The Car Rental Industry in Turkey: Market Entry Strategies and Emerging Opportunities, Analyses and Forecasts to 2016 Industry Forecast Report Reference code: TT0011MR BRICdata John Carpenter House Published: February 2012 7 Carmelite Street London EC4Y 0BS United Kingdom Tel: +44 (0)20 7936 6400 Fax: +44 (0)20 7336 6813 www.bricdata.com www.bricdata.com EXECUTIVE SUMMARY 1 Executive Summary The car rental industry in Turkey grew strongly during the review period, supported by global economic growth, the government initiatives to improve infrastructure, increasing volumes of tourism and business activity, as well as the rising middle-class population with high disposable incomes. Turkey has a favorable economic environment, making it an attractive destination for international car rental operators. The Turkish car rental industry grew at a CAGR of X.XX% during the review period, and valued TRYX.X billion in 2011. The industry is expanding rapidly and is expected to grow at a CAGR of XX.XX% over the forecast period to reach TRYX.X billion in 2016. Increasing GDP and annual disposal income will positively impact the Turkish car rental industry Steady growth in GDP and annual disposable income in Turkey in recent years have fueled the expansion of the country’s car rental industry. Turkey’s gross domestic product (GDP) at constant prices grew from US$XXX.X billion in 2007 to US$XXX.X billion in 2011, recording a CAGR of X.XX% during the review period. It is projected to grow at a CAGR of X.XX% over the forecast period to reach US$XXX.X billion in 2016. The growing GDP, backed by a healthy economy, will improve the confidence of both local and international companies. This, in turn, is expected to increase the volume of business tourists, resulting in increased demand for car rental services in the business sector. The annual disposable income in the country is expected to reach US$XXX.X billion in 2016, growing at a CAGR of X.XX% over the forecast period. This will generate demand for car rentals among leisure customers. Leisure and business tourist volumes remain the key drivers Demand for rented cars in Turkey is primarily driven by the rising volume of inbound leisure or business tourists. The total number of business tourists in Turkey increased from X.X million in 2010 to X.X million in 2011, an increase of X.X%. The volume of business tourists is projected to reach X.X million in 2016, growing at a CAGR of X.XX% over the forecast period. Business traffic for both domestic and inbound tourists is expected to grow rapidly over the forecast period. The number of leisure tourists is likely to grow more quickly than that of business tourists during the forecast period, with a CAGR of X.XX%. Favorable government regulation intensifies competition in the industry The Turkish car rental industry is forecast to remain competitive for both domestic and foreign companies during the forecast period, due to favorable government regulations that allow XX% foreign investment in the car rental industry. This will encourage foreign operators to enter Turkey. Leading companies active in the Turkish car rental industry include Sixt, Auto Europe, Europcar, Avis and Hertz, all of which offer a range of car and fleet rental services. To remain competitive, companies are pursuing various marketing strategies, such as partnering with airline operators and online booking service providers to provide attractive tour packages at reduced prices. Franchise model key to successful growth in the Turkish car rental industry International companies are using the franchise business model as a cost-effective means of expansion in the Turkish car rental industry. Many car rental companies use the franchise model, and agreements with local partners are widely seen as the most effective way for a company to establish a brand throughout the country. Leading companies using this model include Avis, which operates in Turkey through XX franchisees along with XX owned offices, while Hertz has franchise outlets in major Turkish cities such as Istanbul and Ankara. Domestic and inbound tourist spending on travel and transport will keep the industry buoyant The Turkish car rental industry is expected to grow at a significant pace due to the growth in spending on domestic and inbound travel and transportation. Total spending by domestic tourists on travel and transportation grew at a CAGR of X.XX% during the review period to reach TRYXX.X billion, primarily driven by the country’s rising disposable incomes, especially among the middle-class population, as well as the government’s infrastructure improvement measures. Meanwhile, inbound travel and transport expenditure is projected to grow at a CAGR of X.XX% over the forecast period to reach TRYXX.X billion in 2016, which will be driven by promotional activities undertaken by the ministry of tourism and the country’s strong economy. The Car Rental Industry in Turkey: Market Entry Strategies and Emerging Opportunities, Analyses and Page 2 Forecasts to 2016 © BRICdata. This product is licensed and is not to be photocopied Published: February 2012 TABLE OF CONTENTS TABLE OF CONTENTS 1 Executive Summary .............................................................................................................................. 2 2 Turkish Car Rental Industry Market Environment .............................................................................. 7 2.1 Market Regulations .................................................................................................................................. 7 2.2 Macroeconomic Fundamentals ............................................................................................................... 8 2.2.1 Turkey – GDP at constant prices ............................................................................................................. 8 2.2.2 Turkey – GDP by key segments .............................................................................................................. 9 2.2.3 Turkey – inflationary forecast and car rental industry outlook ............................................................... 10 2.3 Business Confidence ............................................................................................................................. 11 2.4 Consumer Confidence ........................................................................................................................... 12 2.4.1 Turkey – annual disposable income ...................................................................................................... 12 2.4.2 Turkey – unemployment rate ................................................................................................................. 13 3 Market Size and Growth Potential ...................................................................................................... 14 3.1 Turkish car rental industry – market size ............................................................................................... 14 3.2 Turkish car rental industry – airport vs non-airport locations ................................................................ 16 3.2.1 Demand comparison for rented cars at airport and non-airport locations ............................................. 16 3.2.2 Turkish car rental industry – car rental industry for airport locations ..................................................... 17 3.2.3 Turkish car rental industry – non-airport locations ................................................................................ 19 4 Turkish Car Rental Industry – Customer Category Analysis .......................................................... 21 4.1 Turkish Car Rental Industry – Individual Customers ............................................................................. 22 4.2 Turkish Car Rental Industry – Corporate Customers ............................................................................ 24 4.3 Turkish Car Rental Industry – Insurance Replacement Customers ...................................................... 26 5 Competitive Landscape and Key Performance Indicators .............................................................. 28 5.1 Competitive landscape .......................................................................................................................... 28 5.2 Key performance indicators ................................................................................................................... 29 5.2.1 Turkish car rental industry – fleet size ................................................................................................... 30 5.2.2 Turkish car rental industry – fleet size by vehicle type .......................................................................... 32 5.2.3 Turkish car rental industry – rentals ...................................................................................................... 34 5.2.4 Turkish car rental industry – rental days ............................................................................................... 36 5.2.5 Turkish car rental industry – average rental length ............................................................................... 38 5.2.6 Turkish car rental industry – average revenue per day ......................................................................... 40 6 Growth Strategy, Demand Drivers and Key Trends ......................................................................... 42 6.1 Market entry strategy ............................................................................................................................