South Africa´s Barloworld aims to expand car-rental footprint in the Nordic countries

JOHANNESBURG. There are no obvious synergies between Avis in Southern Africa and Avis in Scandinavia, but the owner, the South African industry and brand management group Barloworld, clearly thinks it is a good idea as it announced the acquisition of the Avis and Budget franchises in Denmark.
It means that Barloworld now operates Avis and Budget in three Nordic countries: Denmark, Norway and Sweden.
The acquisition of Avis Denmark from the Danish Biludangruppen for ZAR 180 million (DKR 170 million) signals the next step by the listed South African group, which is one of the larger industry groups back home.
Barloworld´s intention is to grow further in the Northern European region.
“Anybody that can put one and one together can see that our broader aspiration is to grow in the Nordic territory. There is no doubt that we would like to expand and take a broader position”, say´s Martin Laubscher, CEO of Barlow Motor.
He doesn´t say it, but it means that Finland, Island and the countries around the Baltic Sea would be prime targets. But it is not up to Barloworld to expand for the sake of it.
It is very much in the hands of the “principal”, Avis Europe, to decide – it owns the various Avis and Budget brands – which is why Mr Laubscher has to thread careful
Barloworld, in Europe more known for its Caterpillar franchise, has done well out of its Scandinavian car-hire venture so far.
“The Scandinavian business was already there when we acquired the Southern African Avis”, says Martin Laubscher.
While he acknowledges that there are not many synergies he finds that the two stimulate each other.
“We run the same booking system and we can benefit from the collective wisdom. It is also stimulating for our staff to go to each others territories”, says Mr Laubscher.
Including the latest acquisition the Scandinavian operation now makes up a third of Barloworld´s car-hire operation.
“We rent out four million cars in Southern Africa and two million in Scandinavia on an annual basis”, said Martin Laubscher.
The split is: 900 000 in Sweden, 600 000 in Denmark and 600 000 in Norway.
The annual turnover for Sweden and Norway is in the vicinity of ZAR 500 million and the profit is healthy. With the Avis Denmark the turnover will rise to about ZAR 750 million (DKR 720 million; EUR 94 million).
Barloworld, with a ZAR 37 billion (SEK 45 billion; € 4.6 billion) in total revenue, has an integrated approach to its businesses in Scandinavia. The view taken is that the Nordic region is one entity. Dag-Andre Johansen is the CEO for the region at the moment and he will be responsible for Avis Denmark as well.
The growth in Scandinavia has been satisfying for Barloworld. The car-rental operations in Norway and Sweden have had a compounded growth of 12% annually.
The market was not too impressed by the Danish acquisition. Barloworld´s share price lost 1,69% to close at ZAR 104,90 the day the deal was made public.