Sixt Product and Strategy

Investments
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I=5

  • Sixt is currently phasing out Tesla Models in its fleet due to their declining resale values, according to a report by Focus Online.

    “We would like to inform you that we are currently not acquiring any more Tesla vehicles. In addition, we are currently reducing the number of Tesla vehicles in our rental car fleet,” Focus Online quoted an email sent by Sixt to its customers.

  • According to Focus Online, Tesla models don’t have buy-back agreements that eliminate residual value risk.

  • Also, fluctuating prices of Tesla Models make it hard to forecast residual value.

  • Sixt doesn’t indicate the number of Tesla models it has but it’s reported to be well under 5,000 globally.

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  • Sixt signed a multi-billion euro deal with Stellantis for purchase of 250,000 vehicles by 2026 that will be use in North America and Europe.
  • The first significant delivery volumes will occur in the first quarter of 2024 and will continue throughout the year.
  • Sixt said that the specific quanties, order compositions and delivery dates beyond 2024 can be flexibly agreed between the two companies as per fleet requirements and demand.
  • Deliveries will include several vehicle classes from SUVs to vans and trucks (including 7- and 9-seaters), as well as all drive types including BEVs.
  • The two companies will also explose potential cooperation in other areas such as Mobilisights and Stellantis’ data as a service (DaaS) business.

Assessment
The significant delivery volumes for 2024 could indicate that Sixt expects a strong demand in the current year given that they were cautious last year with regard to fleet purchasing in 2024.

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Wow that’s an surprising announcement as Sixt worked heavily with German premium OEMs in the past. Signing such a large new agreement is certainly a risk as many of Stellantis brands are not premium brands and established partners should not like it.

Maybe Sixt got an particular good deal as Stellantis CEO Carlos Tavaris is hinting at the marketing effect that comes with exposing Stellantis newest technology to costumers via car rental.

“This partnership with SIXT enables current and potential Stellantis brand customers to immerse themselves in our newest offerings with the most advanced propulsion, vehicle connectivity and thoughtful comfort.“

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I=5, SI=+2%
Buy, €133 : Analyst Yasmin Steile of Berenberg says its supply contract with Stellantis carried advantageous terms which reduces residual value risk in North America. She is also confident with Sixt’s current refinancing.

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I=3

  • Sixt introduces Sixt Charge, a charging solution in Germany, Austria, France, Belgium and Luxembourg which has been developed in partnership with Elli, Volkswagen’s charging unit.
  • As a result, Sixt customers will have access to around 400,000 charge points in Elli’s charging network that are accessible without a physical card.
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This topic discusses Sixt’s products and strategies.

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I=5
In its 2024 Analyst day,

  • Sixt showcased it’s new “Car Gates” technology that takes between 200-300 photos of cars and uses AI to automatically analyse them and spot damages.
  • Sixt also talked about its strategy for the B2B Vans and Truck business which includes growing in Europe and U.S through acquisitions and partnerships, respectively.
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I=3
Stellantis has delivered around 30,000 vehicles to Sixt in the first 5 months of 2024, covering more than 50 models from 9 iconic brands.

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Sixt North America is working on a counter-bypass experience and a new loyalty program in an effort to attract more corporate clients

  • In an interview with BTN, Sixt head of North America Tom Kennedy revealed that they are working on a counter-bypass experience and a new loyalty program that should help them to attract more corporate clients.

    “We’re still very, very small, but we’ve been growing pretty well on a percentage basis. [Previously,] no corporate would entertain us as an alternative to Avis, Hertz or National because we just didn’t have the presence. Now that we’re in 51 airports this year and have a counter-bypass process, and we’ll be launching a revised loyalty program, which also is important in the U.S. market for those frequent travelers, I think we have all the components now to aggressively compete for that corporate frequent traveler,” he said.

  • Kennedy added that they are also looking to expand their “Proovstation”, a technology that scans for damages to other stations.

  • He also said that they are testing a new technology that checks for fuel levels, mileage and what time the car was returned so as to enhance customer trust.

https://www.businesstravelnews.com/Interviews/Sixt-Takes-Steps-to-Establish-Itself-as-Viable-US-Competitor

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Alexander Sixt said a vast majority of their codebase is developed in-house.

“The vast majority of our codebase is developed fully in-house, operating on a modern multi-service cloud architecture, with over 100,000 deployments in the past year alone.
This foundation gives us the speed, ownership, and flexibility to adapt quickly — and positions us strongly for the AI revolution ahead,” he wrote in a LinkedIn post.

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Sixt is betting on car subscriptions and synergies with car dealerships

  • In an interview with Autohaus last month, Sixt’s Chief Business Officer Vinzenz Pflanz reiterated that demand for car rental is strong.

  • Pflanz said he sees potential in car subscriptions.

    “We are very satisfied with the demand for our Sixt+ car subscription and see further potential here,” Pflanz said.

  • Sixt+ auto subscription service (launched in 2020) has been rolled out across all of Sixt’s corporate markets in Europe and the US.

  • He also said they are betting on synergies with car dealerships such as fleet distribution and customer contact.

Assessment

Car subscriptions will help Sixt generate steady income from vehicles over longer periods, and close ties with dealerships assists in marketing and could even boost the sale of used cars.

GPT 4o Deep Research Summary (Notion)

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Are there any details in terms of numbers how car subscriptions currently contribute to the top and button line of Sixt?

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There are no recent numbers. However, in 2023, Sixt said it was already making a substantial contribution to revenue.

SIXT+, Sixt’s subscription offering since 2020, is now in operation successfully in 10 countries and already making a substantial contribution to revenue," Sixt said in its 2023 annual report.

EuroGroup Consulting estimates that it currently brings in 1.3 billion euros (page 17).

One year after its launch, it had more than 10,000 subscription contracts and was generating an average revenue of more than €700 per vehicle per month.

It says in its website that it has 100,000+ customers.

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I think this is a topic worth drilling into more as it will change how i think about the company if this indeed a very substantial part of revenue.

Sixt revenue grew from €2.3 billion in 2021 to €4 billion in 2024. (Valuation model)
I take 2021 as the baseline for this analysis because 2020 was artificially low due to Covid and is not representative.

Do we know which world regions it’s car subscription model is active in and substantial? By looking at factors like where in the world Sixt revenue growth is coming from (+ how much of it could be driven by car subscriptions), the margin profile of the car subscription service in comparison to their traditional car rental model or further clues from their annual report we might be able to estimate roughly how important it is by now.

Esp. figuring out the margin profile of this business in different world regions would be very insightful given that it is likely an ever growing and more important business line.

Overall i would be looking for a more detailed and extensive analysis and the time it takes to get those insights is a bit less important.

The 100,000 costumer stated on their website feels a bit vague as it relates to the “Sixt family” and it might also include past costumers.
If there would be indeed 100k costumers paying €700 monthly on average this would translate to €840 million euro a year in revenue contributions which might be on the high side given that it is such a young business line and they typically don’t grow as fast.

The €1.3 billion mentioned by EuroGroup consulting feels very unrealistic as it would imply that almost their total revenue growth is coming from this new and nascent business line while we know that the traditional car rental business and esp. prices boomed in the years after Covid.

Vague costumers
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Regarding relevance: Predictions by Oliver Wyman and others that the car subscription market might make up 30% of all new car registrations by 2030 in Germany and 16% of all new car registrations in Europe by 2035 highlight how important this business line might become.
I am not sure by how much consultants like Oliver Wyman have a tendency to overestimate trends so we should also have a look how large market is by now and how fast it has been growing the last couple of years to get a take ourselves. (& look up industry predictions like the one mentioned above if they are freely accessible)

(Sixt Annual Report 2024 p. 50)

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Sixt+ had around 19,000 active contracts in 2023, 16,000 in 2022 and 10,000 as at Q2 2021. Assuming they added 3,000 active contracts in 2024 and charged an average of €700 per vehicle per month, that would translate to a revenue of €184.8 million in 2024 or 4.62% of total revenue.

According to RBC’s 2022 flash note, management said two-thirds of the active Sixt+ customer base is domiciled in Germany. Sixt+ is present in 10 European countries (Germany, France and Spain being the top regions) and United States.

According to management, Sixt+ is margin accretive (its margin sits comfortably above the traditional margin) since management gets only one hand-over and one return, instead of maybe 10 and incur costs associated with cleaning, refueling, counter time, vehicle preparation only once per quarter instead of once per week.

In 2024, Sixt’s corporate EBITDA in Germany was 27%, 14% in Europe and 2% in North America. Assuming Sixt+ corporate EBITDA margin is 3%-10% (guestimate based on above insights) higher, we get Sixt+ corporate EBITDA of €46-€59 million, which is only 8%-11% of the Group’s corporate EBITDA of €560 million.

The 40% share by Oliver Wyman is based on a 2020 study by Ferdinand Dudenhöffer of the Duisburg-based CAR Institute, hence cannot be relied on now. The same Oliver Wyman projected in October 2024 that European car subscription market will grow from $1.4 billion in 2023 to $2.9 billion in 2035, a 6% annual growth rate. That is reduced estimate compared to their 2022 projection which indicated that Europe car subscription market will grow from $900 million in 2020 to $4.1 billion in 2025 and $15.1 billion in 2030, an annual growth rate of 32.5%.They said they had overstated the growth of this nascent market.

Boston Consulting group estimated in 2021 that car subscription market will make up 15% of new car sales in Europe and US by 2030, adding that they consider the 20% to 40% estimate by others as overstated. Other than the October 2024 Oliver Wyman report, there are no recent reports by credible research institutions.