Europcar to be fully ‘connected’ by 2023 as it aims to deploy real time telematics to monitor usage throughout its vehicle fleet

27 October, 2020

Europcar Mobility Group plans to strengthen its partnership with Telefónica and Geotab as part of an objective to progressively deploy its Connected Cars programme, following a successful pilot in Mallorca in 2018. The company already had 44,000 connected cars in 2019 but aims to connect all of its fleet by 2023, as part of its "Connect" roadmap. The first stage of deployment is planned in France in 2020 starting with Vans & Trucks fleet with other countries to follow in 2021.

Through this partnership, Geotab and Telefónica will provide Europcar Mobility with access to engine data, driving behaviour and GPS location including insights into: distances travelled, mileage, speed, acceleration, fuel level, accident detection and more. As a key component of the Connected Cars programme, this data will be processed "to help improve customer experience and optimise business applications and internal processes such as fleet inventory management, vehicle delivery and collection, vehicle maintenance, vehicle return and more," it says.

The project is part of Europcar Mobility Group's "Reboot & Connect" strategy, an adaptation and transformation programme, with short-term and mid-term horizons. The "Reboot" side is all about adapting to the business environment and effectively is a massive cost-reduction plan. This "vigorous and drastic cost adaptation plan" was launched in Mar-2020 to mitigate the impact of the COVID-19 crisis, aligning costs to the reduced size and activity level of the company.

It was initially estimated to deliver EUR850 million in cost savings by year-end 2020, but was revised upward in Jul-2020 to EUR890 million, but has now been further revised to close to EUR1 billion. This represents a circa 30% cost base reduction on its pre COVID-19 operation.

The "Connect" side has been designed to reshape the Group around customers' new needs and expectations: reinforced digital consumption habits, new safety and contactless standards, aspiration for simple and flexible services, allowing, in addition, to rebalance the seasonality of revenue streams across the year.

This will result in an acceleration of the Group's transformation plan, relying on: its purpose ("offering attractive alternatives to vehicle ownership, in a responsible and sustainable way"); a reshaped network model and footprint, to gain efficiency and increase interplay with local eco-systems; and a new, unified technology platform, for greater go-to-market agility and to digitise customer experience at scale.

The implementation of "Connect" is based on four enabling pillars:

  • Fleet - 100 % connected fleet in 2023, above 30% green fleet in 2023, simplification of the fleet mix and categories;
  • Network - new organisation based on use cases operating models: airports, hubs in cities, regions;
  • Technology - one common customer database, extension of direct access to car, connected fleet platform;
  • Organisation, Talents & Culture - renewed set up for group's executive committee, simplification of the organisation / centralisation while delayering, strong rationalisation of HQs framework.

The measure are seemingly proving positive as despite a summer impacted by COVID-19, resulting in a 3Q 2020 revenue down -50% versus 3Q 2019, the group managed to generate positive adjusted corporate EBITDA, at EUR54 million post IFRS 16, thanks to the strong adaptation measures introduced over the course of 1H 2020.

Across 3Q 2020 rental days were down -44.3% on the same period last year to 16.2 million and the average fleet down -38.5% to 243,000. For the 9M 2020 period those figures were -38.2% year-on-year to 42.9 million and -20.8% to 260,700, respectively.

Caroline Parot, CEO of Europcar Mobility Group, has a confident outlook. "We are fully confident in our capacity, with the adapted indebtedness level and capital structure which should stem from the financial restructuring process we are currently managing, to fully benefit from the travel and leisure industry rebound and progressive recovery, when they happen," she says. But, with a "volatile and highly uncertain business environment" as the COVID-19 outbreak develops again at an unpredictable pace, she says the business "can no longer provide a FY 2020 guidance".