A leading car rental company has raised concerns about the market demand for electric vehicles (EVs), highlighting discrepancies between consumer interest and governmental initiatives.
- Sixt, a prominent German car rental firm, reported a ‘severely worsened’ environment for used EV sales throughout 2023.
- The firm faced increased depreciation and suffered financial losses from EV sales, resulting in a significant €40 million impact on their earnings.
- Despite a rise in revenue to €3.62 billion, Sixt’s annual pre-tax profit dropped by nearly 16% last year.
- Sixt also indicated that without the challenges of e-mobility, they could have surpassed their record profits from 2022.
Sixt, a leading European car rental firm, has recently expressed doubts about the current consumer demand for electric vehicles, despite the high aspirations for green technology by governments. The company reported a significantly challenging market for used EVs over the past year, pinpointing specifically the sharper depreciation in value of these vehicles as a primary financial concern.
Throughout 2023, Sixt experienced a noticeable decline in the residual value of electric vehicles, which directly contributed to a €40 million downturn in their earnings due to increased depreciation and related losses from vehicle sales. Their annual pre-tax profit thus saw a reduction of almost 16%, settling at €464 million despite an increase in revenue from the previous year.
The firm noted that, particularly in Germany, prices for electric vehicles slumped by more than 20% within the year. This decline reflects a broader failure to galvanise the desired momentum for e-mobility, as recent vehicle registration records suggest consumer interest has yet to align with political ambitions.
Investments in high-profile marketing campaigns and charging infrastructure demonstrated Sixt’s commitment to e-mobility. However, the comparatively lukewarm consumer interest in electric cars versus traditional combustion engines led to a notable drop in revenue.
In response to these challenges, Sixt decided to accelerate the phase-out of their ‘electric risk vehicles’—those without leasing agreements where they bear the residual value risk. By the end of February, the number of these vehicles was reduced by almost half compared to the previous year.
The car rental leader, while scaling back on their electric vehicle fleet, maintains a flexible outlook, acknowledging the critical importance of consumer demand and evolving strategies of car manufacturers. This adaptability is essential for Sixt as they navigate the complex landscape of modern e-mobility demands.
The size of Sixt’s overall fleet expanded significantly, averaging 169,100 vehicles, up from 138,400 in the previous year. Co-chief executive Alexander Sixt lauded the company’s ability to achieve record revenue, recognising the efforts of their workforce within a tough market environment marked by increasing interest rates and high levels of investment.
The future role of electric vehicles in Sixt’s fleet remains contingent on consumer demand and market dynamics.
