EasyCar is a European based car rental company that was founded in 2000 by Stelios Haji-Ioannou, a flamboyant self proclaimed cereal entrepreneur from Greece. The company’s mission was to give customers an outstanding value by providing a reliable service at a low price1. To achieve this mission easyCar took a very different approach than the traditional car rental companies in Europe. The main competitors to easyCar were Avis Europe, Europcar, Hertz, and Sixt. The company did everything is could to reduce costs and used technology to operate as efficiently as possible. Steilios’ ultimate goals were for the company to achieve revenues of £100 million and profits of £10 million by the end of 2004 so that he could take easyCar public in 2005. This goal seems lofty considering that in 2002 easyCar only broke even with revenues of £27 million.
The pricing strategy for easyCar was to offer rental cars for the lowest prices in the industry. Prices were updated daily based on demand and location and the lowest prices could only be found if booked well in advance. In order to keep costs down easyCar only rented one type of car at each location and did not work with agents. Almost 95% of all car bookings were made through the company’s website with the others made through a phone reservation system that carried a €0.95 per minute charge. EasyCar’s information system calculated expected demand and enabled the company to achieve a utilization rate above 90 percent; this figure was much higher than industry leader Avis Europe’s utilization rate of 68 percent. To further reduce costs the company enacted stiff penalties for returning the car late and for not cleaning the before returning it to the rental office. Some customers complained that the fees were not adequately disclosed and were therefore unfair. EasyCar’s response was to do everything in their power to disclose any and all fees on the company’s website.
EasyCar’s initial product strategy was to offer only one car model at each location. The company made a deal with Mercedes to purchase 5000 A-Class vehicles. This move was surprising to many in the rental car industry because no other company has attempted this strategy and cheaper cars could easily be purchased in the main goal was to reduce costs. Company founder Stelios replied to questions and comments by saying that easyCar will not compromise on hardware to reduce costs; it will instead use innovation. The company was able to reduce the costs of vehicles by utilizing quantity discounts and by only buying one model. In 2003 easyCar implemented a policy that customers could rent cars for as little as one hour. Stelios hoped that people would consider short term car rental as a viable option to car ownership or using buses and taxis.
Another way in which easyCar was able to keep costs down was with its facility management strategy. With a 90% fleet utilization rate, the company could successfully operate in very small areas. Many rental...