In this web-exclusive Q&A with Dan Mekler, managing director of Redspot Car Rentals of Australia, he discusses the company’s new marketing partnership with Germany’s Sixt and how Redspot’s ‘Business Club’ loyalty product has been its largest growing program in the company since the club was started in 2005.
What's your fleet size?
We’re forecasting a peak fleet size of 3,000 for 2012-13 financial year.
How many locations do you have and in what types of areas?
We have 38 Australian rental locations in total. Most are corporate (some licensed) and located in airport terminals (20), city metropolitan locations (7) and regional locations (11).
How did the business start?
We started in 1989 as a courtesy-car side business to an inner Sydney gas station. The first stand-alone rental location opened in 1995 and our first airport concession for Sydney Airport opened in 1999.
What are your primary sources of rental customers?
Our largest business source is direct customers who book via website, call center or walk-up. Online agents (or web partners) make up our next biggest source followed by traditional wholesale and travel agent markets.
What are the details on your new relationship with Sixt?
I’m pleased to advise that an agreement for a marketing partnership between Redspot Car Rentals of Australia and Sixt rent a car of Germany has just been signed. It will see Redspot servicing Sixt’s loyalty and corporate customers and also represent all Sixt booking channels into Australia.
Through our marketing partnership with Sixt we’re launching Redspot Sixt rent a car as our trademark within Australia. Redspot is privately owned and independently operated, and this will not change as a result of the partnership.
Are you pursuing new sources of business/customers?
In addition to our new partnership with Sixt, Redspot continues to promote and expand its business markets through its highly regarded Business Club and Club Red loyalty products. The success of Redspot and Business Club can largely be credited to all-inclusive rates, which offer zero damage liability and include all mandatory fees and charges.
First launched in 2005, Business Club is Redspot’s fastest growing market. We’re on a good thing so we stick to it!
Describe your marketing efforts and what the payback has been so far.
Redspot recently appointed BCM, an acclaimed Brisbane-based advertising agency after a thorough tendering process. A comprehensive brand and brand positioning strategy has since been developed that’s currently being launched across various marketing channels.
How do you buy cars?
A combination of leasing and outright purchase.
How do you sell your cars? (sell back to dealers, used car lot, auction?)
All of these and, we also sell highly sought-after models to the public as a licensed motor dealer.
How long do you keep cars in fleet?
Depending on the sale method, our cars are sold upon reaching predetermined mileages. This generally occurs between 12 and 24 months from new.
What are your biggest challenges with fleet?
Fleet distribution; or in other words, planning the logistics of getting fleet to the regions to meet demand. This requires comprehensive planning and monitoring, and involves buying, selling, one-way rental specials and at times, trucking.[PAGEBREAK]
What are your biggest challenges right now in the car rental business?
There are always going to be challenges as any successful business person knows. For example, as a growing company we generally find that despite our internal programs for career development our demand for management staff mostly outstrips supply, so regretfully we have to hire from outside. Our competitors’ business models are very different from ours and managers appointed from outside often find they don’t fit with Redspot.
What kind of products/software do you use to manage your business?
Redspot rents quality vehicles supplied by Holden (GM), Hyundai, Mitsubishi, Nissan and others. Redspot uses CARS+ car rental software by Thermeon, MYOB accounting software and ADP payroll systems to name a few.
What are your popular rental vehicles?
Small automatic cars are generally the most popular. We only rent high-demand vehicles, which generally means we have a smaller fleet range than our competitors. Keeping a small vehicle range means we can ensure consistency in supply, availability across all locations and keep a lower cost base than industry standards.
What types of counter products are popular?
Satellite navigation systems, prepaid fuel, electronic toll road passes, child restraints, vehicle class upgrades are all popular, but nothing goes past personal service for keeping our customers coming back.
What car rental companies are your competition?
We consider all car rental companies as competitors but none in particular. We also consider other forms of transport, including buses, taxies, trains and aircraft our competitors.
Are there a lot of independent car rental companies in Australia?
I think there’s about 600 in Australia, so I would say ours is a relatively small industry by world standards, but then it would depend on what you’re used to.
How did you survive the recession? And what is that economic climate like currently for you in Australia?
Redspot has fared better than most, which I put down to our transparency, simplicity and a keen understanding of the marketplace.
Australia came through the recession much better than most developed nations, but there were and are still difficulties for the car rental industry, particularly the high relative value of our currency which discouraged international visitation and made it all too attractive for Australians to travel overseas.
How has the car rental market in Australia evolved in the past 10 years? 20 years?
Australians are mostly advanced technologically. They’re up to date with the latest in IT, communications and Internet technologies. Internet, XML and dynamic pricing has had a huge impact on car rental markets and distribution channels.
As a result, the last 10 years has seen shifts in markets and fostered greater competition between car rental companies. The result has also been lower margins and higher risks as traditional car rental qualification has stepped aside for speed bookings and volume transactions.And as a result of this, customer service standards have slipped and increased risks prevail in the race to take market share and a fast buck. Fortunately, Redspot’s strategy for success differs from this.
What does the car rental market over the next five years in Australia look like?
I expect there will be some rationalization of car rental companies as these trends are likely to have casualties.
Any new laws or rules you must abide by?
Our industry is mostly unregulated so there are few laws that specifically relate to it. Though legislation that recently passed relating to all Australian businesses has had an impact on the way some car rental companies advertise rates, as it prevents them from bait advertising without disclosing any hidden fees and charges.
Are you part of any industry-related associations?
Motor Traders Association, Australian Tourism Export Council, various national state and regional tourism associations, and the Institute of Automotive Mechanical Engineers.