Hertz Southern Africa CEO
Wils Raubenheimer took office around three years ago and soon after gave his first interview to Business Traveller Africa. That’s why it seemed a good idea to re-visit the same subject matter – over a coffee in Johannesburg – three years on, to see if Raubenheimer’s view on the South African car rental industry had changed, and what he’d learned in the same period.
Wils Raubenheimer is singing a different tune.
By his own admission, back in 2013 he thought that the car rental business was fairly simple.
“I have a completely different view today to the view I had three years ago,” he says. “I wondered how difficult it could be. I thought that you buy a few cars, you rent them out, you get them back, you give them to the next renter. It’s actually a very difficult, very competitive, very complicated environment that changes constantly.”
All of which makes it a difficult environment in which to stay ahead of the game.
“That’s from renters’ needs to their demands, to the lack of control over your destiny,” he says. “From one year to the next there is a completely different profile in terms of what they look for, from the small cars in 2013 to the SUVs in 2014/15, to the automatics that renters now want. Also, the fact that we have to submit our fleet plans five to six months in advance. It is very difficult to adjust.”
So, how does one stay competitive and profitable in an industry that is notorious for its difficulty in making a decent margin?
“We have to look at rate increases,” says Raubenheimer. “I see that some of our competitors have announced in press releases that they’re thinking the same. Whether they’re serious about it or not, I can tell you that I’m serious about it. We have to increase our rates, and I know that will mean some lost business, but we have no option.”
On the issue of rates, I put it to Raubenheimer that the last time we chatted he bemoaned the fact that the South African car rental industry rates had barely moved the needle in the previous decade, with the Hertz CEO citing the comparison with the hotel industry, which had managed to treble the three-star hotel room rate in the same time.
“In some instances it even came down because of the competitive nature,” he says. “It is very competitive in South Africa, which has a fairly small pool of renters, whether it’s corporate or leisure or government or replacement.”
No surprise then that Hertz South Africa continues to look for other, more attractive markets, with Raubenheimer recently in Zambia to check on the viability of expanding into that country.
“It’s got a lot of development and the mining industry is very big,” he says. “It’s also got a growing economy and a lot less competition, which makes it very attractive.”
Hertz Southern Africa is currently present in South Africa, Namibia and Botswana, where it took over a small operation a year ago. It has also started a business in Zimbabwe from scratch, but it sounds like the operating environment there has been quite challenging.
“It’s been very difficult,” says Raubenheimer. “But we’ve got a strong team in Zimbabwe, a small fleet, and they’re driving additional business. The future is looking better.”
What about the other challenges facing the South African car rental industry, such as e-tolls and the impact of the sharing economy, with Uber making a big splash in South Africa and seemingly shaking up the business and leisure travel markets with an attractive offering?
“We actually have a close relationship with Uber – their drivers who are not credit-worthy can rent cars from us,” says Raubenheimer. “We’ve got a good relationship with them and that’s globally. It’s very convenient and they’ve got a fantastic system. If the car rental industry is not going to look at it seriously, I can see Uber becoming a significant threat to car rental.”
Raubenheimer believes that this threat is in its infancy in South Africa, but that it looks set to grow.
“The concern I have is the youth – they’re all using Uber,” he says. “The next generation of renters will be Uber users. That’s where I think the biggest threat is.”
All of which means the car rental industry – just like every other industry – is going to have to innovate to survive.
