The great service they're supposed to provide is what the leasing companies in Israel tend to stress in their ads. "We bend over backward," declares Eldan, vying against Avis' "We try harder" while New Kopel says, "Yes, always." Albar tries to persuade with "However you like it."
Hertz, the fifth in size in the local market, recently tried a different tack. Its latest campaign features not the wonders of its customer service but its low price.
"We win no matter what the price," to very loosely translate its campaign - "Minatzhim b'chol mechir." (Perhaps its PR people gave up trying to find a parallel in English: The Hertz Israel Web site simply says instead of the Hebrew slogan, "Your first choice.")
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The change in tone at the highly conservative car leasing company raised eyebrows in the marketplace. What lies behind the new slogan is an actual change in strategy, explains Danny Shimoni, general manager of Hertz in Israel. "We decided to change position in the rental and leasing market," he says. Its policies were "solid and exclusive" at the level of service, customers and prices, which left it a small player, he explains. "We wanted to realize our potential."
Hertz Israel is controlled by Meir, a car import company, and the decision was made that Hertz Israel had to grow and by a lot, says Shimoni, who took the reins at Hertz Israel in 1997, at the tender age of 36, and had his contract extended in October 2006. In the middle, in 2004, he took the job as CEO of Champion Motors, which imports Volkswagen and other car types. But after just half a year he returned to the Meir group, first at the Phoenix insurance company and ultimately winding up back at Hertz.
"Upon my return, we set up a new management team and with the help of a strategy company, we built a plan to increase our market share," Shimoni says. They abolished the division of "leasing" and "rental," replacing it with a division into "business customers" and "private customers." Its aim is to become one of the biggest three leasing companies by 2010 and to grow its fleet to more than 30,000 vehicles, from a starting point of about 12,000.
Just how did Hertz mean to achieve those ends? Two ways, he explains: closing contracts with big companies, and through acquisition of other, smaller companies. Or at least one, so far. "We acquired 50% of Operate Lease and have the option to buy out the rest in the future. Today we have 17,000 cars of our own and another 8,000 at Operate Lease. At the start of the process, we had 7% of the market and today our share is 12%. The companies are run separately, but take advantage of their joint procurement power. Hertz Israel is also aggressively pursuing second-vendor deals with big companies, says Shimoni, as well as primary-vendor deals with smaller ones.
You've slashed your prices by a lot.
"The cut in prices resulted from accurate pricing, adjusted to the client," says Shimoni. "My previous job was at Phoenix and in insurance, each client gets accurate pricing. Leasing is insurance. I know how to manage risks for the client. I can take clients at lower prices, with lower risk. Problem customers would pay a premium. AutoCenter" - a used-car dealership also owned by Meir - "supplied us with data on used cars that the [client] companies gave them, so we could learn about our customers."
The other companies have been using similar methods for a long time.
"We adapted ourselves to the market," Shimoni insists. "We also changed our relationship with importers. When you're act like a small player, you're treated like a small player. When you behave like a major player and undertake to buy large amounts of cars, you get treated differently. We managed to turn the importers into our partners, and to reduce procurement costs."
Ilan Bronstein is responsible for the business division at Hertz Israel, which brings in 70% of the company's revenues. He began as a driver at the company's Ben-Gurion International Airport branch and advanced through services and logistics to his position as VP. "Hertz is perceived as an expensive, prestigious company, mainly when it comes to service," he says. "We did demand a premium for these things, and discovered that clients were prepared to pay a premium. A small one."
The company decided to become more aggressive, he says. "We will continue to be perceived as providing good service, but at competitive prices and if our image becomes a little scratched, that's okay. The packaging has changed, the content has changed."
Your rivals claim you're hurting yourselves in the long run.
"Before I came here, they said we didn't count," Bronstein shoots back. "You can't say that now. Obviously the competition will say that we're undercutting the market because we offer more for the same price. Sometimes you have to sacrifice profit in the here and now for the future."
Shimoni has been keeping an eye on the development of Shai Agassi's electric-car idea. "I think he's pretentious," he rules. "The project is doable, but it will take a lot of time and not because of infrastructure. The main problem is that a transition to electric cars will take a long time, but kudos to him. He harnessed the biggest forces in the world and is raising millions of dollars for a plan that may come true in 15 years."
Is the leasing market's potential all but used up, as some industry sources say?
"It is but Hertz's potential isn't. It's taking a lot of work from its rivals," says Shimoni.
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