Sixt USA in Trouble
Jan 26, 2016 | 12:37 pm
#1
Original Poster
FlyerTalk Evangelist
Join Date: Oct 2008
Posts: 11,592
Sixt USA in Trouble
I was passing through a Sixt USA station recently and had a discussion with a senior employee.
He told me there had been a number of Senior VPs who had been fired...they were increasing prices of rentals which was having a big effect on reducing the number of reservations they were receiving and management were asking them to fluke local regulations to save money. (I won't post examples, but they were surprising).
It doesn't surprise me given the very shoddy feel of Sixt stations over there, they certainly have a very temporary feel about them. The coming and going of LAS and I think also SJC is interesting too.
He told me there had been a number of Senior VPs who had been fired...they were increasing prices of rentals which was having a big effect on reducing the number of reservations they were receiving and management were asking them to fluke local regulations to save money. (I won't post examples, but they were surprising).
It doesn't surprise me given the very shoddy feel of Sixt stations over there, they certainly have a very temporary feel about them. The coming and going of LAS and I think also SJC is interesting too.
Jan 26, 2016 | 1:44 pm
#2
Join Date: Oct 2013
Location: Montreal
Posts: 599
Sixt will probably have to cheapen their product or leave the United States. Unlike the other major firms, they do not have a discount/business-oriented brand such as Budget, Dollar Thrifty, or Enterprise to support them along the lean periods.
It's quite obvious that Sixt is way too cheap for the product they're offering. Hertz and Avis have average revenues in North America of $46/day (so about a $60+ price for the consumer) and probably give out on average a $30,000 car for that price. Meanwhile, you can book a $40,000+ LCAR at Sixt for about that same price most of the time. On top of that, Sixt gives one or two class upgrades and doesn't restrict the upgrade booking class to FCAR like Hertz. Sixt undercutting the big 3 is obviously unsustainable.
Hertz and Avis have both had dismal stock performance recently. Sixt USA has probably had it worse. To be profitable and sustainable, rental car companies will one day realize that they have to reduce the upgrades they hand out in order to survive. The most profitable customers should always be willing to pay for what they want (like Zipcar or Enterprise). There's no way a company like National is not losing money by giving me an upgrade to an SFAR for a US$20/day rental if I decide to put even 100km on it.
It's quite obvious that Sixt is way too cheap for the product they're offering. Hertz and Avis have average revenues in North America of $46/day (so about a $60+ price for the consumer) and probably give out on average a $30,000 car for that price. Meanwhile, you can book a $40,000+ LCAR at Sixt for about that same price most of the time. On top of that, Sixt gives one or two class upgrades and doesn't restrict the upgrade booking class to FCAR like Hertz. Sixt undercutting the big 3 is obviously unsustainable.
Hertz and Avis have both had dismal stock performance recently. Sixt USA has probably had it worse. To be profitable and sustainable, rental car companies will one day realize that they have to reduce the upgrades they hand out in order to survive. The most profitable customers should always be willing to pay for what they want (like Zipcar or Enterprise). There's no way a company like National is not losing money by giving me an upgrade to an SFAR for a US$20/day rental if I decide to put even 100km on it.
Jan 27, 2016 | 5:31 am
#4
Join Date: Jan 2009
Location: New York suburbs
Posts: 4,380
No. We discussed this in an older thread. Sixt likes to franchise overseas, but had to adapt to the reality that the way people use rental cars in America is fundamentally different. Ex, long distance one-way roadtrips in the summer are historically a big part of the culture, but are not easily supported by a franchise model.
Also, if Sixt feels it has to raise prices, it will have to contend with a new value proposition in the US, or rather a lack of it. Unlike some European countries, the US does not have laws restricting reward programs, and many American customers expect them.Merely offering the same cars and prices as competitors, without one-way capable rewards, not adding neighborhood store flexibility in more markets, etc is not a positive competitive differentiator and a reason to choose Sixt.
Also, if Sixt feels it has to raise prices, it will have to contend with a new value proposition in the US, or rather a lack of it. Unlike some European countries, the US does not have laws restricting reward programs, and many American customers expect them.Merely offering the same cars and prices as competitors, without one-way capable rewards, not adding neighborhood store flexibility in more markets, etc is not a positive competitive differentiator and a reason to choose Sixt.