This topic discusses the state of Sixt’s competition. Here is our wiki article on the same:
I=5
- Hauck Aufhäuser maintained Sixt’s “buy” rating and a price target of 108 euros.
- Analyst Nicole Winkler said Europcar’s entry into the U.S market is not a serious threat.
- She expects continued positive developments for Sixt.
I=5
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Alain Favey, CEO of Europcar told Handelsblatt that the company plans to expand into the U.S market by opening the first station at Los Angeles International Airport (LAX) in the first half of 2024.
“We are targeting around ten locations in America at the end of 2024,” he said.
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Europcar is already active in 25 locations in U.S through its subsidiary Fox Rent A Car, which has 1% market share in U.S. and 20,000 rental cars, mainly operating in airports.
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Europcar wants to increase the U.S fleet size to 30,000, though Favey did not give the period for the growth target.
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One strategy that Europcar plans to use, which is still under discussion, is to rent and service its fleet at Volkswagen’s dealer shops, and then market them after seven or eight years as used cars.
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Europca, which has 9,000 employees, recorded 3 billion euros in sales in 2022 and EBITDA margin of 17%.
I=6
- A recent customer survey by the American Customer Satisfaction Index- which surveys 500,000 consumers across 40 industries-ranked Sixt last, with a satisfaction score of 72%, below the 76% industry average.
- Sixt customers complained about their interractions with the company’s staff as well as the quality and cleanliness of its vehicles.
- Analysts such as Michael Austin from the US analysis firm Guidehouse praised Sixt’s rapid expansion in U.S but warned that it could easily lose to its competitors through price cuts and quality of service.
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I=5
- Sixt named “Best Car Rental Company in North America” for the second consecutive year by the Business Traveler.
- Business Traveler is a monthly magazine that is distributed in air lounges across 90 North American Airports and collects votes on nominees of its awards from its readers.
My take:
I would choose the rankings of the American Customer Satisfaction Index though since it doesn’t deviate much from the rankings of JD.Power and Travel and Leisure. It is also based on a larger sample.
Sixt doesn’t appear in JD.Power 2023 rankings but ranks fourth in Travel and Leisure report.
JD.Power report is based on 8,632 business and leisure travelers who rented a car at an airport location between August 2022 through August 2023.Travel and Leisure report is based on 685,000 votes cast in different locations globally.
I=6, January 14, 2024
Hertz said they are getting rid of a third of its EVs (around 20,000), the majority being Tesla cars. As a result, they will incur an extra $245 million in depreciation expense.
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Hertz shares rose 13% today after it upsized its bond offering to $1 billion from the planned $750 million.
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The company intends to use the proceeds of the bond offering to pay a portion of its $2.0 billion revolving credit facility.
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The two investors (Knighthead Capital and Certares) that brought it out of bankruptcy in 2021 by investing $2 billion have already committed to buy a portion of the bond ($250 million) which doesn’t pay any cash interest and can be converted to shares in case of a rally.
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Yesterday, Hertz said it expects elevated depreciation to continue throughout 2024.
“Despite these initiatives, we expect elevated vehicle depreciation to continue throughout 2024, further burdened by an elevated cost structure that does not yet include the benefit of our various contemplated cost initiatives. Forward estimates of vehicle residual values at the expected time of disposal have recently declined, subjecting us to greater risk of losses on vehicle sales and increased depreciation, and, as a result, additional payments may be necessary to meet the collateralization requirements in our ABS programs.”
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Hertz has been facing a liquidity crisis after its bet on EVs flopped. In Q3 2023, it announced plans to sell 20,000 EVs due to a fall in their residual values and rising repair costs. In Q1 2024, they announced that they will dispose off 10,000 more EVs this year bringing the total number of EVs to be sold to 30,000. Additionally, they replaced their CEO and their CFO resigned.
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Hertz currently has $3.9 billion in corporate debt and $10bn in asset-backed bonds (see page 20).
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According to S&P Global May rating, its liquidity is currently adequate and could remain at moderate levels in the next 12-18 months
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I=5
- Sixt was named a favorite car rental company in the Trazees 2024 Award.
- Trazee readers average six foreign trips every three years with over 90% having passports.
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I=5
Sixt ranked third in J.D Power North America survey, an improvement from last year
- Sixt was ranked third in J.D. Power 2024 North America Rental Car Satisfaction Survey with a score of 708, above 688 industry average.
- Sixt was ranked behind National (736) and Enterprise (729).
- The survey was based on responses from 8,379 business and leisure travelers.
- Last year, Sixt didn’t appear in JD.Power Survey.
https://www.jdpower.com/business/press-releases/2024-north-america-rental-car-satisfaction-study
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Insights like those are interesting. Can you see if you can find any costumer satisfaction surveys in germany or europe? If you find a good high quality survey can you map out the performance of the Sixt in the survey over time in a graph?
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I expected Sixt to outperform the likes of Avis and Hertz when it comes to customer reviews in its home region, but apparently not;
- A recent survey of 2,324 individuals by Which? A U.K consumer insights company placed Sixt at the 10th position with 64% marks, behind its major rivals. Customers complained about long queues and staff shortages. Many customers also said they felt under pressure to purchase Sixt’s own additional insurance.
- In 2023 and 2022, Sixt (unlike Hertz) didn’t appear in the top three rankings of German Institute for Service Quality.
- In the last 5 years, Sixt has been ranked 3rd in Europe, after Avis and Hertz in Business Traveller Award.
Hmm I liked the first source but am a bit unsure how reliable the second and third sources are?
Aren’t there more surveys or costumer review sites which could give us insights? Maybe we should look at websites like trustpilot etc.
Have you been able to determine trends for Sixt ranking/reviews in the last years? This would be an important element. If reviews are like always we need to worry less compared if there is a steep downward trend in recent years
Not yet. I think Trustpilot could help with that since reviews websites like the ones above don’t usually give marks.
Maybe you can use Reddit opinions too for this kind of research, I think it was a good idea that Michael from telegram had.
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Yes i agree. I would just be a bit careful not to spend too much time on it, because trying to work with APIs could be time consuming and you already have many other important topics and the earnings season is coming. I ideally would like to make a decision soon if I want to reduce the Sixt position, and for example early insights into, e.g., Hertz or Avis Q3 would be much more important compared to granular details on customer sentiment on Reddit.
I also just added “consumer sentiment based on e.g. surveys, trustpilot, reddit” to our investment framework here. I think it would be great if both of you would also always add new standard components that we are using to analyze a company if we don’t have them there yet. I also believe that a similar framework that breaks down all components to be analyzed could be developed for macro.
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During the recent Sixt annual general meeting, DWS flagged the possibility that competition may have increased in Europe.
“Is it correct to assume that local competitive pressure has increased in European countries like Spain, and that this development is significantly affecting pricing?” Sabrina Reeh DWS fund manager asked.
I think it could be the case given the slowing Sixt’s revenue growth in Europe. This is, of course, something that should be investigated further.
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Do you think apps like TURO (which works like Airbnb for auto) is a threat for these big companies or not?
Apparently it has gotten more popular, but don’t know if it really something to consider
In this post I made pricing pressure is classified as the biggest challenge for the industry due to a segment of low rates currently.
Pricing remains the biggest challenge for rental car operations given a segment of lowball rates in the industry. An operation cannot make a profit or break even on $10 per day rentals, for example, even at theoretical usage rates exceeding 100%.
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I don’t think Turo and Getaround are the main threats. Turo grew its revenue by 18% to $880 million in 2023. But its revenue growth rate has been declining in the past two years. Getaround’s revenue was flat in Q2 2024. Given that they are the pioneers in the segment, I would expect their revenue growth rates to be significantly higher. Also, Sixt is significantly growing in United States, their home regions.
I suspect competition in Europe to be coming from the likes of Autoreisen:
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Is the pricing pressure coming from companies like Turo and Getaround? I assume the 10$ a day in the quote is a theoretical example?
How low are some of the prices in the U.S and how do they compare with Sixt prices in the U.S?
Sometimes even smaller competitors can be a problem if the have the funds to ignite a price war (for example because they have strong VC funding)
I=4
- Sixt said its premium chauffeur and ride hailing service won the Booking.com Traveler Review Award.
- The award don’t assign specific rankings to the companies and was based on over 360 million verified customer reviews.