Sixt AG - Company Profile, Information, Business Description, History, Background Information on Sixt AG

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We want to expand the value creation chain of our firm spectacularly. We know much more about our customers than others and we want to offer them more than simply cars. This strategy changes the company dramatically. We stand before a genuine revolution.

History of Sixt AG

Sixt AG is Germany's number one car rental company and it continues to expand into all of Europe. The company maintains about 440 offices in its home country and about 700 in other countries, primarily in Europe, but also in Australia, New Zealand, Tunisia, and Morocco. Focusing on the business traveler, Sixt works with a number of airlines including Deutsche Lufthansa, and hotel chains such as the Hilton Group. Sixt is also one of Germany's largest used car dealers. About one-third of the company's sales come from car rentals, while the remainder is generated from used car sales. Sixt is also active in car and equipment leasing as well as in e-commerce. Descendent of company founder Martin Sixt, Erich Sixt, manages the business and owns 67 percent of Sixt AG.

Origins in 1912

When the automobile became fashionable among well-to-do passengers and drivers, German auto-lover Martin Sixt came up with the idea for a business. In 1912 he founded 'Sixt Autofahren und Selbstfahrer.' It was one of Germany's first rental car companies, based in Munich. Targeting British noblemen and rich Americans, Sixt rented his four Mercedes and three Luxus-Deutz-Landaulets for a day at a time and offered customized tours with a company driver. However, only two years later, at the onset of the World War I, the German Army confiscated his vehicles. After the war was over, Sixt acquired a piece of property in the city of Munich at Seitzstrasse 11, from which he gradually expanded his business. He ran his business according to three basic principles: 1. Have the right cars; 2. Offer perfect service to the customer; 3. Minimize administrative costs.

In 1927 Martin Sixt's 20-year-old nephew Hans Sixt took over the business. He added two new principles to the Sixt business philosophy: creativity and innovation. Two years after he took over, the new owner decided to stop using foreign cars, given the difficulty of finding replacement parts. Instead, Sixt chose to use the domestic Mercedes brand and soon built a 20-car fleet. The worldwide economic boycott against Nazi-Germany which was preparing for a war in 1938 resulted in a significant downturn for the rental car business. A year later the Sixt fleet was once again confiscated by the German army to be used on the battlefields of World War II.

As the war was coming to an end, company founder Martin Sixt was overcome by the destruction of his life's work by Allied bombings. He died in May 1945. The following year Hans Sixt started from scratch with a Mercedes 230 Landaulet which survived the war hidden in a barn in upper Bavaria. Sixt was fortunate enough to get a taxi license and chauffeured the members of the American occupation forces through Munich in his seven-seat limousine. Hans Sixt called his new service the Export Taxi and soon offered it to business people and VIPs. The next Sixt innovation was a fleet of Radio Taxis, equipped with radio gear from the United States, introduced in 1948. Three years later the company, called 'Auto Sixt,' was founded as a rental agency for motorists who wished to drive themselves around. Hans Sixt was also active in car dealerships and gas station businesses. As Germany entered the economic boom of the 1960s, the business started to thrive once again. In 1966 Sixt opened offices at Munich and Frankfurt airports. The Hans Sixt era ended with the company's expansion into car leasing in 1967. Two years later he brought his son Erich into the business and withdrew from management for health reasons. However, before he died in August 1998 at age 89, Hans Sixt saw his company grow into a DM2 billion business.

Erich Sixt Changes the Rules in the 1970s and 1980s

Erich Sixt entered the family business at age 25--after dropping out of college--and fundamentally changed the German car rental industry for good. In the 1960s the industry was characterized by high prices and limited service. Renting a car was something for wealthy people. Erich Sixt had a different vision: renting a car should be affordable for anyone. To free the rental car business from its image of exclusivity, Sixt offered his customers 'a Mercedes for the Volkswagen rate' of DM66 per day, a very low price at that time. From the very beginning Sixt used provocative advertising campaigns to attract attention and gave his primarily British and American competitors headaches with his flexible prices--which were always a little lower than theirs. 'Rather to Sixt than too expensive' was another popular slogan which Sixt was soon forbidden to use by the rigid German antitrust authorities.

In 1969 the German car rental market was dominated by seven notable national and international players while some 2,000 local businesses competing for the crumbs. When Erich Sixt took over the company management in that year, the Sixt fleet consisted of 100 cars. One year later the company started renting trucks. Another important Sixt strategy was to obtain significant rebates from car makers for the brand-new cars purchased and then rent the cars for only a few months, up to a year. Not only was the company able to offer its customers the latest models, after a few months of being rented, the cars were still new enough to be sold off for good prices without needing many repairs.

Sixt founded its own used car dealership, Autoland Central Garagen GmbH, which became another important profit center. In the early 1970s Erich Sixt was looking for software to help manage the dynamic growth of the company. However, he was not able to afford the prices charged for customized programming at that time. So he picked up a book about computer programming and wrote the code himself, which at the time was still entered by punching holes into paper cards.

The year 1977 marked another important step for Sixt. In that year the company opened offices at all major German airports. More important, the company entered a licensing agreement with American car rental giant Budget Rent a Car. As a result, Sixt car rental locations were included in Budget's worldwide network listings. To reflect the importance of the alliance, the Budget logo became part of the Sixt logo in 1982 when the company was renamed Sixt Autovermietung GmbH. In 1979 Sixt acquired another license for Germany from Carey-Limousine-Service and was listed in the world's leading chauffeured limousine service network. One year later Sixt entered the leasing business and founded Auto Leasing GmbH (ASL) together with the Dusseldorf-based Disko Group. Later, in 1988, Sixt founded its own leasing arm Sixt Leasing GmbH. By 1982 Sixt was number eight among Germany's rental car companies. In 1986 the company was renamed Sixt AG and went public in Germany which raised some additional capital for further expansion. However, Erich Sixt remained majority shareholder of his company.

New Era of Expansion Begins in 1990

At the beginning of the 1990s Sixt AG had all it took to tackle market leader interRent Europcar Autovermietung GmbH. With over DM 1 billion in sales and 238 rental offices Sixt had worked its way up to Germany's number two rental car company. The opening of the Berlin Wall offered new business opportunities. In 1990 15 Sixt rental stations opened in the former East Germany. The company also profited from the huge demand for used cars in the new eastern German states. In that year Sixt AG's revenues from used car sales were higher than from car rentals. Overall, that year the company's revenues grew by 40 percent for used car sales and by 47 percent for car rentals. In addition to the higher demand that followed German reunification, Sixt worked for a higher market share by using unusual offers to distinguish itself from competitors. Sixt customers were able to rent a Harley Davidson, a Porsche Cabrio, as well as a heavy duty flat-bed truck. Another new vehicle made available by Sixt was the so-called 'conference-mobile,' a mobile office that included a computer, fax machine, and telephone. Sixt also broadened its leasing services. Besides cars, Sixt Leasing also offered financing for heavy machinery and even equipment for dental practices. The company's so-called 'Vario-Leasing' allowed customers leasing a car to sign one contract and change the car several times during the term of the lease.

An important part of the company's marketing strategy during this time was provocative ad campaigns that won many advertising industry awards for their creativity. For example, when American competitor Avis was using the slogan 'We try harder,' Sixt headlined 'Don't try harder, try Sixt.' Another ad featured the English Queen in her coach of state with the headline 'If she had booked at Sixt she could have had a Mercedes.' The German news magazine Der Spiegel was only willing to run the ad if Sixt agreed to buy the entire English print run if outlets there refused to carry it. Sixt refused and placed the ad in other publications.

Not all of Erich Sixt's ambitious plans were successful. His idea of adding hotels for business travelers to his service portfolio never got off the ground. Sixt bid unsuccessfully for the former East German Interhotel chain. Moreover, economic recession in Germany took hold in 1992, and the car rental market decreased significantly for the next three years. Sixt was especially hit hard in the company's core business, putting it under financial pressure. Interest rates went up while prices for used cars went down. The average waiting time to sell used cars doubled. At times the used cars Sixt had for sale clogged the neighboring streets around the company's used car dealerships. At the same time that money was tight, interest debt went up by 30 percent amounting at DM 52 million. Sixt stock lost ground, and the company's capital base began to diminish.

Confronting this situation, Erich Sixt restructured his empire. Sixt AG became a management holding company while the car rental business was organized under the umbrella of Sixt GmbH & Co Autovermietung KG. Sixt sold off his 50.2 percent share in ASL to minority shareholder KG Allgemeine Leasing, taking away two-thirds of the total leasing sales of DM 300 million, to gain needed cash and more control over the business.

Partnerships and Innovation Spur Growth in 1994

In the 1990s competition among car rental companies grew stiffer. Within only two years the number of firms competing in the German market went down from 1,400 to 1,100. To regain strength, Sixt AG looked for new business partners in the travel industry. In 1994 the company entered an agreement with the leading German air carrier Deutsche Lufthansa, becoming a partner in that company's Miles & More program. Customers who rented a Sixt car earned frequent flyer miles, and Lufthansa customers were able to rent a car when checking in at the airline counter. Lufthansa's CEO became president of the Sixt board of directors. By the end of 1994 Sixt AG had become Germany's number one car rental company in sales; the company credited much of its success to the alliance with Lufthansa. Sixt also succeeded in targeting business commuters, who accounted for 60 percent of the company's total sales compared with 35 percent on average in the industry. After the company opened several booking offices at high speed ICE rail stations, Sixt began working together with German railway company Deutsche Bahn AG.

Another cooperation agreement was signed in 1997 with Germany's top automobile club ADAC. The club, which offered various on-the-road services for motorists, had entered the car rental market in 1991 with its subsidiary ADAC Autovermietung München GmbH and had started cooperating with Sixt competitor Europcar. ADAC members could reserve rental cars via an ADAC phone number but rented the car from one of 450 Europcar rental stations. To expand its network ADAC entered a second agreement with Sixt and gained access to the company's 326 stations at the time. In this way private travelers not otherwise targeted heavily, were referred to Sixt. However, like Europcar, Sixt had to offer its services at fixed prices. Another area of cooperation with ADAC was in providing replacement cars following accidents to ADAC members; replacement cars could be ordered via a 24-hour-emergency line.

Besides its strategic partnerships Sixt also kept the stream of its own innovations flowing. In 1996 the company introduced its Sixt SelfService Centers in big city airports where customers were able to rent a car without having to deal with a clerk behind a counter. At the Sixt 'Car-Express-Automat' a customer could rent his car before departure at an automate, using a credit card or Sixt member card, and--after arrival--pick up the key for his rental car at a Sixt key safe. Not only did waiting in line become obsolete, but the company also saved on personnel. Another experiment was started in the same year together with Deutsche Bahn. Environmentally-conscious individual travelers could rent an InnerCity E-Mobil, an Renault 'Clio' equipped with an electric motor, at Munich and Frankfurt/Main ICE train stations. The electric car could be reserved when purchasing an ICE ticket at a train station and was picked up at the Sixt office after arrival in Munich or Frankfurt. The electric cars, with a maximum speed of 95 kilometers an hour, ran for about 90 kilometers with a full battery which could be reloaded at any power outlet. As an additional incentive, the E-mobile could be parked for free in several Munich inner city park houses.

Last but not least Sixt continued to create award-winning advertising campaigns with its Hamburg-based agency Jung von Matt. Distinct and eye-catching ads were placed in Germany's renowned weekly news magazine Der Spiegel. One popular ad featured a picture of Social Democrat candidate for chancellor, Gerhard Schröder, and the headline 'Sixt has cars for people who don't yet know where they want to go.' Among others, the Sixt campaign won the award from Art Directors Club of Europe.

Massive International Expansion in the Late 1990s

In the second half of the 1990s Sixt AG started expanding aggressively into other countries around the globe. In 1996 the first Sixt rental station opened at Vienna airport. The following year, the company expanded into France and Great Britain. In France Sixt set up a joint venture with Paris-based Eurorent S.A. with over 100 rental stations in France. In Great Britain Sixt acquired European Car Rental, a small player in the British market with eight offices and a 1,000-car fleet. In 1998 Sixt offices opened at major airports in Ireland and Italy, Spain and Portugal, Malta and the Netherlands, the Czech Republic and Hungary, Morocco, and New Zealand. Central booking offices were also established in the United States, Canada, and Australia.

At the same time Sixt set up new airline partnerships such as with the British Airways 'Executive Club,' United Airlines' 'Mileage Plus' program, the 'Frequence Plus' program of Air France, KLM's 'Flying Dutchman' mileage program. A notable partner from the hotel industry was finally found in the American Hilton group.

However, there was at least one party who was not so happy with Sixt's massive international expansion: its license partner Budget Rent A Car. In spring 1997 Budget canceled its license agreement with Sixt AG. Budget accused Sixt of having breached their contract by not referring rental car bookings from abroad to Budget and questioned the validity of the sales numbers Sixt reported to the American partner. Sixt in turn said it understood that the agreement was only valid for customers who were booking a car for abroad from Germany, and referred customers in other European countries to their own rental stations. Sixt also pointed out that the company referred 87,000 customers to Budget in 1996 while only 59,000 referrals came the other way around. Sixt paid DM 6.6 million in license fees to Budget in that year. However, in April 1999 the Oberlandesgericht Munich found Sixt AG guilty and ordered the company to bear the cost of the lawsuit and to pay damages to Budget. In February 2001 Sixt lost the appeal when the German Bundesgerichtshof rejected the revision Sixt had asked for. However, in the meantime, in 1999, the company signed a cooperation agreement with another major American company, Dollar Rent a Car, which went into effect in March 2000. At that time, the company also acquired British rental car company United Kenning Rental Group.

Erich Sixt's latest venture was as Germany's virtual auto dealer, establishing the e-commerce platform e-Sixt. Already some ten percent of all Sixt rental car business was done over the Internet; by 2003 the company expected to realize DM 300 million selling cars, auto parts, flight tickets, and insurance policies over the Internet. Sixt planned to use its four-million customer database to market the new service. In spring 2000 Erich Sixt told Süddeutsche Zeitung writer Karl-Heinz Büschmann that information technology was one of his responsibilities and that he spent many hours daily on the Internet. At age 55, he did not plan to withdraw from his business. 'I don't sell,' Sixt said. 'The business is my life. It's my hobby. I wouldn't know what else to do.'

Principal Subsidiaries: Sixt Autoland Central Garagen GmbH; Sixt GmbH & Co Autovermietung KG; Sixt Leasing AG; Sixt Travel GmbH; e-Sixt AG; Sixt Eurorent SAS (France); Sixt plc (U.K.); Sixt AG (Switzerland); Sixt G.m.b.H. (Austria); Sixt B.V. (Netherlands).

Principal Competitors: Accor; Avis Europe plc; The Hertz Corporation.


Additional Details

Further Reference

'AUTOVERMIETER; Drunter und drüber,' Focus, January 18, 1993, p. 168.'Bahn AG und Sixt starten Pilotprojekt in Muenchen,' Süddeutsche Zeitung, April 17, 1996.Büschemann, Karl-Heinz, 'Wir stehen vor einer richtigen Revolution,' Süddeutsche Zeitung, March 6, 2000, p.23.Diekhof, Rolf, 'Frontalangriff auf leisen Sohlen,' Werben und Verkaufen, June 16, 1995, p. 64.'Hans Sixt,' Frankfurter Allgemeine Zeitung, January 28, 1997, p. 18.Pellikan, Leif, and Reinhard Röde, 'World Wide Sixt,' Werben und Verkaufen, June 9, 2000, p. 120.Riefler, Dagmar, 'Immer auf der Überholspur,' Werben und Verkaufen, September 20, 1996, p. 100.Sixt, Erich, 'Die bessere Idee,' Werben und Verkaufen, October 27, 1995, p.185.'Sixt greift nach dem Spitzenplatz,' Süddeutsche Zeitung, June 15, 1991.'Sixt unterliegt im Streit mit Budget,' Frankfurter Allgemeine Zeitung, April 16, 1999, p. 18.'Sixt verliert endgueltig Prozess gegen Budget,' Frankfurter Allgemeine Zeitung, February 15, 2001, p. 22.'Sixt will das Eigenkapital weiter aufstocken,' Frankfurter Allgemeine Zeitung, January 20, 1993, p. 19.'Sixt: Wir muessen sogar Kunden ablehnen,' Frankfurter Allgemeine Zeitung, June 28, 1995, p. 17.'Sixt zweiter Mietwagen-Partner des ADAC,' Süddeutsche Zeitung, June 17, 1997.Taylor, Roger, 'European Car Rental Deal Drives Sixt's UK Ambitions,' Financial Times, October 10, 1997, p. 24.Trapp, Carolina, 'Handfeste Werbung fuehrt Sixt zum Erfolg,' HORIZONT, February 21, 1992, p. H13.Winkelhage, Johannes, 'Der Konkurrenz schlaflose Nächte bereiten,' Frankfurter Allgemeine Zeitung, August 29, 1998, p.49.'Wogen zwischen Sixt und Budget glaetten sich,' Süddeutsche Zeitung, May 6, 1997.

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