When can customers choose their rental car based on environmental criteria? And can you laugh in the Corona crisis? Alexander and Konstantin Sixt provide answers.
The rental car market in Germany is highly competitive. With the German family company Sixt, which has its headquarters in Pullach near Munich, three internationally active industry giants compete: Europcar, Avis and Hertz.
What unites everyone: The corona crisis has almost brought their business to a standstill. The absence of business travelers at the airports in particular caused the companies to bleed, and Sixt even had to take out a loan from the state development bank KfW.
In a video interview with t-online.de, the sons of company boss Erich Sixt, Konstantin and Alexander, talk about their lessons from the crisis – and explain whether customers can choose their rental cars based on CO2 emissions in the future.
t-online.de: The Corona crisis already knows some winners, but above all a lot of losers. Are you one of them?
Alexander Sixt: We are not one of the winners like Amazon, the mail order business or the food trade. The crisis hit us hard, especially when it started in March and April. Us as a company, but above all our employees. What has stormed into people these weeks: The abstract fear of the virus, the fear of the family, of being almost locked up at home. Then there is the economic component. Many employees went on short-time work. As company management, it is particularly important to show empathy to the employees and to radiate confidence and optimism.
You generate a large part of your turnover with business travelers at the airport. Now every second company after Corona wants to go on fewer business trips. Where do you get your confidence from?
Konstantin Sixt: Right, business trips declined very sharply. And they are still far from where they used to be, even if demand is slowly recovering. But: Unlike other companies in the travel industry, we don’t just depend on business trips. And unlike hotel chains or airlines, we have no fixed and local capacities. A hotel that is located in Sicily cannot even be converted to the Balearic Islands, or significantly reduced. With our vehicle fleet, however, we can react to developments. That is why we have drastically shut down our fleet in the past few months, thereby reducing our costs. We have also discovered new customer potential for us in recent months. For example, private customers in cities. That wasn’t exactly our main target group in the past. We are currently seeing an increase in demand here.
You will be pleased that the number of business trips is increasing again. Anyone who thinks of our climate should see it differently.
Konstantin Sixt: A lot has changed, of course, through video conferences as we are currently conducting them and many other digital measures. You can take ten appointments a day today, in the past maybe one or two appointments. Nevertheless: I would prefer to have our current conversation with you personally. You get to know each other better and find better access to each other. That may seem old-fashioned or inefficient. But people are made for social contacts, and in my opinion these social contacts are also the essence of business life. As digital as the world is, business is always done between people. So I think these encounters will come back. Maybe different than in the past. But they will come back. That is why I am optimistic personally and also on business.
The corona crisis has not only resulted in us holding meetings or interviews on the computer. But it has turned many other areas of our lives upside down. What do you take with you personally and as an entrepreneur for the future?
Konstantin Sixt: During the crisis, I kept asking myself the question: what is important and what is not? You can tell how much time you spend on things that don’t help, that are senseless or that are pure bureaucracy. That could be abolished because they don’t bring anything to anyone. For me, the greatest realization of the crisis is that people are now questioning these things in a much more focused way. You only do a lot because you have always done it this way – even though it has no use.
What will you no longer do in the future?
Alexander Sixt: A very simple example from the company: We used to send plastic cards, i.e. customer cards, to each of our customers. Paper, envelopes, printing on plastic, shipping – all of these are costs and, of course, that’s not sustainable from an ecological point of view. It was important 15 years ago because we didn’t know any apps. So our customers pulled a card through a reader. It’s been like that forever. Today you can do it differently. Customers don’t want it, it costs us money and it’s not sustainable – so we don’t do it anymore. There are many more examples of this.
Corona shows that many things are possible that were previously considered impossible. For example the more flexible organization of work. Do you think examples like yours will go to school in other areas?
Alexander Sixt: The question is whether it is worth striving for. In our opinion, the spontaneous, pragmatic and personal exchange between employees is crucial. And what I also notice in myself: It is an advantage if you separate the worlds from each other. For many, the home is a place where you can relax and find peace. And not a place where you do the office work.
Again and again we all hear that our life and our country would be different after Corona. But it won’t be particularly concrete. What do you expect from life after Corona?
Konstantin Sixt: I read that all the time in the newspaper. But I don’t think that our life after Corona will be completely different. We are all still in the middle of a storm right now. And usually one cannot really imagine a time after the storm. Because you only see the whole problem. But I think after the storm the world will be a good one again very quickly. My brother and I work in an industry that has experienced many storms. Car rental is a crisis-proven industry because it depends heavily on the economic development. Think of the financial crisis or, more recently, the oil crisis of the 1970s. You become a professional optimist.
Alexander Sixt: Correct. That is why we are now optimistic about the future. And why should everything be different in the future? Are we really going to be a different country just because we’re going to do more video conferencing in the future? We are currently experiencing a very difficult time. But this storm will also pass by. And ultimately, our country is different every day. Germany today is different from that five or twenty years ago. We live in constant change.
To prevent the storm from causing too much damage, the federal government has decided, among other things, on a historic stimulus package. And the auto industry is the big loser: it could not assert itself with its vehement demand for a purchase premium for new cars. Is the car a phase-out model?
Konstantin Sixt: No, I see it differently, people still want to be mobile. I had recently read in a large newspaper: “Corona: The Renaissance of the Car”. The car is not abolished just because there is no purchase bonus. In general, however, I mean: You have to promote the auto industry as a key industry because without it it will be very difficult for Germany. The electric purchase premium is a very good measure. With this, the government is focusing and helping to direct investments in electromobility. For example in battery technology. Historically, Germany has always been a world leader in engine construction. I hope that we can do the same with battery technology. And I think the bonus will help.
To this end, reservations that have existed for many years must also be reduced. Your customers’ interest in electric rental cars is high, but the demand from customers in the car dealership is low. How do you think this discrepancy is?
Alexander Sixt: Renting and buying are two different decisions. Basically, our customers also do a paid test drive with us. Your experiences with the rental car later shape your decision to buy. The hurdle for buying an electric car is much lower if you have previously driven an electric rental car than if you come to the dealership and sit in front of the contract after a test drive. The manufacturers and their dealers also notice this in the sales talks.
But your fleet still mainly consists of internal combustion engines. Why can I, as a customer, only filter your car selection based on price – but not on CO2 emissions per 100 kilometers?
Alexander Sixt: We have recognized the topic and are already thinking about how we can come to a better solution.
Konstantin Sixt: When you as a customer book a car with a rental car company, you usually do not choose a single car or model, but a car class, as we do not know which vehicle will be available to you when you book. This is already possible today when you pick up your car, for example with our share product, where you can explicitly display e-vehicles. What we also do is, for example, offer CO2 reporting of all rentals to large corporate customers. Because after the rental we know which car you used. Corporate customers in particular like this because they can measure their CO2 footprint in this way.
When will there be such a filter option after CO2 emissions?
Konstantin Sixt: That cannot be said at the moment. We are constantly thinking about how we can optimize our products and also make the target group of sustainably oriented customers a tailored offer. As already mentioned, at Sixt Share it is already possible to filter for e-cars. It is still unclear exactly when we can implement such a selection with classic rental cars.
You have already mentioned Sixt Plus, which means a kind of auto subscription for several months. How did you get it?
Konstantin Sixt: We have been dealing with the subject of auto subscriptions for a long time. In short, we came up with the following: Purchasing a car is a very important, a very big decision for most people. Only building a home is even more important for many. The German makes the decision to buy a car on average every nine years – and each time it involves a lot of effort and a lot of paperwork: credit check, salary check, household bills and so on. In addition, there is usually a long connection to the selected car. Those who choose a car today drive it for at least three years, usually much longer. The greatest cost factor of a car lies in this term: namely the loss in value of the purchase. During the term, this is an unquantifiable factor for many car buyers. The life circumstances of car owners can also change completely – for example, by founding a family that needs a larger car. So buying a car makes you incredibly inflexible. For many people, it no longer fits their lifestyle. And this is exactly where we start with our new product: With Sixt Plus you get a car without long delivery times and without any paperwork. Everything is included in a fixed monthly rate, e.g. Approval, comprehensive insurance, liability, maintenance or inspection costs. And the best thing about the product: You can cancel the Sixt Plus auto subscription every month and therefore have maximum flexibility.
Alexander Sixt: In addition, many people ignore the cost factor. When buying, they usually only vaguely know what the car costs them per month. In terms of taxes, this is still relatively easy, but it will be difficult with maintenance costs. This is where we start with our new subscription model. With Sixt Plus, we offer our customers full cost transparency and more flexibility: they can book their car using the app, get it within five days, keep it for as long as they want, and return it to us when they no longer need it. Or, to stay with the example of the newly founded family, they swap it for another. And with all of this, they always know how much it will cost them.
And why are you coming around the corner with this offer right now?
Konstantin Sixt: As I said, we had the idea for a long time. But then the Corona crisis came and people had an even greater demand for flexible mobility. We then developed a customized product within a few weeks and launched it.
You are not in the mobility trend: Actually fewer and fewer people want to own a car, especially in the big cities and especially the younger ones tend to share.
Konstantin Sixt: I wouldn’t say that. There are both trends: On the one hand, we are experiencing that the sharing economy, the desire to share, is also experiencing a lot of upward mobility. But that’s only one side. The other is that at least as many people want to have their own car – at least temporarily. From which you know exactly where it is, which only you have. We believe: Especially in times of Corona, the need for it may have grown. Especially in cities where more people want to have a car for a longer period of time, for example to drive it out into the countryside or to the Baltic Sea at the weekend.
The Baltic Sea weekend is a good example: If you rent a car for three days from you in the conventional way, you only pay slightly less than the monthly rent. How can that pay off?
Alexander Sixt: These are completely different products with completely different cost structures and assumptions about utilization. Every short-term rental involves certain processes and costs, for example the vehicle is cleaned accordingly after each rental. In addition, the ability to plan naturally plays a role – if you book a hotel room well in advance, it may also be cheaper.
Sixt is known for its sometimes provocative advertising slogans, most recently you pissed off interior minister Horst Seehofer and ex-constitutional protection chief Hans-Georg Maassen. Are you going to run a similar satirical campaign with familiar faces for your new offer?
Statin Sixt: No, this is currently not planned. We will advertise our new offer, and we are already doing so. However, the focus is on the product.
Did you get too much trouble for previous advertisements?
Alexander Sixt: No, in total it was worth it.
Konstantin Sixt: We had a few good and funny ideas in the past few months, but we rejected them. It’s not the time for advertising jokes. The respect for the situation is too great.
That means there is nothing to laugh about in the Corona crisis?
Konstantin Sixt: Unfortunately, the situation is serious at the moment. It is all the more important to remain optimistic.