Though Sixt is a public company, it is still family driven. Erich Sixt, chairman of the board of directors, is flanked by his wife Regine, senior executive vice president for Sixt international marketing, and sons Alexander (back) and Konstantin, representing the fourth generation of the family within the company. Alexander is head of corporate development, while Konstantin manages the company’s Internet activities.

Though Sixt is a public company, it is still family driven. Erich Sixt, chairman of the board of directors, is flanked by his wife Regine, senior executive vice president for Sixt international marketing, and sons Alexander (back) and Konstantin, representing the fourth generation of the family within the company. Alexander is head of corporate development, while Konstantin manages the company’s Internet activities.

And then there were three. When the Hertz acquisition of Dollar Thrifty is finalized, Hertz, Avis Budget Group and Enterprise Holdings will control more than 93% of the auto rental market in the U.S. The consolidation leaves industry watchers and consumers alike asking the question, “Will there ever be room in this market for a new car rental company?”

And then there is Sixt. Started in Germany in 1912, Sixt might just be the oldest car rental company in the world — or at least the oldest (and biggest) car rental company the American public has never heard of. But that is changing.

Sixt stuck a flag in America early last year when it opened in Miami International Airport. It has since opened four more corporate stores in Florida, another in Hartsfield-Jackson Atlanta International Airport, and has most recently expanded westward to Phoenix’s Sky Harbor International Airport. The company is looking to open more on-airport corporate stores and has embarked on a U.S. franchise initiative.

Sixt’s plans for America are an extension of the company’s global expansion, which began only 15 years ago. The company now counts about 2,000 locations in more than 105 countries.

With more than $2 billion (EUR 1.564 billion) in total revenue in 2011, Sixt Group can be called a “mobility services provider.” In addition to car rental, Sixt offers fleet management and leasing services, chauffeur services, a luxury rental division and DriveNow, a joint car sharing venture with BMW.

The company, started by Martin Sixt, went public in 1986 yet it still remains a family business, now on its fourth generation. Auto Rental News spoke with Erich Sixt, chairman of the board of directors, to understand the company’s direction and plans for U.S. expansion, and Craig Olson, head of Sixt’s franchise development in North America.

Why Here, Why Now?

So why is Sixt moving into the U.S.? “If you want to be a global player you must be in the biggest car rental market in the world,” Sixt responds, adding that it was important to first establish and expand the European market before voyaging across the Atlantic.

The interior of a location in Nürnberg demonstrates the company’s attention to design detail. The company celebrated its centennial anniversary in 2012 and is in the midst of a significant international expansion. “The world is orange and black, that’s what we are working on,” reads a line from the company’s 2011 annual report.

The interior of a location in Nürnberg demonstrates the company’s attention to design detail. The company celebrated its centennial anniversary in 2012 and is in the midst of a significant international expansion. “The world is orange and black, that’s what we are working on,” reads a line from the company’s 2011 annual report.

A presence in America gives European business and holiday travelers another familiar choice, especially to Florida, a top European vacation destination. In a testament to the company’s global footprint, however, Sixt says he was surprised that initially more Sixt clients traveling to Miami were not coming from Germany but from Brazil and other Latin American countries. Sixt has a strong franchise presence in Mexico, Latin America and the Caribbean, so it was only logical to add America as the largest piece of Sixt’s travel matrix puzzle in the region.

The local business is following, witnessed by the uptick in American travelers choosing Sixt at more domestic-oriented airports such as Ft. Lauderdale, Sixt says.

Sixt isn’t stopping with the Sunbelt. The company is looking to open in larger U.S. airports, especially those with high international traffic. Sixt is well aware that those openings don’t come easy, owing to locked-in concession agreements and a finite number of slots already filled by well-established companies.

Recently, the Hertz and Dollar Thrifty merger has accelerated on-airport opportunities, as a result of the Federal Trade Commission’s mandated divestiture of airport locations to resolve anticompetitive issues. Sixt isn’t ready to talk about specific bid possibilities. “Naturally we will examine [the opportunities] very carefully, and if the price is reasonable, yes we are candidates,” Sixt says.

Opening in Canada might happen down the road, especially in regards to franchise opportunities, though the United States is the focus for now. [PAGEBREAK]

Looking for Franchisees

The Sixt franchise system counts more than 80 master franchisees operating from about 1,000 worldwide locations, but there are none in the U.S. — yet.

While the larger U.S. airports are better candidates for corporate locations, Olson says Sixt is open to franchising in any market that it is not operating corporately at the time. Priority will be given to on-airport operations; however, with the limited availability of on-airport concessions, Sixt would consider near-airport locations and even local branches in certain circumstances. “The entire U.S. is a blank canvas at this point,” Olson says. “There are lots of markets to choose from.”

Holding to a traditional view of franchising, Sixt sees the franchise network as a way to accelerate the brand’s growth in America, especially with the know-how of a local entrepreneur in smaller markets. “It may not be important from a network standpoint to be in Cheyenne, Wyo., but if someone wanted a franchise there we would be happy to accept it because every franchisee increases our presence,” Sixt says.

Olson summed up Sixt’s ideal franchise candidates as “successful, independent car rental operators who are looking to align with a global brand to expand their business.”

Other candidates include “growth-oriented entrepreneurs” in automotive, travel or other related businesses. As fleet is the No. 1 expense in car rental, “Someone who has a new or used car sales outlet would be a great tie-in for our car rental franchise,” Olson says.

“There are standard requirements for credit history and net worth as well as liquidity, which will be scaled to the size of the market,” Olson says. “Sufficient financing is paramount, and that is up to the franchisee.”

For the franchisee, Sixt offers connectivity and reservations flow from online travel agencies, global distribution systems and “virtually every booking platform there is,” Olson says. “We have a very strong existing customer base in both business and leisure coming from Europe, South America and other points around the globe. We have a proprietary software system developed and managed in-house that has very robust tools for pricing, yield and utilization, giving franchisees the ability to manage their business effectively.”

“This is an opportunity to come in on the ground floor of Sixt’s national expansion and grow with the brand,” he adds.

Creating a Niche

So where does Sixt expect to fit in the U.S. car rental market, the oldest and largest in the world?

After opening in Florida Sixt got noticed with ultra-low rates, and thus has been likened to a “Spartan brand” such as Fox or Payless. But this is far from Sixt’s corporate identity, which is more akin to Hertz, Avis or National as it offers low-mileage, late-model vehicles. Premium vehicles make up more than 60% of its worldwide fleet. Sixt is the biggest purchaser of BMW vehicles in the world, and one of the biggest purchasers of Mercedes and Audi vehicles.

In the U.S., Sixt looks to occupy a unique niche in the spectrum: “With Sixt you drive first class and pay economy,” Sixt says.

Sixt is known for its provocative advertising in Europe. With no established network in America yet, you won’t see any national advertisements that will ruffle feathers any time soon.

In the meantime, it will focus on local advertising, Internet marketing and social networking. More importantly, Sixt is present on the major OTAs and is pushing traffic to the U.S. by advertising in Europe.

Sixt’s niche extends to technological innovations, especially in regards to mobility. Sixt was one of the first car rental companies worldwide to allow rentals through a smartphone with the iSixt application for the iPhone.

Sixt has since created apps for most major smartphones, tablet PCs and operating systems such as Android, iPad, Blackberry, Bada, WebOS, and Windows Phone 7 and 8.

App services extend beyond reservations, for example, to the management of bookings (including loyalty program members) and a visual display of the nearest Sixt station. In 2012 the iPhone app was updated to include the Passbook function, a first for a car rental company worldwide.

Today, more than 50% of Sixt car rental bookings are made via Internet and mobile services.[PAGEBREAK]

Sixt is the largest purchaser of BMW vehicles in the world.

Sixt is the largest purchaser of BMW vehicles in the world.

(Small) Size Matters

Surely any car rental company would want to rent premium cars for less and keep a reasonable profit margin. Can Sixt?

Sixt contends that the company’s smaller size in America is an advantage. “Our competitors are so big; it’s difficult to offer very personalized service. Attention to detail can get lost,” he says, pointing to what he calls “the unbelievable bureaucracy and overhead” of his larger American competitors.

In contrast, “We are lean, and our hierarchy is flat,” he says. Although the company is public, “We are still a family-driven business,” says Sixt, whose two sons hold corporate positions. “Almost 60% of the voting stock is in my hands, so you can imagine that I’m looking to keep overhead costs in my company very low.”

Sixt claims his company’s IT costs are the lowest in the industry, citing a three- to four-point advantage over competitors. Sixt doesn’t operate mainframes, pioneering the use of the LINUX open-source operating system in the mid-90s and focusing on web-based technologies in the 2000s.

Years ago, Sixt avoided purchasing the type of costly yield management systems found at other major car rental companies, ones initially designed for the airline industry. The company instead developed its own system in-house, and has worked to improve it for the past 20 years to achieve better control of capacity and yield flow of fleet.

Sixt also believes the company’s size will be an advantage when it comes to buying and selling cars. Sixt praises his American competitors’ acumen in this regard; however, “They have to fight with the unbelievable number of cars they throw on the market,” he says. “We’re talking hundreds of thousands of cars every year, and we only have to buy and sell thousands. We can be much more selective in buying them and be more patient in selling for a better price.”

Sixt had buyback arrangements for 97% of its fleet in 2011. In America, the fleet will be primarily “risk,” or bought and sold on the open market.

A competitor could quibble with Sixt on the “smaller is an advantage” point. But one factor is unequivocal — Sixt’s debt-to-equity ratio is excellent, and in America the company would be considered investment grade. This is no small feat for any car rental company these days. Sixt’s low financing costs and ability to raise money through a spectrum of financing instruments, including attractive conditions on the bond market, could be its biggest advantages yet.

New Ideas

While the other global car rental players look to emerging markets for growth such as China and Brazil (where Sixt already has a foothold) the company realizes that coming to America — the most mature market of them all — won’t be easy. But then again, “There isn’t a market in the Western world that is not saturated,” Sixt says.

Sixt feels there is room for a new company that offers a unique niche.
“It’s about survival of the fittest and bringing new ideas into the market,” he says. “Yes, the U.S. is very competitive, probably the most in the world. On the other hand, it offers big opportunities because the business of car rental has become a gigantic commodity. There is room for a company that offers first class service with not only cheap cars but those that offer more value.”

For more information on Sixt franchise opportunities, visit www.sixt-franchise.com, call 888-942-7498 (ext. 426) or email [email protected].

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