When the pandemic struck, the CEO of car rental company Turo Inc. remembered the slow reaction to the collapse of the Internet bubble. It didn’t end well then.
This time,
Andre Haddad
decided to be more aggressive. At the end of March, Mr Haddad dismissed one third of his 330 employees. It has reduced marketing costs to zero next month, where they will remain throughout the second quarter. He examined all expenses to find savings and to guarantee three years of cash flow.
Touro’s financial turnaround suggests that the measures are working. According to the Wall Street Journal, the peer-to-peer car rental market experienced its first profitable quarter and Haddad expected to reach profitability for the full year 2022 before adjusting for interest and taxes.
Building on the company’s success and following the success of numerous IPOs in the technology sector in 2020, Haddad plans to float Turo on the stock exchange later this year. The company has not yet decided on a traditional IPO and is open to other solutions, such as a public offer through a merger with a public limited company.
Turo is a website where private car owners rent their cars daily, weekly or monthly, including luxury cars such as Lamborghinis. The car rental market comes into play
Airbnb Inc.
in the category of starters who seemed unreliable at the beginning of the pandemic, but have since benefited from an unexpected change in consumer behaviour during large-scale closures.
In Turo’s case, people exchanged plane tickets for local excursions and needed cars. People took time off from the city to work remotely and rented a car for their new workplace. Some customers with extra money have rented sports cars or Teslas for rides after spending months in the house. Turo maintains a variable reduction in rental income based on insurance costs and charges a separate reservation fee.
The platform model is much more flexible and agile, he said.
Arun Sundarajan,
Professor at New York University and author of a book on the economics of sharing. Because markets like Touro have no assets like hotels or traditional car rental companies, they are much less likely to have financial problems, he said.
Hertz Global Holdings Inc..,
one of the largest car rental companies in the country, filed for bankruptcy protection in May.
Touro said he expects to end the year 2020 with $153 million in sales, a record for the San Francisco-based company over the past 10 years. Turnover for the second half of the year was also $92.3 million, up 7% on the previous year. This increase reflects slower growth than in recent years, when revenues increased by more than 60%, but any increase is noticeable in the context of a pandemic.
Touro makes it possible for private individuals to rent their personal vehicles. Some car rental companies create an activity at airports that are described by the major car rental companies as unfair competition. Jason Bellini’s doing a report for the WSJ. Photo: Jake Nichol/Wall Street Journal
The company also reported that it had reduced its losses before interest and tax adjustments to $7.2 million in the second half of 2020, compared to $46.9 million a year earlier.
Haddad, 49, was managing director of the European online auction market iBazar SA when the technology market collapsed in 2000. He stated that he had reacted indecisively and hesitantly to the crisis and had sold iBazar at a substantial discount to
eBay Inc.
in the spring of 2001.
We haven’t handled this crisis very well, and I’m very impressed by this experience, Haddad said.
What was good for Turo was also good for its main competitor in the United States, the Getaround private car rental market. By the end of the summer, sales of Getaround had more than doubled from pre-pandemic levels, said Andrew Byrnes, the company’s assistant general counsel.
Touro CEO Andre Haddad.
Photo:
Turo
Touro and Getaround are still exceptions in a volatile industry.
General Motors Co.
Maven Carpooling Service and
Daimler AG
и
BMW
Among other things, the Car2Go car-sharing project stopped failing last year.
Madeline Brozen, who studies politics and transportation at the University of California, Los Angeles, said that the arrival of monsters in amusement parks…
Lyft Inc.
и
Uber Technologies Inc.
The depression in the market for potential car-sharing customers and the trend towards increasing private vehicle ownership has put car-sharing companies to the test. Consumers have moved to used cars and car manufacturers have reported record profits during the pandemic, indicating that the unfavourable trend will continue.
We haven’t really made any progress in reducing the number of individual car owners, and that’s what will drive these models for car sharing, Mrs Brozen said.
Touro has also suffered setbacks in battles with regulators and airports over fees and permits. And consumer behaviour will change again after the pandemic. When people travel by plane again, they may be more inclined to use traditional car rental companies at airports where Touro is less present.
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Both Touro and Getaround have received pandemic aid at the taxpayer’s expense. Touro received a loan of approximately $6 million and Getaround received $6.9 million under the government’s Pandemic Small Business Assistance Program.
Haddad said the money from the pay protection program allowed him to rehire about half of the 110 employees he had laid off and reverse a pay cut of about 25 per cent he had given to all employees, including himself. Mr. Byrnes of Goetharound said the loan helps the company to keep jobs.
Ethically, the right thing to do would be to include the PNP in our arsenal of all measures, Haddad said.
Email Heather Somerville at [email protected].
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