In an effort to stay competitive against the foreign operators, Autonom, one of the largest car rental companies in Romania, announced the acquisition of the operational leasing business of Banca Transylvania, the Romania-based commercial bank. The deal will materially extend Autonom’s fleet, while supporting its extensive package of mobility offerings, including fleet management, road assistance, car rentals, and drivers on demand services. The acquisition is expected to close by the end of 2018, with the investment banking division of Banca Transylvania acting as an intermediary.
Prior to the deal, Autonom managed a fleet of around 5,000 automobiles across 33 Romanian cities. The company is monetizing the demand for cars by tourists and offers services in the main airports of Romania in Bucharest, Cluj, Bacau, Constanta, Craiova, Oradea, Sibiu, and Targu Mures. Also, it is increasingly providing vehicle fleets to corporate customers who prefer leasing to car ownership. During the past several years, the car lender expanded abroad by opening new locations in Hungary and Serbia. In 2017 company’s turnover reached 27 mln EUR.
On the other side of the deal, Banca Transylvania Operational Leasing has over 3,000 cars, which delivered revenues in excess of EUR 15 million in 2017. The CEO of the parent company, Omer Tetik, expressed his satisfaction with the deal: “We are glad to have grown the business in a difficult niche of operational leasing. BT Operational Leasing has become one of the main players on the local operational leasing and auto fleet management markets. We trust the business will be developed even better thanks to the skills at Autonom.”
This deal comes as no surprise, as the European car rental market is currently in a stage of consolidation, marked by a large number of mergers and acquisitions. The top 5 companies account for about 70% of the market. Among them, Europcar is the leader with close to 20% market share in Europe. The French company is followed by Avis Budget, Hertz, Sixt, and Enterprise – each of them representing close to 10% of the market. Industry analysts expect that Europe will be approaching the US levels of consolidation, where the market is a mere oligopoly as 95% is controlled by 3 companies.
Since the beginning of 2018 several European M&A deals in the space materialized: Europcar acquired Scooby, a Belgian scooter-sharing start-up; Europcar got a share in SnappCar, the second-largest peer-to-peer car sharing service in Europe; Daimler and BMW merged their car-sharing services to compete with US services Lyft and Uber.
The European car rentals market is expected to grow at a CAGR of almost 3% until 2022, according to data by Statista, a market intelligence portal. Similarly, in Romania experts forecast CARG in the rage of 4-6% over the next 5 years. Rise in demand is fueled by increasing substitution of vehicle ownership with operating leasing by corporations, booming tourist industry and Romanians who are living abroad and prefer car rental services when returning home. The trend is facilitated by the well-adopted Internet applications, alongside increase in smartphone possession, both of which boost online bookings. In addition, public transportation, regarded as a competitor, is of low quality, underdeveloped and not highly appreciated.
SORTIS view:
Due to the similar macroeconomic environment and social factors, we believe the industry growth and efforts towards consolidation will replicate in Bulgaria and the neighboring countries. The car rental service market is bound for a material transformation, involving further consolidation and shift towards car sharing and a self-driving fleet. We foresee a significant drop in car ownership: in corporations, in the short term, and in private cars in the long term, driven by car sharing options and robotaxis’ penetration. The surviving vehicle providers will be positioned to take advantage of their industry know-how, brand recognition, and economies of scale.
We are excited to be part of the process through our involvement as a sell-side advisor in the TBI Rent/Leasing Finance transaction in Bulgaria. For further details, please visit our TBI Rent case study.
