easyCar.com - Case 9
Key Fact Summary and Analysis
EasyCar.com is a car rental company their mission statement is “At east car ewe aim to offer you outstanding value you for money. To us value for money means a reliable service at a low price. We achieve this by simplifying the product we offer and passing on the benefits to you in the form of lower prices”. The company was started by a flamboyant Greek entrepreneur Stelios Haji-Loannou, who borrowed money from his father a Greek shipping billionaire to start a low cost air carrier easyJet.com, the idea was successful and then expanded into a similar industry EasyCar.com founded in 2000. Easycar.com functions differently than traditional car rentals; it only has a single vehicle type and focuses on renting out 100% of the fleet by internet or telephone bookings charging the customer .95 a min. Most car rental companies use many different vehicles and use many intermediaries. The rental rate relying on online bookings is, 95% rental online for easycar.com, 10% others. Because of the software that easyCar created they were able to achieve a fleet utilization in excess of 90%, beating the competitor Avis at 68%. 2003 broke even on third year of operation, 2002 revenues of 27 million. Plans called for quadrupling revenue over the next 4 years and in order to achieve this financial goal they wanted to add two new locations per week through 2003-2004. Each western European country had its own strong competitor accounting for half the market in Germany Sixt, Europe car, Avis, hertz accounted for 60% M.S. and there over 700 smaller companies, similar to Spain. The rental car market could be thought of as composed of two broad segments: a business segment 25%-55% not very concerned about price, mainly about quality and service. A 45%-65% tourist/leisure segment very price conscious. Easy car opened multiple locations in its first week, they were popular easyJet locations prior. Vehicles could be rented for as low as 15 Euros per day, plus 8 car preparation, all Mercedes A class vehicles. They purchased innovation to substantially reduce cost and not jeprordize quality, feeling that the customers should not have to compromise. The agreement for the 5000 cars with easy jet also allowed them to make a buyback plan so that way they could update the cars at a later date. They also secured 27million with the Scotland bank with equity and stock options to prepare for expansion. The expansions slowed but resumed their pace of expansion after the September 11th attacks. The company then made a strategic decision to purchase more fleets of a different brand of cars to pass savings on to the consumers, but still offered only one type of vehicle per location. They also changed policies to allow rentals for as little as an hour with as little as one hours notice. This allowed them to compete with local taxi, buses, trains and local car ownerships. Tapping into this broader transportation market would help the company reach its ambitious future sales. In the hopes that people would even rent cars when traveling through the cities leaving their own at home. Most of the locations where near trains or buses that way to reduce high costs especially in air port locations but kept the locations closest to the airport open 24 hours and the rest 7am to 11pm. They also made locations in garages with cubicles, or out of vans, because the cars where rented out 90% of the time they were able to minimize the space to store a fleet of 150 to a site that offered 15-20 stalls, and staffing requirements where at a minimum of on average 2. It took less than thirty minutes to prepare customers and they are required to bring the credit card ID and 80 euro deposit refundable. Customers can leave the car with the same amount as previously in the tank or return it as low as they wished as long as the tank low indicator light was not on if so. They were required to pay an extra refueling fee of 16 euros. They...
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