Dusseldorf, New York The car rental company Europcar is planning to expand into the highly competitive US market. As CEO Alain Favey told Handelsblatt, the first Europcar station is scheduled to open at Los Angeles International Airport (LAX) in the first half of 2024. “We are targeting around ten locations in America at the end of 2024,” said Favey.
Europcar is already active through the Fox Rent A Car brand at 25 locations in the USA with a total of around 20,000 rental cars – mainly at airports. The aim is to increase the fleet size to around 30,000 vehicles. Favey did not give an exact period for the growth target.
The Europcar boss remains deliberately cautious with his announcements. Because entering the American market is likely to be complicated. The USA accounts for around half of the global car rental business. “For that reason alone,” says Favey, “we have to be present there.”
However, a good three quarters of sales are generated via stations at airports – and there the licenses are clearly divided among the competition and are often tied to the same rental company for years.
It will probably be years before Europcar can develop new airport locations of a substantial size. Until then, the French company is dependent on the existing Fox locations. According to Favey’s wishes, depending on the airport, these should sometimes have the Europcar logo and sometimes the Fox logo. “We will push Europcar more strongly as a brand where there are particularly many tourists from Europe,” says Favey. Fox will remain visible at all other locations.
“We will push Europcar more strongly as a brand where there are particularly many tourists from Europe.”
(Photo: Claire-Lise Havet)
Fox currently only has about one percent market share in America. The three US providers Enterprise, Avis Budget and Hertz dominate the business. The Enterprise brand operates just over 4,000 stations in the USA, Hertz has a good 2,800, Avis has almost 1,600 stations and Budget has another 1,500.
Europcar moves to the USA: “Challenger in a largely occupied market”
In view of these figures, Michael Austin from the US analysis house Guidehouse sees new competitors such as Europcar in an unfavorable starting position on the US market. “They are challengers in a largely occupied market.” The only way they could score points is with low prices and new cars. However, the problem with the low coverage in the area remains.
This is clear from another prominent attacker from Europe who is currently trying his hand at the USA: Sixt. According to their own information, Bayern have around 100 stations. However, it is more difficult for business travelers and tourists to drive inland from Sixt locations at larger airports and find a drop-off point there.
>> Read also: The USA is now Sixt’s largest market
To get around this problem, Europcar is relying on the connection to the Volkswagen Group, which has majority owned the car rental company since summer 2022. One of the ideas that is currently being discussed: The car company could support Europcar with its large US dealer network and offer cars for rent in the dealer branches.
The rental vehicles could then be regularly serviced in the dealer workshops and remarketed as used cars after a period of use of seven or eight years – all business areas that at Volkswagen are traditionally coordinated by the finance and leasing subsidiary Financial Services (VWFS).
“We are ready to take such a step,” VWFS boss Christian Dahlheim told Handelsblatt. But nothing has been finally decided in this direction for America.
Europcar – 9,000 employees, three billion euros in sales, a good 17 percent Ebitda margin – has been majority owned by a consortium around the Volkswagen Group since the summer of 2022 and is intended to boost business with car sharing, car subscriptions and rentals for Europe’s largest car manufacturer. In addition, the company, headquartered in France, is the linchpin of a mobility app that the group has just tested in the Austrian capital Vienna and will soon roll out across Europe.
Europcar boss on integration with VW: “Great appetite for Europcar topics”
Nevertheless, one of the most important tasks for Favey, who has only been in office since June, is to better integrate Europcar into the VW world. The North American expansion is also of strategic importance. The project is part of the “Transformation Office”, a committee made up of VW and Europcar managers that is working on seven ideas on how the two companies can be better integrated.
In Germany, Europcar and VW have already come closer. On Friday, the companies announced that they would spin off VW’s existing car rental business into a joint venture – with Europcar as the 51 percent majority owner, with VWFS holding the remaining 49 percent.
The leasing and finance subsidiary had so far offered around 16,000 VW brand cars for rent through Euromobil. These cars will now join Europcar’s fleet. This means that Europacar can work better with VW Group dealers – similar to what is planned in the USA.
With the joint venture design, Volkswagen and Europcar are above all solving a very practical problem. VWFS, with its small rental fleet, was formally considered a competitor to Europcar, which made cooperation difficult from a purely antitrust perspective. The path is now clear for greater cooperation.
More: Volkswagen completes Europcar takeover: car sharing should finally become profitable