget car rental company that was launched in May -- is making bold predictions about its business prospects for the year.

"In 2003 alone we will have sales of 4 million euros," said Sixti Managing Director Lars-Eric Peters. "Against our expectations, we will definitely make a profit this year."

Peters' goal for 2004 is sales of between 12 million euros and 15 million euros. Company boss Erich Sixt's original aim for next year was only 10 million euros.

During the past four weeks Sixti has received more than 10,000 rental bookings -- some of them for months in advance. For example, the company is reporting a healthy level of bookings for the post-Christmas period.

This is despite the fact that Sixti’s heavily advertised offer of a car to rent for 5 euros per day won’t be available until September, due to capacity limitations.

Currently, Sixti's rental prices for a Smart begin at 10 euros.

"It doesn't make any difference whether the rental costs 5 euros or 10 euros, our prices are still incredibly low," said Peters.

Sixti has already expanded its original fleet of 1,000 cars to 1,500. Its fleet is wholly comprised of Smarts and Ford Focus Caravans. Convertible models make up seventy percent of Sixti's Smart fleet. The company does not charge a premium for the rental of a convertible over a standard Smart City Coupe.

Peters plans to extend Sixti's nationwide network of 10 locations to 14 by the end of 2003, but that will still be less than Navicar's branches.

But Peters believes that Sixti has a distinct advantage over Navicar: "We can make use of wonderful synergies with Sixt, especially regarding personnel and their more plentiful branches," he said.

Peters is not only Sixti's managing director; he is also a regional manager at Sixt.

Business is going so well that Sixti is planning to expand into Italy this year. Sixti already has 12 locations in five other European countries: Austria, Switzerland, the Netherlands, France and the UK.

Peters does not fear a cannibalization effect with Sixt.

"We are targeting different, more cost orientated groups, who don't have any problem with receiving less service,” he said.

About 90 percent of Sixti customers are first-time hirers. The company also found the majority of its customers travel regularly on budget airlines.

InterRent is the third main competitor in Germany’s budget car rental sector. Managed by Frank Boettcher, the Europcar subsidiary opened two locations in Berlin in April and recently added further outlets in Cologne and Hamburg. The network will also be extended to Munich and Frankfurt in the near future.

InterRent rents out VW Golfs at prices starting from 8.99 euros per day.

Europcar Germany boss Philippe Guyot hopes to achieve a turnover of about 12 million euros in 2004 -- which would be equal to rival Sixti's target.

Tags: Retail