EasyCar is one of the companies under the easyGroup brand name created by Stelios Haji-Ioannou. It is the fastest growing car rental company in Europe because it offers value for money. This is achieved by simplifying the car, and passing on the benefits to the customer in the form of a lower price. This low cost car rental idea is not for every consumer. Since the market is segmented into business and leisure travelers easyCar tries to focus all of its efforts to the price sensitive leisure segment. It has taken them two years for easyCar to break even, and Stelios intends to quadruple its sales in the next two years.
Leverage on established brand reputation of easyJet (by easyGroup): EasyCar is a member of the easyGroup brand which first developed the easyJet air carrier. The other companies under the easyGroup umbrella mimic the low cost, no frills business strategy. This business model has been quite successful in the rental car industry, has a presence in the internet café industry, and easyCinema is expected to be launched soon.
Competency of Stellos: Stelios Haji-Ioannou is an entrepreneur who founded easyJet, and has been expanding the easyGroup brand. Stelios is described as a flamboyant entrepreneur who has been aggressive in expanding his brand into many different industries that fit his low cost, no frills business model. Stellos’ excellence is a direct reason of how easyJet broke even after two years of operations.
No agent (disintermediation): EasyCar has been able to maximize the amount of revenue they receive because they deal with the majority of the bookings themselves. For other rental car companies ninety percent of their bookings are made by agents (intermediaries), and these agents require a portion of their sales. EasyCar manages 100% of its rentals so it is able to gain the maximum amount of revenue.
90% utilization of assets: There are three main strategies that easyCar utilizes to gain the highest utilization rate out of the major car rental companies. Firstly, their information system evaluates projected demand, and expected utilization quite accurately, and adjusts price accordingly. Secondly, they only offer one car type on each lot. The customers know that and they will automatically be matched to any car in the fleet. This removes the risk of decreased utilization as a result of customer picking certain cars over others. Finally, they offer demand based pricing. This ensures that for any given demand the maximum number of cars are rented out.
Only one type of car: Having one type of car can also be seen as a negative to customers because it offers them no choice. If customers value selection and quality over price then they will not rent from easyCar. Process of car picking up is time consuming for customers, given the low staffing levels: When a customer wants to pick up a car they usually have to wait between a half hour and an hour at the lot to finally pick up their car. This inhibits the company’s ability to sell more in a day, and the customers become dissatisfied from waiting. Public relations issues regarding its policies: The Office of Fair Trading has passed legislation stating that easyCar has to grant customers seven days form the time they made a booking to cancel it and receive a full refund. The company is scared that this process will inhibit their plans for a 2004 IPO.
They have also received bad press from their clean car policy. The company requires the car to be fully cleaned when returned, and it’s very strict regarding this policy. They have received some bad press, but 85% of their fleet are returned with an acceptable amount of cleanliness. Finally, there are many additional charges that are explained in the fine print. When easyCar first opened they received a lot of bad press because they didn’t explain their costs clearly. Recently they have been trying to make their charges more transparent to the customer.
Expand into other European markets: Experts of the car rental industry feel that Europe is “ripe for consolidation.” This is significant since it will allow easyCar to work together in different countries across Europe and further strengthen its brand.
Broaden the fleet size to offer customers more choices: To further expand easyCars market share they could offer more selection. Customers value choice, but this is only realistically possible if the prices remain low.
Further develop the one hour car rental service provider: To compete with local transportation like buses and cabs they can target citizens of each city who only want to rent a car for an hour or a short amount of time to complete less time consuming tasks.
Legal Challenges: If the company is unable to amend the seven day full refund law than there could be serious consequences. The utilization rate would be expected to fall from 90% to 65%, and it could also delay their expected 2004 IPO. There is also legal criticism with the posting of peoples faces on the website who have overdue cars.
Competition: There are several internationally recognized car rental companies, and domestic companies that easyCar competes with. For example, domestic or national companies usually account for 50% of their country’s sales. New low cost companies are going to be popping up since they have seen the success of easyCar, thus easyCar needs to widen its gap between its competitors.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 2 November 2016
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