Interview with alexander sixt: "we would like to have significantly more electric cars"
The brothers have been running the mobility group since June 2021.
munich these are wild times for the sixt mobility group: with the onset of the pandemic, business almost completely collapsed. The employees had to go on short-time work, the cars back to the manufacturers. In the meantime, sixt needed a government loan of 1.5 billion euros.
Since june 2021, alexander sixt has led the family business with his brother konstantin. The brothers lead equally, but have shared the tasks. Alexander does strategy and organization, konstantin sales.
In the meantime, business is running smoothly again, the government loan has been paid off. 2021 is likely to be a record year thanks to increased travel demand and the successful expansion in the USA, as alexander sixt announces in the interview.
And the brothers still have a lot of plans – from car subscriptions and app bookings to the self-driving cab shuttles that are to travel through munich in the fall. Internally, too, the transformation into a "tech group with affiliated car rental" is underway. In the headquarters in pullach near munich, the walls have been torn out and work is now done in open areas.
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Mr. sixt, you’ve been at the helm of the company together with your brother for a good six months now. How does it feel to have the job your father held for 50 years??
We see ourselves first and foremost as entrepreneurs and therefore as servants of the company. We want to do our part for the future of the company. Not that much has changed for us. Of course, as before, we involve my father and the other members of the supervisory board in the major strategic decisions.
You lead sixt in a dual leadership. In other companies, such management tandems do not last long.
It’s a little different for us than for large corporations. We’re brothers who have known each other for 40 years and know pretty well where each other’s strengths and weaknesses lie. We are also shareholders and therefore committed to the company. We understand each other. That’s why we share an office and a desk.
Who is in the office first thing in the morning?
I tend to be there a bit earlier – but konstantin would probably say something different (laughs). I would guess that we both tend not to be the first in the office, but often among the last.
Sixt expects record figures for 2021
Business has been on a roller coaster for the past two years. 2020 the crash, 2021 should be a record year. How does 2022 start?
the last two years have certainly been extremely challenging. We are likely to have a real record year in 2021 in the biggest crisis in the travel industry. However, we are still very much on track. We don’t know what the pandemic-related requirements will be in the coming months. Currently I can only say that we see a more positive development than in january 2021. People are more mobile than they were a year ago.
Where is the market picking up?
It’s mainly private travel and the strong foreign market. People long for vacation, for communication and exchange. Business is growing. In 2021, we have gained significant market share in both the private and business customer segments.
But business trips remain rather meager ..
not every business trip made before corona was probably sensible. I believe that this segment will tend to remain slightly weaker even after the pandemic, although our market share in this segment has grown recently. For all market segments, we expect market volumes to remain the same or increase in 2022, but with significantly fewer vehicles and a consequent trend toward rising prices. this also applies to other areas of the travel industry.
How come?
Cars are in short supply. in december 2021, 27 percent fewer new cars were registered in germany than a year ago, because fewer vehicles could be produced due to the chip shortage. We have good relationships with our partners, which is why we had almost five percent more vehicles in the fleet at the end of 2021 than a year ago. But today we also serve more market shares and more products, such as our new car subscription sixt plus. If we had more cars, we could do a lot more business.
So you have to go begging to the car manufacturers.
We see ourselves as a long-term strategic partner. We are also a sales channel and a marketing tool. The rental car experience has a decisive influence in the buying process, it is more important than the test drive or classic ads. With us, the cars can be experienced. This currently applies in particular to electric cars.
The 42-year-old has a degree in business administration. From 2005, he is working for deutsche bank in london. 2006 he joins roland berger in berlin, focusing on the financing and restructuring of industrial companies. sixt joined the family group in 2009, and has been a member of the board of management since 2015. Its focus is on the organization and strategy of the mobility service provider. 2021 father erich sixt hands over the management of the company to alexander and his brother konstantin sixt.
How many electric cars do you have?
We currently have ten percent of the global rental car fleet, a good third of the car-sharing fleet in Germany, and 100 percent in some markets such as the Netherlands. We’d like to have a lot more electric cars, but they’re even harder to get than internal combustion ones because the government subsidies have triggered a run. But this will dissolve in 2023 and 2024, because production capacities will be significantly increased and completely new competitors will enter the market.
You mean tesla and the new factory in brandenburg?
Also. But I also mean new manufacturers. I believe that after years of scarcity will come years of oversupply. the german auto industry will always remain a strategic partner for us. However, we are watching with great interest the development of completely new market participants. One thing is certain: we are working on a good and sustainable electric fleet.
Europcar and hertz are not a threat
Car manufacturers and car rental companies are moving closer together. Volkswagen buys its competitor europcar, hertz orders 100.000 electric cars at tesla. is this a threat to sixt?
This is nothing new. Hertz used to be owned by ford, avis used to be owned by GM, and both were sold again. Europcar used to be owned by Renault, then volkswagen sold it twice and now bought it again.
Don’t you also have to be more closely tied to a car manufacturer??
We have done well by remaining independent of manufacturers. We have very good partnerships with BMW, Daimler, Audi, Stellantis and especially with the Volkswagen Group. Also I don’t see the competition to europcar as big, because europcar is partly focused on other market segments, which we don’t address so strongly.
Europcar and hertz are also car rental companies ..
almost all of our competitors have focused on the mass business: europcar has bought gold car and buchbinder, hertz has taken over dollar thrifty. We do premium, and for car manufacturers with strong brands, there are not that many car rental companies that have a similar customer structure as us.
That’s why they are attacking the USA. How far is the expansion?
For us, airports are crucial. The U.S. market is worth more than 30 billion dollars, over a third of which is generated at airports. Our goal is to serve the 30 largest airports this year – today we are at 24. With our offer we occupy a niche: premium cars from BMW, mercedes, audi, combined with premium service and modern technology at an attractive price.
Your competitors can’t do that?
Especially in the USA, customers usually have to fight their way through pages of clauses and additional contracts, with offers that they usually don’t even want or need. We’re trying to do it differently: we don’t have pages and pages of paper printouts with huge lines in front of the counters. In the future, they will make the booking in the app and get their keys in the parking garage. We are growing organically in the U.S. because people like to come to us directly.
Don’t tempt the giants in the U.S. business with this?
We are not yet a threat to the big players and will be happy if we reach ten percent at every airport in the medium term. That’s enough to generate a billion in sales there in the medium term and make the uSA the strongest market for sixt. This is a huge step for us. But that’s also how we’ve grown in europe. in 2009, we were still at eleven percent market share in the core european sixt markets. Now we are at 24 percent.
How can you still grow as a car rental company??
Car rental must be easy and flexible. Customers don’t want to go through 25 steps on the internet before they get a car. We want to do better. We still have some catching up to do, even at sixt. Simplicity is the new premium. Flexibility is the second dimension. Customers should be able to go to the counter or book right away via the app and get the key in the garage. Or the car is parked right outside our door.
When it gets easier for the customer, it gets more complicated for them.
Many of the new providers and investors underestimate the complexity of our industry. The assumption is often that the business stops with the demand side. You build a cool app, have a few cars, and somehow put it together. But there are millions of routines behind the processes. Provisioning, maintenance intervals, repair orders – all things that the customer should not be aware of.
What is the most difficult task?
Providing customers with the right car at the right price. Customers often want a specific car, but for us there are a lot of variables. For example, most of our more than 200.000 cars permanently between the locations. We don’t know if rentals will be extended spontaneously or where cars will be dropped off. So we have to develop dynamic forecasting models, and that’s very complex.
"we see ourselves first and foremost as entrepreneurs and therefore as servants of the company."
How do they charge?
the models for this are set up by our own developers in germany, but also in kiev and in bangalore. Next year we are evaluating a location in the USA and another in europe. In addition to our current 770 tech employees, we will then have a third of them. by 2023, we will have almost as many software developers as station managers. We are a tech company with an affiliated car rental company.
Who are you relying on in particular?
Sixt stands out above all because we have a very creative, young and loyal management team. Our managers have an average tenure of twelve years, with an average age in their late thirties. Sixt is your home, and you have built up these models with a great deal of experience and continue to develop them with heart and soul.
Pilot project with robotaxis in munich
In the fall, you plan to drive a first fleet of robotaxis through munich with mobileye.
We are starting with up to 25 vehicles. They will drive level 4 autonomously, always with a safety driver in the beginning. For us, this is a pilot project with which we are gaining experience. Mobileye and sixt enter into a partnership of equals here: mobileye has developed the technology of autonomous driving. We know how to operate such a fleet.
When will the robot cab become a business model for sixt?
I do not dare to make any predictions. Many tech companies believed that the autonomous car would come very soon and that this would quickly become a business model because the costs for drivers would fall. But if everyone eventually drives without a driver, then in the end it’s all about efficient operation and vehicle utilization again. In the meantime, most of them have abandoned their autonomous car projects. But I can already imagine that in certain cities, robot cabs will one day be on the road on a regular basis.
Because private motoring is becoming a luxury?
Many people will still be dependent on their own car for a long time to come, for both professional and private reasons. But it’s also true that few people realize how expensive private car ownership is. According to the ADAC cost calculator, a small private car costs at least thirty cents per kilometer driven. If every driver were to put thirty cents into an economy can for every kilometer, it would quickly become clear that this is very expensive. If we make our product so attractive, we can offer some people a real alternative. This is our task.