investors’ meeting...• sixt: pay-as-you-use model in europe • europcar joins mobility as a...
TRANSCRIPT
INVESTORS’ MEETING:
CAR RENTAL, AN
INVESTMENT VIEW
Christy Morris & Chris Brown
Investors’ Meeting: Car Rental, an
Investment View
Christy Morris
Pricing Manager
Chris BrownExecutive Editor, Auto Rental News
INVESTORS’ MEETING:
CAR RENTAL, AN
INVESTMENT VIEW
Christy Morris
Independent Pricing Analyst
Rating the Future
• Market type – any potential for growth?
• Push for rate – opportunity….
• By class – no major changes
• By region – rate data
• Brand behavior
Market Type
• Leisure – flat or shrink
• Commercial – Corp business opportunity
• Government – Spending ???
• Local/Replacement – flat or growth opportunity
• One way - Growth
Small airport growthhttps://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger/
STATE ID CITY 2017 2016 DIFFERENCE ENPLANED PASSENGERS
AZ 1G4 Peach Springs Grand Canyon West 258,038 128,739 100%
SD PIR Pierre Pierre Regional 32,822 8,246 298%
OK SWO Stillwater Stillwater Regional 27,370 10,362 164%
NY OGS Ogdensburg Ogdensburg International 22,957 10,281 123%
CA CCR Concord Buchanan Field 14,517 67 21567%
KS SLN Salina Salina Regional 13,850 3,967 249%
SD ATY Watertown Watertown Regional 11,160 2,117 427%
FL VRB Vero Beach Vero Beach Regional 9,110 4,581 99%
CA CRQ Carlsbad McClellan-Palomar 5,931 180 3195%
OR PDT PendletonEastern Oregon Regional at
Pendleton5,701 2,582 121%
AR HRO Harrison Boone County 4,371 1,178 271%
PA AOO Altoona Altoona-Blair County 3,806 1,865 104%
GA PDK Atlanta Dekalb-Peachtree 3,259 472 590%
NM FMN Farmington Four Corners Regional 2,739 1,359 102%
AK 6R7 Old Harbor Old Harbor 2,586 1,285 101%
TOP 15 GROWTH 418,217 177,281 236%
Push for Rate
• Push for rate to keep revenue
• If volume is flat or shrinks (at airports) due to ride share and economic in/stability, you can only maintain revenue and profit margins by having right size fleet, better class mix, lower fleet cost, and counter sales increases
Class
CCAR – most rented GOV vehicle, also XXAR is compact or larger (manager’s special)
IFAR – car cost may be the same or even $50/mohigher. If you have 200 in fleet (90% = 5400 days) if you get $2 more per day = $10,800
MVAR – market and seasonal profit maker
Regional rates provided by Rate HighwayYear Month Region SIPP Avg. Rate Year Month Region SIPP Avg. Rate
2018 11Midwest ECAR $ 52.70 2018 11Midwest ECAR $ 269.15
2018 11Northeast ECAR $ 55.93 2018 11Northeast ECAR $ 266.21
2018 11Northwest ECAR $ 41.13 2018 11Northwest ECAR $ 174.97
2018 11Southeast ECAR $ 42.06 2018 11Southeast ECAR $ 196.19
2018 11Southwest ECAR $ 37.77 2018 11Southwest ECAR $ 207.21
2018 12Midwest ECAR $ 50.81 2018 12Midwest ECAR $ 275.40
2018 12Northeast ECAR $ 62.09 2018 12Northeast ECAR $ 306.00
2018 12Northwest ECAR $ 46.50 2018 12Northwest ECAR $ 278.64
2018 12Southeast ECAR $ 52.27 2018 12Southeast ECAR $ 268.61
2018 12Southwest ECAR $ 49.19 2018 12Southwest ECAR $ 250.81
2019 1Midwest ECAR $ 45.78 2019 1Midwest ECAR $ 248.41
2019 1Northeast ECAR $ 44.86 2019 1Northeast ECAR $ 217.74
2019 1Northwest ECAR $ 36.38 2019 1Northwest ECAR $ 188.53
2019 1Southeast ECAR $ 36.06 2019 1Southeast ECAR $ 184.58
2019 1Southwest ECAR $ 35.65 2019 1Southwest ECAR $ 185.88
2019 2Midwest ECAR $ 47.42 2019 2Midwest ECAR $ 259.79
2019 2Northeast ECAR $ 55.98 2019 2Northeast ECAR $ 280.97
2019 2Northwest ECAR $ 37.09 2019 2Northwest ECAR $ 202.71
2019 2Southeast ECAR $ 43.64 2019 2Southeast ECAR $ 228.77
2019 2Southwest ECAR $ 42.30 2019 2Southwest ECAR $ 224.29
Notables
• Northeast still shows best rates
• Midwest always stays mid pack
• DEC had great rates overall
• JAN showed low rate trends
Brand behavior• Sixt – gaining US market share
– https://www.latimes.com/business/la-fi-travel-briefcase-sixt-20180421-story.html
• Hertz/Dollar/Thrifty – restructure has helped, Hertz competes at times, Dollar/Thrifty more inclusive for young renters– https://www.wsj.com/articles/stocks-to-watch-yelp-disney-hertz-
activision-blizzard-dropbox-1541764081 (NOV 2018)
• EHI – aggressive using Alamo and Enterprise on weekends
• ABG – Budget leading
Weekend DFW
Weekend OGG
QUESTIONS?Thanks for your time
INVESTOR’S MEETINGChris Brown
Executive Editor
Auto Rental News
Car Rental: Today, Tomorrow, and
the Blade Runner Future
Las Vegas, 2049
Fleet Sales Q1 2019
Fleet Sales Q1 2018
Sales to fleet up, overall sales down
2019 Q1 light vehicle sales down 2.5% over 2018
2018 Q1 light vehicle sales up 1.9% over 2017
Danger danger! Overfleeting?
On the negative side:
• Interest rates still rising• Wholesale volume peaks in 2019 – 16.6m units!• Residual values will drop 2% - 3% in 2019• Per-unit fleet costs will rise
On the positive side:
• Healthy business and leisure travel demand (USTA: 2.4% growth YOY 2019, 3.2% growth in business)• “Upstream” (non auction) sales have positive impact• Improvements to revenue management – AI, Big Data
Prognosis:
Fleet costs will go up but the sky is not falling.
Preparing for the Future, Today
Connected Rental Fleets
• Avis 100k connected cars today, entire global fleet by 2020• Enterprise Holdings to connect 100k of GM fleet this year• Europcar has 35,000 units connected• Hertz working through Donlen FMC for connectivity• True benefits not realized in 2019
(What does connected mean, and why is it good?)
TNC Rentals
• Hertz: $300m in 2018 with 42,000 units, will grow 30-40% this year.• Avis multi-year agreement for Lyft Express Drive, in-house rental• Lower RPU, but lower costs• HyreCar is public• Entrepreneur suppliers jumping in – fleet growth spikes
Feeding the insatiable beast
Peer-to-Peer Market
• Peer-to-peer market is real and growing (Turo, Getaround, Avis invests in Fetch)• Rental companies, private entrepreneurs supplying platforms• Issues surrounding taxation, airport fees must be solved
Market growth, legislative issues
Subscription Market
• OEMs, tech companies, dealer groups have programs• Models forming, in data acquisition mode• Car rental knows this transaction model. Does it have the right to win? Does it want to?
What’s the profit formula?
Fleet Management as a Service
• What is FMaaS?• Avis partners with Waymo• Hertz/Donlen managing Aptiv’s AV fleet, Apple leasing Donlencars for AV fleet• Fleet management companies ready to play too.• Car rental knows this transaction model. Does it have the right to win? Does it want to?
A car rental diversification strategy
Car Rental and MaaS
• What is Mobility as a Service?• Avis: Zipcar deployed at South Fla train stations• Sixt: Pay-as-you-use model in Europe• Europcar joins Mobility as a Service Alliance• Helsinki is model city – yet few rides on Whim app• Indie RAC joins moovel app in Japan• Issues with system rollout – public transit vs. rideshare• One car/one person not optimal
Not ready for prime time
Blade Runner
Rentals LLC
Car rental in the era of autonomy• First step is to get rid of the rental counter, second decentralize the fleet• A more efficient process drives partnerships and investment• Incremental change outside of urban environments• Autonomy is ride-hailing model with fleet management• Will car rental be consumer facing, or just manage the fleets?• Franchise model: Local operators serve their markets best• Fleet management is key, but autonomy removes rental’s advantages (acquisition, remarketing)• Competitors: OEMs, TNCs, P2P networks, AV startups• “Own the fleet, own the future”
