Struggling car rental firm Sixt overcomes financial difficulties
Sixt Car Rental Sees Significant Profit Growth in H1 2021
Sixt, the global car rental company, has reported a substantial increase in profits in the first half of 2021, driven by strong growth in European markets and the USA, high market pricing levels, and efficient cost management during the COVID-19 pandemic.
The company's consolidated earnings before taxes (EBT) for 2021 reached €442.2 million, marking the best result in Sixt's history [4]. This impressive growth was achieved through a combination of strategic growth initiatives and favourable market conditions.
One of the key contributing factors was Sixt's expansion into new markets. The company extended its car sharing service, SIXT share, with a 100% electric fleet into the Netherlands and formed a major franchise partnership with Australia's largest automobile club (NRMA), adding a market share of 13% in Australia and 160 rental branches with 16,000 vehicles [4].
Sixt also broadened its product offerings with the introduction of car subscriptions (SIXT+) and various micromobility services accessible through its digital platform and app, thus expanding its customer base and revenue streams [4].
In terms of strategic growth, Sixt made significant strides in North America by acquiring 10 strategically important airport stations in the U.S., laying the foundations for significant expansion in the region [4].
The high pricing levels and cost efficiency also played a significant role in Sixt's profit growth. The company leveraged the high market pricing for its rental services combined with cost controls implemented during the pandemic, thus improving margins and profitability [4].
The USA remains Sixt's largest car rental market, and the company's profits in the unencumbered second quarter were accordingly higher, at around 78 million euros. However, the turnover growth in the USA in the second quarter was lower than in Europe, due in part to exchange rate effects from the weak dollar [4].
Despite market uncertainty, Sixt's fleet in the USA was planned to be slightly smaller, according to Sixt's Chief Financial Officer, Franz Weinberger. Weinberger also praised the result, despite a challenging market environment and uncertain times, and stated that the problem of weak used car prices, which reduced the income from the resale of Sixt's rental cars last year, has been resolved [4].
Weinberger also mentioned that Sixt is now paying more for insurance, but no further information about the reasons for the increased insurance costs was provided in the article [4]. When asked about car rental prices, Weinberger was cautious, stating they are extremely difficult to predict [4].
No information about potential changes in Sixt's rental prices was provided in the article. However, improved purchasing conditions have been helpful for Sixt, as the situation on the vehicle market has improved [4].
In summary, Sixt's significant profit growth in the first half of 2021 can be attributed to strategic growth initiatives, expansion into new markets, innovative product offerings, and favourable market conditions. Despite challenges, the company remains optimistic about its future prospects.
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