VW/EUROPCAR ACQUISITION
“ACQUIRING LEVERAGE TO BECOME A MOBILITY LEADER”
Europcar has accepted an acquisition offer by a Volkswagen-led consortium. This transaction comes 15 years after Volkswagen sold Europcar in 2006. Still, the move makes sense, says Michel Taride, member of the Fleet Europe Hall of Fame and former Group President at Hertz.
“Not long after its establishment, Europcar was owned by Renault. Volkswagen progressively bought Renault’s shares between 1988 and 1999. In 2006, VW sold Europcar to private equity,” said Mr Taride (pictured right).
Hertz and Avis experienced a similar ownership history, explains Mr Taride:
“Hertz was owned by GM from 1926 to 1953 and then by Ford from 1987 until 2005, when they were also sold to private equity firms. Around 1990, GM also owned around 30% of Avis.”
Why did these carmakers decide to sell their rental car companies?
“They originally used their rental companies as a channel to sell cars and to achieve brand exposure. It was about putting bums in the seats of cars.”
“But then carmakers realised car rental is very complex. It is a service business and capital intensive on top of that. Synergies were hard for OEMs, who needed to refocus on their core business. Volkswagen was expanding into China and South America and it was the very beginning of EVs and carsharing.”
What happened for Volkswagen to change its mind?
“A lot has changed in 15 years. We are going through a mobility revolution, which is a threat to carmakers. This has to do with consumer behaviour – usage versus ownership – which is accelerated by technology (AI, IoT, 5G, …) and regulations related to the environment, congestion and so forth. Carmakers are facing a real threat of selling less and less cars over time.”
“Of course they have been aware of that threat for some time because they have tried to go into mobility but in my mind, they have failed. You see, they may be very good at manufacturing cars, they may excel at tech and R&D but they are not so good at service.”
“Car rental companies have a lot of unique competencies:”
· Fleet management: carmakers build cars, they don’t manage them.
· Customer relationship management: today, OEMs still interact with their customers through dealers, there’s no direct relationship like the one car rental companies have.
· The whole customer journey: shopping, booking, picking up a car, returning, after sales.
· Car rental companies are global: Europcar to a lesser extent but it’s getting there. Car manufacturers are strong in some markets but less so in other markets.
· Car rental companies have a lot of data about the fleet which is increasingly connected, that was not the case 15 years ago, and about millions of customers in 140 countries.
Combined, these five things are big, and none of them existed before. Mobility is a real fact of life now, with new products like carsharing, subscription and so on. I think that’s why Volkswagen is buying Europcar. Essentially, they are acquiring leverage to become a smart mobility leader.”
A major challenge for car rental companies is fleet electrification, particularly investments in charging infrastructure. Is that something Volkswagen can help Europcar with?
“So far, car rental companies have only followed the trend. They haven’t invested a huge amount in R&D like carmakers, who are ahead of the curve.”
“What could happen, is that Volkswagen will push Europcar to electrify and help them do so. In that sense, it’s not unlike the previous time Volkswagen owned Europcar. It’s still about putting bums in the seats, this time of EVs.”
Source:
Fleeteurope.com – Benjamin Uyttebroeck
