All the pandemic hardships that are felt more or less currently in all businesses have almost entirely fallen on the business that Trpimir Botica started 16 years ago in Split. His company Viator is engaged in short-term and long-term car rentals as well as the sale of used vehicles. With their rent-a-car services, they are present in all Croatian airports and in larger cities such as Split, Zagreb, Rijeka, Pula, Zadar, and Dubrovnik. The pandemic troubles first halted the influx of clients, both tourists and companies that rent vehicles for business purposes, and now that this has normalized, their business plans are disrupted by the stagnation in the automotive industry.
Despite not being able to say that they have left the pandemic problems in the past, they performed well last year. Their revenues have almost returned to the pre-pandemic level of 2019 when they generated 203 million kuna. A complete recovery from 2020, when their annual revenue dropped to 138 million kuna, was hindered by a decline in vehicle sales. Until now, their revenue structure was fifty-fifty, but rent-a-car has taken precedence out of necessity last year. It is already evident that this will be the case this year as well.
– We sell 95 percent of rent-a-car reservations in advance, and we have already sold a good portion of reservations for the next season. Long-term rentals are becoming increasingly popular. Companies that had official cars on leasing during the pandemic have come to realize that long-term rental is a much more flexible and simpler solution. Additionally, many companies are turning to long-term rentals because they need to change their fleet but cannot obtain new vehicles. Deliveries are expected to take an average of over nine months, and for some manufacturers, even longer – Botica touches on a painful topic that introduces uncertainty into his business plans.
In Anticipation of Vehicles
Precisely because it is uncertain how many reserved and ordered vehicles they will receive by the start of the tourist season, Viator halted vehicle sales last year. How dramatic the situation is can be illustrated by their current math:
– We currently have about 2100 vehicles. We have ordered over a thousand new ones, of which we estimate that between three hundred and four hundred will definitely arrive; if another two hundred come, it will be good. Everything is very uncertain, which is why we stopped sales, meaning we only sold older vehicles with higher mileage that are not suitable for further use in the rent-a-car – explains Botica, revealing that the best vehicles to sell are those that are two to three years old.
For now, it seems more likely that they will obtain Korean and Japanese vehicles because they have their own solutions regarding chips. European manufacturers depend much more on China in this regard, and their vehicles cannot be found in stock. However, he emphasizes that even when supply chain disruptions settle, the consequences in the form of new, higher vehicle prices, which have jumped three times a year, will likely remain. Due to long-term rentals, but also wealthy tourists, Viator aims to have luxury vehicles in their fleet as this eliminates competition that is stronger in the segment of smaller vehicles.
– For example, Dacia offers, I exaggerate, fifty rent-a-cars, while Mercedes offers five. It is important for us to have the latest models of all vehicles in our fleet, from the smallest to the most luxurious – new Mercedes S-Class, GLEs, GLCs, new Audi Q8, A4, and similar. Some vehicles generate more revenue because they are more luxurious, while others because they are rented for 365 days. Since charter is very developed in Croatia, we have users in the season who can afford luxury vehicles. We also have electric vehicles, but until we have a developed charging infrastructure, renting e-vehicles to foreigners is problematic because they need to be returned charged. Last year, while all other vehicles were rented out, about 15 electric cars were idle – says the director of Viator, noting that companies and domestic users are getting used to e-vehicles, but it will take some time before the charging system is brought to a level that would allow tourists to truly enjoy the advantages of such vehicles.
