The economies
of scale

Mike Nigro, UK & Ireland Managing Director

Enterprise's business model is built on customer service and growth. The latter can't be sustained without the former, while great service equally drives further growth. It's this equation that has helped our business become one of the largest rental car companies in the UK since our arrival in 1994.
 
But in order to maintain it, we have been careful to build a business with strong leadership and a healthy balance sheet, plus we have always aligned ourselves with partners that can help us achieve that growth. That way we never have to compromise on the quality of service.
 
In addition, as a privately-owned multinational company we have the leadership and finance that allow us to make significant investments in the future. For example, as well as growing our branch network around the UK and Ireland we've built close relationships with vehicle manufacturers that allow us to access vehicles quickly and effectively.
 
Perhaps what may be surprising is, as the largest purchaser of vehicles in the world, we have relationships with some 20 leading manufacturers. And it's these relationships that provide us with the ability to make fleet purchasing decisions based not only on our current customers, but anticipated new ones as well. These unique relationships mean we have a lot of flexibility. For example, by committing to buy thousands of vehicles every year we can determine when we take these, allowing us to cater for sudden peaks in demand. Additionally, if we need to buy more vehicles, our relationships allow us to do so.
 
For some, taking receipt of so many vehicles at any one time would spell disaster. But our structure means that whilst we may negotiate vehicle buys centrally, our 10 operating groups across the UK and Ireland, each with their own acquisition team, can liaise with their local dealerships and manufacturers to facilitate delivery of the vehicles. This ensures they hit our branches quickly, where they are needed and ready to rent, with no risk of administrative bottle necks or logistical challenges.
 
Just as important is our access to fast-fit and repair networks around the UK and Ireland, helping us to maintain a healthy fleet of vehicles at all times.
 
This type of scalability is vital for a business to grow without impacting the service it offers. For example, in January and February this year we grew by over 6,000 cars in the UK to help deal with the demand imposed by, amongst other things, the unusual weather. Many rental firms would simply not cope: How would they acquire them? How would it affect existing customers? Who would manage that influx?
 
But when you already have an ever expanding network of over 350 branches, the manufacturer relationships we do and the structure and facilities to get the vehicles to those branches quickly, it becomes much less of a challenge. And within the branches growth of this scale equates to only 17 new cars per location and perhaps four additional rentals per day - barely a blip on the radar. This same dilution of impact occurs regardless of whether demand is related to new business, seasonal or weather related. In fact, if our customers notice anything, we hope it's that we have even more vehicles with which to fulfil their rental requirements, or a new location even closer to them.
  
And because we purchase all those vehicles outright from the manufacturers, we can keep hold of them a little longer if needed. By turning off any vehicle sales and increasing vehicle purchases, we have a solid contingency for any temporary, yet significant increases in demand.
  
So when it comes to renting cars and vans, there's no doubt that the economies of scale come into sharp focus. More branches give us a closer relationship with our customers, while more vehicles lead to a wider choice. It also helps us maintain competitive rental rates.
  
But none of this matters if the service is poor, which is why we've designed the company more like a series of small businesses - local branches able to offer a personal touch, with systems in place to ensure that great service is the yardstick by which we measure our success. The fact that we can offer so much through our scale, and keep growing without affecting what we already have, is a bonus.