Global Snapshot: Iceland Car Rental Company Faces Seasonal Challenges

In this web-exclusive Q&A with Tómas Hafliðason of recently established Nice Cars in Iceland, which offers specialized 4WD vehicles for travelling through the snow, Hafliðason speaks on dealing with uneven seasonal demand, how customers use the website and narrowing in on effective marketing strategies.


The owners of Nice Cars, from left to right: Tomas Haflidason, Sigurdur Palmason and Haflidi Saevaldsson.
The owners of Nice Cars, from left to right: Tomas Haflidason, Sigurdur Palmason and Haflidi Saevaldsson.

Fleet Size

No more than 20 vehicles.

Locations

One location in the Reykjavik capitol area, where Nice Cars provides drop-offs and a VIP pick-up service to the international airport Keflavik and in the Reykjavik area.


How did the business start?

Three of us established Nice Cars: my father, me and one of our travel buddies. We love to travel and have been enthusiastic travelers for more than 30 years and have visited all parts of the country. We have mostly traveled to the middle of Iceland, where there are great wilderness areas without any inhabitation. This has required specialized vehicles and we modified 4x4 trucks ourselves to do the job.

Our foreign friends started to visit us and travel with us, and soon friends of their friends also liked to come along. We realized that there might be a market for car rental that was not traditional rental, but one that would offer the real Icelandic experience and offered only 4x4 trucks. It just makes no sense to visit Iceland and rent a small Toyota Yaris, even though the most common rental car type is the smallest 2WD cars. There are severe restrictions where you can drive these cars and many guests have found out that they are driving in restricted territory when something happens. Then they are liable for the cost of damages because insurance will not cover the cost.

Nice Cars modified trucks driving during winter in Iceland.
Nice Cars modified trucks driving during winter in Iceland.

We thought also that our travel experience could be useful for our visitors — we know the country very well and could share our experience with our customers. Our idea was to make a car rental model that would offer service like we would like to receive if we were visiting Iceland.

What are your primary sources of rental customers?

The Web is absolutely the primary source of our rentals. We are a small rental company and we do not have a big budget for large marketing campaigns. The Web is therefore a very good medium for us to obtain customers.

The usage of our website, though, has been very different from what we initially thought. We viewed it as very important for us to have a full-blast booking system on our website, and that our customers could finish their orders through the website. The outcome has been that very few customers actually use the website that way. Instead, customers view the cars we have and read through our information, but when it comes to booking, most people either call us or use the email option. This has changed our strategy.

Even though we still have our online booking system, we have put much more emphasis on ways to give our customers on how to contact us directly. For example, we now use Skype, and have set up a direct phone number in the UK, so our UK customers can call us with a local call — and without even knowing they are using Skype. We find that our customers like this service, and next season we plan to add more countries with this service.

Are you pursuing new sources of business/customers? What are they?

Yes, we have found that many of our customers are afraid of driving big cars with bigger wheels, but they really would want to do so. Our plan is to offer convoy tours, where a driver from our company will drive ahead of the customers and assist vehicles driving in the snow or crossing rivers. These convoy tours will be in the fall, early spring and during winter time. This is the season were we have the fewest bookings, so we hope this can even out our income between the seasons. We are currently getting about 70% of our bookings during the summer season.

We have also added more of cars that are not modified, but still 4x4. We see that many people do like to get these cars as well. We have even found that customers like to mix vehicle types, in that while the highly modified trucks are expensive, people like to take cheaper cars for part of the journey and then use the modified trucks to explore the Icelandic highlands. We still only offer 4x4, as we think you need to have 4x4 any season of the year in Iceland.

How has the car rental market in Iceland evolved in the past 10 years? 20 years?

The market has gone in a circle in the last 20 years. The big brands were not so interested in the Icelandic market 20 years ago, so most of the operators were independents of different sizes. As tourism grew in Iceland, though, more of the big international brands appeared on the Icelandic market. Then about 10 years ago these brands dominated the market while the independent rentals were weak and few. In the last 10 years tourists have doubled in Iceland, so there is space for more small rental companies like ours and many others. There are now about 130 rental companies in Iceland, with about 10 of them from the big international brands.

CONTINUED:  Global Snapshot: Iceland Car Rental Company Faces Seasonal Challenges
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