Cheers to Irish Independence!

In this and future issues, Auto Rental News travels abroad to discover how car rental companies operate in other parts of the world while we get the scoop on international car rental markets.

In this edition, ARN talks to Bernard Loughran, managing director of County Car Rentals in Dublin, Ireland, about his company's business model and the challenges to renting cars on the Emerald Isle.

■ ARN: How did the company start?

BL: County Car Rentals was founded by my father in 1953 as a small part of a car dealership in Dublin. Realizing the potential of tourism into Ireland, I spun off my father's car rental operation and expanded it to become the largest independent Irish car rental operation with a fleet of 600 vehicles.

■ Where are your locations?

County Car Rentals has concentrated its five rental locations in the greater Dublin Area, including an in-terminal desk in Dublin Airport, where more than 80 percent of Ireland's tourists arrive. County also has depots in Cork, Limerick and Dun Laoghaire Ferry port. These locations serve the local and replacement market.

■ Where does your business come from?

County Car Rental's business consists of 65 percent tourism, 20 percent local and repeat and 15 percent replacement.

The majority of our tourism business is generated through the Web. County's own Web site (www.countycar.com) generates 10 percent of this business. County is the Irish licensee of ACE Rent A Car, which gives the company access to the most popular Internet portals. ACE bookings are mainly generated from North America.

Wholesale Internet sites, including the Irish wholesaler Cartrawler, generate 65 percent of our Internet business.

Significant offline business also comes from travel agents and wholesalers in Australia and New Zealand, and in Europe from travel agents in Italy, Germany and Austria.

■ What does the car rental market in Ireland look like?

Ireland's tourism season peaks sharply in July and August. County typically requires a 65-percent fleet increase for this period, only to rapidly de-fleet in September. Outside of this peak, local and replacement business is important.

Pricing is very competitive and has resulted in companies expanding to gain economies of scale. There are now only nine car rental companies serving the Irish market, compared with more than 50 a decade ago. This over expansion has resulted in two companies going into financial examinership and restructurings (similar to Chapter 11).

County/ACE competes with one European and seven major U.S. car rental companies in Dublin.

[PAGEBREAK]■ Where and how do you procure your cars?

Ireland does not have the same type of manufacturer's programs as in the U.S. Vehicles are provided by local dealers who get a concession for vehicles they supply to the Irish car rental industry.

Fleeting for the peak has always been an issue. In the past, car dealers supplied vehicles for short terms and had a ready supply of same-year vehicles for their used vehicle sales. The recession has put a damper on this and many dealers have gone out of business or cannot obtain financing for these short-term buybacks.

■ How long do you keep your cars in your rental fleet?

In common with all Irish car rental companies, we keep our buyback cars up to nine months and risk cars for up to three years.

■ What rental models are popular?

Our popular models include Toyotas (Yaris, Corolla, Avensis) Fords (Fiesta, Focus, Mondeo, Galaxy) and luxury class models from Mercedes, Audi and Lexus.

Car prices are more expensive than in the U.S. A Ford Focus costs nearly $30,000 (in U.S. dollars) at today's exchange rate.

■ What types of ancillary sales generate revenue?

We have ancillary sales of excess cover, GPS and presold fuel.

We have a problem selling CDW to North American customers, as most have bought separate cover for this, but the insurance suppliers have made no arrangement with Irish companies. Pre-bookings made outside of the U.S. include CDW.

It is now illegal to charge for "Out of Age" drivers. European law has now been enacted to bar rental companies from discriminating against drivers of any age once they possess a full driving license. We now enforce a minimum of five years driving experience to cover very young renters. We also have an ability assessment for elderly renters.

■ Do you have other revenue sources?

We have developed a separate gas station and car wash in close proximity to our head office. The initial idea was to refuel and wash our fleet. We added a convenience store and today it is a profitable standalone business. County Car Rentals purchases fuel at discounted prices and the total costs of wash/valet facilities are covered as they are also open to the paying public.

■ How do you remarket your vehicles?

We developed our own independent car retailer, Kill-O-Grange Motors. In Ireland, buying from a car dealer is generally more acceptable to private buyers. This retail operation is located next to our head office and operates as a separate, independent company.  We dispose of 35 percent of our risk vehicles direct to the public at this retail outlet and 65 percent to trade buyers.    

The Irish fleet disposal system is somewhat different than the U.S. As the population and the sales volume are lower in Ireland, there are no very large auction houses. The majority of fleet cars (whether from car rental, fleet management companies or finance companies) are purchased by individual, professional private dealers.  They in turn sell them to larger, main dealers who retail them.

■ How do you market and advertise your business?

We promote extensively in Europe and to the long-haul markets in Australia, New Zealand and the Far East by direct visits and participation in Irish Tourism's overseas promotions. Local markets are promoted by looking after our valued repeat customers and by advertising and promoting to the replacement market. We also have a North American sales coordination office in Connecticut.

■ How did the recession affect your business?

County Car Rentals took a hit very similar to the one experienced in the U.S. Luckily, we did not have any significant non-fleet assets, and we were able to adjust our fleet and staff to the changed market. Ireland is still in recession and has debts of €200 billion (nearly $300 billion) to the main European banks. They in turn are putting pressure on Ireland for even more austerity.  This has removed spending power from the domestic economy. 

■ What legal or legislative initiatives are threatening your business or the industry?

Our biggest headache is the un-competitive situation that has arisen with insurance companies that specify one replacement company. This is the same situation that exists in the U.S. We support the progress that has been made in New York State and other legislatures. We hope to bring similar legislation to the Irish and European system.

■ What is your biggest business challenge?

Our biggest challenge is financing, especially for the peak July/August season.  More than 30 percent of our car dealerships collapsed in the recession and banks are not enthusiastic to support the remaining dealers for short-term lending. Car rental companies have to provide their own financing for this short-term lending, which is difficult to get.

■ What does the future look like?

The future for car rental in Ireland rests with increased tourism. The government has made this a major objective in our recovery. We now have the lowest prices for car rental, airfare, hotels, meals and pubs in Europe.