Record-earning Sixt Leasing launches DRIVE>2021 strategy
In 2017, Sixt Leasing revenue rose to €744 million – a record, driven by strong growth in online retail. But even better days are ahead. The Group took the occasion of its annual report to launch DRIVE>2021, a strategy programme to significantly increase its contracts, revenue and earnings by 2021.
Sixt Leasing SE is more than a specialist in large-fleet management and provision of full-service vehicle leases. The company from Pullach, Germany is also market leader in online sales of new vehicles. And it does both with success: consolidated revenue in 2017 rose by 4.2% over the previous year to €744 million. The operating revenue (i.e. excluding sales revenue) improved by 5.7% to €454.4 million – another record. Sales revenue increased by 2% to €289.6 million.
With an increase of no less than 65.6% (to 45,400 contracts), online retail was the biggest growth driver in the contract portfolio, with significant contributions coming from joint sales campaigns with Peugeot and 1&1, a mobile phone and internet provider. Fleet Leasing recorded a slight increase of 1.2% to 48,100 contracts. Fleet Management contracts increased by 1.9% to 39,400. The Group's overall contract portfolio (excluding franchises and partnerships) rose by 17% to 132,900 contracts.
Regarding potential driving bans for older diesels, Sixt Leasing is keeping a close eye on its diesel stock. At the end of last year, the company managed 5,600 diesel cars with Euro-5 standard or below in Germany. By the end of this year, that figure is expected to fall to around 2,500.
Commenting on the good results for 2017, Sixt Leasing CEO Thomas Spiegelhalter (pictured) promised to lay the foundation for even stronger growth this year with the strategy programme DRIVE>2021. “The name stands for Digitalisation, Risk management, Internationalisation, and Volume and Earnings growth”, Mr Spiegelhalter said. “The aim is to increase the pace of digitalisation, actively manage diesel RV risks, push internationalisation and increase both portfolio and earnings”.
While the first measures have already been initiated, 2018 will be a transitional year, with the next four years witnessing a noticeable positive effect, especially in Online Retail and Fleet Management.
Here are some of the projects and projections for the coming years:
An optimised, fully digital ordering process and a customer portal are among the new functions and services to be introduced on the sixt-neuwagen.de platform from this year onwards. By establishing locations for the delivery and return of leased vehicles, Sixt Leasing aims to optimise the interfaces with customer experiences in the 'analogue world'. In Fleet Management, optimised IT will further improve customer outreach.
- Risk management
The aim for 2018 is to reduce the number of new contracts for diesel vehicles without a buyback agreement to around 15%. To reduce the dependence on the German used-car market, Sixt's own B2B auction platform will be used more actively to market used vehicles in markets outside Germany. A more diverse customer structure will reduce the dependence on large accounts.
In Online Retail, the first step is to optimise and consolidate in the German home market. From 2019 onwards, the gradual expansion into selected markets such as France, Italy or Spain is planned. Simultaneously, Fleet Management will expand into eight or nine European markets.
- Volume and earnings growth
In 2018, Online Retail is expected to grow by around 20%. In Fleet Management, a slight increase is anticipated, and in Fleet Leasing, a slight decline – especially due to active risk management of diesel vehicles. Operating revenue should increase slightly.
By 2021, DRIVE>2021 should deliver growth of at least 60% to 220,000 contracts, with Online Retail contributing 110,000, Fleet Management more than 60,000 and Fleet Leasing around 45,000 contracts. Consolidated revenue should grow by at least a third to more than €1 billion. Operating revenue should increase by 50% to around €700 million.