Rui Ferreira, Hertz International: “We are in control of our own remarketing destiny”
Hertz remarkets about 45,000 vehicles in Europe each year. Compared to the big lease companies, that's not a lot. But being a short-term rental company does provide Hertz with a different perspective on the remarketing industry, says Rui Ferreira, VP Fleet Remarketing at Hertz International.
“I am in charge of all remarketing operations in Europe, Australia and New Zealand. Which means taking care of the sale, and providing feedback to the procurement teams. For example on whether to get risk vehicles or buyback vehicles. The good thing about buybacks is that you know beforehand what price the OEMs will pay you. Risk vehicles, which you buy outright, are trickier. But I prefer to call them opportunity cars”.
Under which circumstances would you prefer either buybacks or risk vehicles?
“We always look at it on a per-case basis. For example, if we need to have 400 B-segment cars for the Belgian market, we'll compare, say, two risk deals and three buyback deals. Any of those options could prove the better one. Of course, OEMs prefer buybacks because they want to control the residual values of their cars. But their used-car programmes only control a small part of the remarketing market. There are a lot of needs to be met, and theirs is just one of many”.
The risk – or opportunity – you deal with depends on future prices. How do you predict those?
“We have one great advantage over lease companies. Their vehicles are on fixed-time contracts, so they have no choice in when to sell them. As a rental company, we have much more control of when vehicles leave our fleet. We can look at different 'exit gates' in the future, at 12, 18 or 24 months, for example. Our short-term perspective gives us more opportunities than challenges. We control our own destiny. If a particular model is not doing well on the market, we just don't sell it now”.
How does your perspective on remarketing influence the cars you buy?
“We pick car by car. Repetition is a recipe for failure. And we never buy the cheapest option available. Those no-frills vehicles don't generate a good return. Also, we're very picky about colour. And we have to be aware of national differences. In Italy, you can't sell a red midsized car. That colour is reserved for Ferraris. The further north you go, the more red is acceptable, though. France is very diesel-minded, the Netherlands are the opposite. Automatics are popular in the north, but not so in the south of Europe. As a remarketer, you have to understand differences like that”.
How has the internet changed the way Hertz remarkets its cars?
“The last three years, we've developed a clear strategy on how to remarket, streamlining processes, deploying common methodologies across our markets, using powerful fleet management tools. We've also developed online remarketing channels, but only for about 20% of our business. Those are aimed at smaller players, who lack the resources of bigger buyers to purchase in large quantities”.
What is your biggest challenge in the remarketing industry?
“It's the new car market itself. You see, we have an atypical profile. Our vehicles are 1 to 2 years old, younger than the vehicles remarketed by lease companies, but older than the ex-demos and self-registered vehicles remarketed by dealers. We are competing directly with the OEMs, who are now very aggressively pushing their new vehicles via discounts and financing deals – which explains why the new car market across Europe is up by 6.5% this year. This is pushing the value of used cars down”.