Sixt targets cargo transportation

Expects monthly breakeven by March

MUMBAI: Sona Mobility Services, master franchisee for Germany’s Sixt car rental company, for India, is looking to derive growth from the entire mobility space and not just the car rental and lease space segments it currently operates in.

The Rs-30-crore company also expects monthly breakeven by March 2008.

Alok Dutta, the newly appointed chief executive of the company said, “The mobility space, which includes cargo transportation, is quite large and I don’t see a reason why we shouldn’t be in that space. Sixt in Germany has a successful cargo transportation division, which we could bring here. Looking at the way retail business is developing in India, it is possibility that we undertake the entire mobility requirement of a retail chain end-to-end.”

Launched in January 2006, Sixt India has expanded slower than it had earlier planned. While it added 220 cars to its fleet in the first eight months, the number inched up by only 80 over the next one year. By March 2008, the fleet size is expected to be 500 and by March 2009, 1,500.

Managing Director Sunjay Kapur had told DNA Money in October 2006 the company would have a 6,000-strong fleet in four years.

The city-wise rollout is also happening at a slower pace. From four cities a year back, (Delhi, Bangalore, Pune, and Bangalore), Kapur had said the company would be in seven cities by March 2007. However, it has added only Chennai to the list so far.

Services in Hyderabad would be launched by January and Dutta said in 2008, three-four more cities, including Kolkata, Chandigarh, and Jaipur would be added to the network.

Sixt India’s lease-a-car service has also not taken off - the number hasn’t changed much from 70 a year ago.

Kapur had said his leased fleet would touch 15,000 in four years (against 500 the biggest player in the segment had).

“We have put on hold our lease car plans and are currently re-negotiating with banks and financial institutions. Leasing business needs more attractive packages, which we are now readying,” Dutta said.
 
However, Dutta, whose mandate is to take the company to a Rs 500 crore topline in 3-5 years, said it is not looking at external funding in the near term.

The car rental business is highly fragmented and according to a 2006 Indian Market Research Bureau (IMRB) study, the latest available, the market is worth about Rs 9,000 crore (4,78,000 vehicles), growing at 20-25% annually. The organised sector accounts for under 6% of this, or about Rs 450 crore. Hertz (fleet strength 800 cars), Avis (600 cars), and International Travel house (500 cars) are the major players.

Sixt has commissioned IMRB for a second round of the market study. “We feel the market has changed a lot over the last two years and hence the latest report would help us gain insight into the qualitative segments of the market as well,” Dutta said.