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The parent companies of the Europcar, National and Alamo car rental brands agreed to consolidate ownership in Europe and establish "a strategic alliance" with North American operations. The developments would create new supplier options for many multinational corporations, including a stronger European entity and Europcar's immediate access to the U.S. market.
Majority-owned since June by French investment company Eurazeo, Europcar would become the U.K.'s largest car rental supplier and extend its lead throughout Continental Europe, the company said. The alliance with National and Alamo--owned by Vanguard Car Rental Holdings LLC--creates a network of 6,000 locations in 150 countries, served by 500,000 vehicles.
"It strengthens our leading position in Europe by 35 percent in terms of revenues compared to the follower," Europcar Groupe CEO Salvatore Catania told The Transnational. "We will position ourselves as a worldwide player. Before, it was not possible for Europcar to compete with global tenders because we were not in a position to offer a U.S. network."
Europcar this year acquired Belgian car rental firm Keddy and signed a partnership in Japan. In the first half of 2006, its revenues grew nearly 15 percent to € 659 million (US$845 million), 55 percent of which came from business customers. "There are a few more countries to cover, and the main region is China," Catania said, suggesting a decision for that market could come in 2007.
Globally, the Europcar/National/Alamo combination would rival the Avis and Hertz brand networks. In particular, access to National's assets in North America better situates the company to accommodate multinational corporate business.
"It is going to be a boon for Europcar," said David Balfour, senior car practice manager American Express Business Travel Advisory Services. "You may see European corporations now accessing the National brand for U.S. rentals."
Catania said Vanguard in the United States would "contact its customers and make proposals for Europcar network destinations. As soon as we realize the closing of the transaction, we will start talking with our partner on how to implement this opportunity."
Expected to close in the first quarter of 2007, the proposed € 670 million (US$859 million) transaction--in which Europcar would purchase Vanguard Car Rental EMEA Holdings Ltd.--is subject to regulatory approvals.
Though the developments certainly raise Europcar's profile, co-marketing also would propel National into a more prominent position in the global arena, especially in Europe. National already has a leading position in the United Kingdom and a presence in several other European markets, notably Germany and Switzerland.
Global corporate car rental contracting recently has received more attention from multinational buyers looking for incremental savings in their travel programs, according some vendors travel management professionals. A recent Association of Corporate Travel Executives/Amadeus survey of 240 corporate travel managers found that 63 percent of multinational companies contract globally with car rental suppliers--more than with airlines or hotel companies.
"Historically, car rental is about 10 percent of air spend and in the past has often been overlooked as an area that offers savings," Amex's Balfour said. "If a company has not looked at this on a global basis, what they have is a patchwork of agreements. They are not pulling together their total volume to leverage and get the best possible deal."
Auto rental consultant Neil Abrams suggested multinational corporate deals with the Europcar/National/Alamo network could resemble arrangements offered by other multi-brand suppliers, notably Avis Budget Group. "One company is the primary supplier and the other is secondary, at a lower price point or for different locations," he explained. "But it remains to be seen just how it will affect customers and the ability to negotiate corporate contracts."
Europcar and National/Alamo operations in Europe would be managed as separate networks, but Europcar anticipates synergies--especially in the area of fleet management--and plans to offer a "harmonized loyalty program." It would still have to sort out brand strategies in overlapping markets and other integration issues, including disparate information technology systems. Europcar, for example, uses its "GreenWay" system to manage fleets, pricing, reservations, rentals, invoicing and detailed reports for corporate customers.
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