Capital intensive business means size matters

TALLINN - Easy Car Rent is an Estonian car rental company which is also the representative of Dollar&Thrifty in Estonia. The company offers a car rent service to local as well as foreign customers. “Our main goal is to transform the whole process of car rental into a fast, convenient and affordable service while offering flexible solutions and customer-friendly service. The company was started in 1998, though it [started] specializing in car rentals in 2005,” says Kristel Haaboja, manager of Easy Car Rent.

According to Haaboja, their customers are mostly tourists coming to visit Estonia and looking to rent a car from an affordable local company. “It is important for our clients to support Estonian businesses and to communicate with locals who can point out slightly less-known attractions. There is also a market share of local clients who are one-time renters due to circumstance and local clients who have become our regular clients because they need to use a car periodically,” said Haaboja to The Baltic Times.

“When it comes to competition in Estonia you can find the rivalry to be very intense due to the limited market. Though the economic crisis has impacted many local car rental companies, the Baltics and especially Estonia are turning into a desirable tourist destination, while car renting is also gaining popularity, so with economic growth we are expecting to see the market increase and further development in the car hire field. There is very little different companies can do at this time, but Easy Car Rent is focused on strict cost planning and pursuing and developing good partner relations. It is also important for us to offer high-standard customer service and keep the price list as competitive as possible. The economic crisis is forcing car rental companies to keep a positive mind, and Easy Car Rent is determined to exit the crisis being stronger and more experienced than ever.”

Ragnar Viigand, from Advantec Car Rental Estonia (the company which represents well-known brand NU Car Rentals Estonia) said that in comparison with well-known major brands such as Avis, Hertz, Europcar and Sixt, the company offers prices that are more reasonable. “Being smaller we can act more flexibly and change our prices quickly if there is a need. When compared to Estonia’s local small companies, we are more expensive, though. Therefore, we could say that our prices are at a medium level. In order to maintain a high quality of service one can’t operate on the lowest price level,” said Viigand to The Baltic Times.

According to Viigand, the company mainly offers car rental services with additional possibilities, such as rental with a driver as well as transfer services. In addition to this they offer equipment such as children’s car seats, GPS navigation systems, ski racks, etc. To some extent they also offer a “full-service lease,” which is car rental for 1 year or longer.

“In the field of car rentals a period of stabilization is coming. Weaker enterprises will go out of business or be bought by other companies. Some companies team up and, as a result, the stronger and bigger ones are going to lead the market. Operating under well-known trademarks and branding become more important. Well-known and strong brands are going to dominate because rivalry has converged prices between international companies and the local, smaller companies, and in that case the customers prefer well-known trademarks. Car rental enterprises have mainly gathered in capitals like Riga, Tallinn and Vilnius and the service of smaller cities takes place through the capitals or in cooperation with local enterprises. Owning a representative firm in smaller cities is not reasonable, price-wise, at the moment,” explains Viigand.

He adds that, “By now some smaller companies have gone out of business and the market is starting to stabilize. Car rental service is an area where one has to calculate the profit in the long-term perspective and it is a very investment-intensive business. What is important to our customers is not only the price, but especially the quality of the service. Whoever has more contented customers is able to achieve a better position on the market. Being able to maintain their loyal customers is one of the biggest aspirations of every enterprise, because it is well-known that maintaining loyal customers is many times less costly than finding new ones. During the crisis our loyal customers have been the ones who have helped us to stay afloat. We have been flexible and accommodating and have been able to maintain most of the relationships with our loyal customers.”

Viigand says that the clientele is different during the high and low seasons. During the low season (from September to April) the local clientele, insurance companies and Estonian companies dominate. During the high season the customer consists mainly of foreign tourists. “Regardless of the fact that the main profit comes from tourists during the high season, the success of the company depends on the relationship with our local customers and on the flexibility to offer suitable solutions to different enterprises,” he points out.

“Having been on the market for 17 years already, we have been able to build and maintain a proper loyal customer base for which we are extremely grateful to our customers. Last year we could feel a setback in demand on the market, but this year it has risen to its regular level. Apparently, the travel plans that were not fulfilled last year have been made up this year. This year we could especially feel the rise in the bookings during the summer season (July-August),” says Viigand.

The crisis has served a lesson in how to survive through smaller costs, forcing a reduction in personnel. “The employees have learned to make bigger efforts and work more efficiently. So we could say that in the long term the economic crisis has been rather for profit. Also, a clean-up on the market has taken place which means that some smaller car rental services that had been in the market for a few recent years have closed. This is a good sign, because the competition and the resulting pressure on the prices was too high to operate normally in the long run. We are cautious but optimistic about the future,” he said.