Once relying on car rental customers from its “long-haul markets” including the U.S and the U.K., GO Rentals’ General Manager James Dalglish talks in this web-exclusive with Auto Rental News how the uptick in travelers from Asian markets — particularly China and India — have helped this New Zealand-based company offset lost revenue. Dalglish also attributes the company's success to its Web marketing.
What's your total fleet size?
1,200 vehicles ranging from hatchback, sedan, wagons to 4WD, people carriers and van rentals.
How many locations do you have and in what types of areas?
Five Locations across New Zealand in the four major cities: Auckland City, Auckland Airport, Wellington Airport, Christchurch Airport and Queenstown Airport.
How did the business start?
The company founder, John Osborne, began as a used vehicle importer and entrepreneur who seized on the car rental opportunity before the Japanese import market bubble burst in 1998. John’s passion for the auto industry, business vision and calculated risk taking has been the foundation for this successful Kiwi business.
What are your primary sources of rental customers?
Currently we have a 35% domestic, 65% international split for a high leisure/tourist market with some replacement and corporate rentals.
Are you an affiliate of any kind?
Not at the moment — we have been rowing our own boat. However, we are considering options all the time.
Are you pursuing new sources of business/customers?
Yes, we are particularly interested in growing the international wholesale and domestic corporate markets.
How has the car rental market in New Zealand evolved in the past 10 years?
As with much of the travel industry there has been a complete transition doe to the World Wide Web and technology. The modern travel e-commerce model has flipped the business on its head, so to speak, so gone are the days of relying on localized print media to source business. It’s all online these days!
Describe your specific marketing efforts and what the payback has been so far?
In the early days we focused on more localized print media and industry agents to source new business; however, Google Search has transformed the way we do business. We now rely on numerous online channels to source our customers, search engine optimization and search engine marketing have been at the forefront of the transformation, and the great thing with digital is that because it is measureable, you get to understand your return on investment (ROI) and cost per acquisition (CPA) inside and out.
We embraced the dot come era very early on, and our continued investment into technology and online channels has really helped the business grow.
How do you buy cars?
Predominantly we buy our vehicles; however, over the years we have entertained some lease vehicles as well. The key to our business is purchasing for the right price at the beginning and selling for the right price at the end.
How do you sell your cars?
We retail some through our own channels, sell some back to dealers and use John’s industry contacts to wholesale a few as well.
How long do you keep cars in fleet?
On average 2-3 years, though some stock purchased new could be longer. We have a “premium” and “budget” offering within our fleet, so once vehicles have enjoyed their premium time they can slip down into our budget tier and chill for their last couple of years![PAGEBREAK]
What are your biggest challenges with fleet?
In New Zealand it is a very seasonal industry, the hardest thing for us is to get fleet on in time for the summer high season (Nov–Mar) and then fleet off in April and onwards so that we don’t carry to much surplus stock through our low winter season.
What are your popular rental vehicles?
Our Zippy Hatch (Hyundai Getz) is very popular, however we do have more than 200 of those, beyond that its Compact Auto (Corolla Hatch) followed by mid-size sedans, people carriers, wagons and 4WD bring up the rear — not because of popularity but more because of the number in fleet.
What types of counter products are popular?
GPS systems are right up there nowadays, especially as many vehicles don’t have that as standard yet. Beyond that are the child and baby seats since we do a lot of business with families on holiday. Pre-paid fuel options are also now very popular.
Are there a lot of independent car rental companies in New Zealand?
Yes there are. The industry here has the big five companies in the first tier: Avis, Hertz, Budget, Europcar and Thrifty. Then the independents that make up the second tier have a combined fleet larger than the big boys due to the nature of the vehicle industry here and the ability to import second-hand Japanese vehicles. It is definitely a landscape where the independents can survive and prosper.
How are you surviving the current economic climate? And what is that economic climate like currently for you in New Zealand?
We have had fantastic growth through the global financial crisis, we figured like most businesses in the industry that we would take the conservative approach, though consequently, we’ve decided to put the foot flat on the accelerator and use the downturn to accelerate our growth.
Currently the financial climate in New Zealand is still recovering, but certainly quicker than most — our housing market is flying along again. We are certainly suffering due to a lack of visitors from our traditional long-haul markets — UK, USA and Europe — but an increase in visitors from Australia and the Asian markets has helped to offset that loss.
What are your biggest challenges right now in the business?
For us it’s technology; the ability to be able to move IT along at a fast enough pace. We have built and developed our own unique software and committed very heavily to an e-commerce website. We are constantly trying to improve systems through automation and are constantly searching the market for technologies to aid our processes.
What does the car rental market over the next five years in New Zealand look like?
Over the last couple of years there has been little or no growth in international visitors, and we don’t expect this to change much until our long-haul markets recover. However, the Asian markets are certainly where it’s going to be at, particularly China and India with their massive populations and growing economies.
Do you have any legal threats that are challenging how you do business?
We are very lucky that we are governed by one set of laws; therefore, state law is not an issue for us here. There are no threats looming at all, to be fair, and the New Zealand Transport Association is in the process of conducting a Vehicle Licensing Reform, which is likely to save us time and money!
Any new laws or rules you must abide by?
Bar a recent road rule change there isn’t much to report, though PCI DSS Compliance around credit card security is on the horizon and we are already totally up with the play, but it could catch out some operators if they are not well organized.
Where do you think the biggest growth potential is in your business?
We see the biggest opportunity going forward is by improving yield (effectively getting daily rates up). The industry continues to be dogged by ridiculous competitor pricing, which is certainly not sustainable
To operate in New Zealand do you have to pay any special car rental taxes or fees?
Our vehicles have to be Government Safety certified every six months. As well, the airports are continually finding ways to increase costs for the independents to operate, which has the added benefit of providing barriers to the cowboys out there.
What would you like to see change in the industry in New Zealand? Worldwide?
The car rental industry is still incredibly paperwork heavy. There is also all sorts of red tape around procedures put in place by the credit card companies. The market already has lots of technology in place to automate processes; however, I can’t wait for the day when we can have a totally electronic, paperless process.
Are you part of any tour or rental-related organizations or associations?
We believe that industry associations are very important and have aligned our business with several of these here in New Zealand. We are members of Tourism Industry Association New Zealand (TIANZ), the Motor Trade Association (MTA) and also the Rental Vehicle Association (RVA).
Any other comments about your staff or daily operations that make your company unique?
At GO we have built our reputation around providing really good service. We employ people who have a passion for travel and a passion for our business and this means our customers always get a smile. We have just received a Traveler Voted award from Rankers (NZ’s largest independent travel review website) in the Rental Car Category, (you can check it out here http://www.rankers.co.nz/).