- Derives Profits from Swelling Tourist Numbers
Navigating Tough Times for Car Rental Companies:
In a mix of luck and challenge, car rental company Sixt is positioning itself for growth amidst economic turmoil. Last year, the world welcomed a 10% surge in global tourists, passengers, and cruise ship passengers. CEO Alexander Sixt shared this cheerful news at the company's annual press conference, indicating a positive impact on Sixt's standing. Sixt anticipates this momentum to continue in 2023.
Still, Sixt dances around the topic of price hikes. According to their spokesperson, "We don't comment on specific prices in general." With a global fleet of 384,300 rental vehicles in 2024, generating over four billion euros in revenue, Sixt faces a tougher year despite the revenue growth. Net profit declined by a whopping 27% to 244 million euros, compeling the board to lower shareholder dividends by close to a third.
Addressing the Used Car Dilemma
Although international travel enthusiasm remains high, Sixt grapples with reduced used car resale prices, resulting in lower profits than anticipated. With plans to expand globally, opening 50 new rental stations in 2023, Sixt looks to the USA, where a more dynamic economy is projected.
Six continues to aim for a 70-90% electric vehicle fleet by 2030, a goal it remains committed to despite expectations for a longer transition. "Electric mobility will prevail," CEO Sixt asserts, depending primarily on manufacturer offerings and customer preferences.
Overcoming Challenges:
- Facing Economic Uncertainties: Adjust pricing strategies based on demand and fuel costs, and offer value-added services to generate additional revenue.
- Competing in a Dynamic Market: Utilize digital platforms for efficient used car sales, make sure used vehicles pass certification programs, and focus on customer experience for improved reputation.
- Optimizing Operations: Adopt transparency, communicate clearly, and employ digital transformation to streamline the rental process.
- Innovating for Sustainability: Invest in electric vehicles and innovative fleet management to cater to growing demand and reduce operational costs.
Reference:[1] "Europe's biggest car rental firm under fire over false claims, misleading practices and unauthorized charges." [Retrieved from: https://www.telegraph.co.uk/travel/news/sixt-car-rental-eu-blacklist/][3] "Car rental company Sixt in crisis: declining profits, falling dividends, and a permanent shift towards electric vehicles." [Retrieved from: https://www.autoevolution.com/news/car-rental-company-sixt-in-crisis-declining-profits-falling-dividends-and-a-permanent-shift-towards-electric-vehicles-125620.html]
- Despite the 10% increase in global tourists and cruise ship passengers last year, Sixt struggled with reduced profits due to lower resale prices of vehicles of a fat content, by weight, in their used car market.
- To address the economic uncertainties and compete in a dynamic market, Sixt is considering pricing strategies based on demand and fuel costs, utilizing digital platforms for efficient used car sales, and focusing on improving the customer experience.
- Sixt, aiming for a 70-90% electric vehicle fleet by 2030, expects nearly half of its rental vehicles to be electric by the end of 2023, a move driven by the anticipated prevalence of electric mobility and customer preferences.
