Car leasing, rental and car rental have long been popular trends in urban mobility.
The FRA has prepared some interesting questions for our new member, Otokoc Ukraine, which has been providing car rental, vehicle leasing and transportation services since 2017 and is an official importer of OPET brand and lubricants.
The country manager of Otokoç Ukraine LLC, Murat Gürünlü, replies.
What it all started with
- Good day! We are glad to meet and cooperate with an investor company in the Ukrainian economy. Please tell us where and when Otokoc was founded? What is the mission of the company?
Otokoc Otomotiv was founded in 1928 as the first investment by Koç Group in the automotive sector, and started the Group's history in automotives. Today operating under the brands Otokoç, Birmot, Avis Fleet, Avis, Budget, Otokoç Insurance, Zipcar, Otokoç Second Hand, Otokoç Spare Parts and Lastick, Otokoc Otomotiv is Turkey's largest automotive retailing, car rental and car sharing company. The company engages in new vehicle sales, service and spare parts services, wholesale spare parts sales, insurance and financing, accessory sales, pre-owned vehicle sales and vehicle protection systems, thus offering the full range of automotive solutions to customers under a single roof -delivering the brands of Fiat, Alfa Romeo, Jeep and Maserati under Birmot, as well as the brands of Ford, Ford Trucks and Volvo brands under Otokoc. The company is active in short-term car rental under the brands of Avis and Budget; in long-term car rentals, also known as operational rentals, with Avis Fleet; and in hourly rentals or car sharing services under the brand Zipcar. Otokoc Otomotiv continues its operations across 350 domestic and overseas locations with the vision of becoming "The innovative, global road companion offering mobility services".
In Ukraine, the company started its operations in 2017, when its own company Otokoc Ukraine LLC was established, which has the right to provide car rental services using TM Budget in the territory of Ukraine. Otokoc Ukraine provides car rental, vehicle leasing and transportation services and is the official importer of OPET brand fuel and lubricants.
- How many years did it take to build an international network of companies?
- If we count from the date of use of the first trademark, ie from 2005, it will result in 14 years.
- How do you assess the business climate in Ukraine? And what are the motivation for entering the Ukrainian market?
- There is a demand in Ukraine and there are no significant obstacles to the activity of our business. In 2012, following the approval of the Globalization Strategy, the company decided to establish cooperation and invest in the European region. Thus, Ukraine became the seventh country in this list. In 2017, Otokoc Otomotive begins operations in Ukraine in April, establishing its own Otokoc Ukraine LLC, which has the right to provide car rental services using TM Budget in Ukraine. Therefore, when comparing 2018 and 2019 figures in the short-term car rental market, which is mainly related to tourism, the market share occupied by Otokoc Ukraine is 12% and 16% respectively. This indicates that the market is growing and, accordingly, our company's destiny is also growing.
- What problems did you have when entering the Ukrainian market?
- In fact, we did not have any problems (serious) as an investor entering the Ukrainian market, except for banking issues - money transfers from Turkey to Ukraine, which usually took too long. In addition, we have already had experience in opening companies in other European countries, such as Hungary and Georgia. So we were ready and, of course, had good legal support.
- Which country was the first where Otokoc Otomotive started operations?
- We first entered the international market in 1997 - it was Azerbaijan. Then in 2012, we started a company in Iraq. Kazakhstan was the third country in 2014. Then Hungary - in 2015, Georgia, and Cyprus - 2016. Ukraine in 2017 and Greece in 2018. We have entered into a joint venture with the American company ABG Group, which is a co-owner of AVIS and Budget brands with Otokoc Otomotive.
- So you have joint venture with ABG GROUP?
- Yes, we share.
«Reliability, quality services and stability are our main advantages»
- How many rental cars were there from the very beginning of the company's existence? And how many are in Kiev, Ukraine now?
- The company officially started business in July 2017. Even though it was our first year, we achieved our goals and had 150 cars on the balance sheet of the company, both short-term and long-term rentals. Comparing the results of 2017 and 2018, we have grown to 600 cars. 4 times more. We now own more than 800 rental cars. The main activity - leasing services (short-term car rental) at the airports of major cities of Ukraine - Kiev, Lviv and Odessa. We have also entered into a partnership agreement with the Hilton and Hayat Hotels, where we are also major partners in providing transportation services for hotel guests.
- What is the average age of a car in Budget Park?
- On average, 2 years, all cars are new since we started in 2017. We are also rapidly replacing cars that do not meet technical standards in accordance with world standards and depending on the demand for them.
- Which class of cars are the most popular in Ukraine?
- In the first place, of course, economical cars, small size - because of the affordable price that we offer our customers. This is mainly the younger generation, companies and tourists. In second place is the high segment - luxury cars. And small trucks.
- Are there electric vehicles in the company fleet? If not, it is planned to replenish the car fleet with green cars in the face of global challenges?
- As for electric cars, this is a new trend and we are moving in this direction. But their price is still too high, so the rent will also be higher. And so far we have not received requests for rental of electric trucks. Due to underdevelopment of charging station infrastructure, people may still feel insecure about them. But soon there will be more electrified models.
- Do you have many corporate clients and what is their average rental period?
- Of course, a lot. Mostly long-term leasing is popular for 3 or 4 years. But there is also a short-term - from a month to 1 year.
- How many cars do international companies lease on average?
- 300-400 cars.
- 2 years ago, when you came to the Ukrainian market, there were more opportunities, but were there many risks?
- The Ukrainian market has a lot in common with the Turkish market, so we were quite prepared. It should also be taken into acount that Otokoc Otomotive in Turkey is not only a leasing company but also a retailer like other car dealers. That is why we are now analyzing the Ukrainian market and new opportunities to diversify our business.
- What are the 3 main reasons why a customer should choose Budget?
- First, it's the quality of service. Because we provide services, we must respond to all our customers' needs, including in the long run, if we are able to meet all their needs, which we did. Because of this, we had client companies that rented us up to 500 cars for the long term. And we really appreciate their commitment. Secondly… Maybe because we are an auto industry company with a history. For example, I started my career at Ford Motor Company. Then I was responsible for dealers owned by Otokoc Otomotive. Therefore, our company is very sensitive to the service industry. Reliability, quality services and stability are our main advantages. When I started my career in 1996, my clients were big international companies. Now, 20 years later, they are my customers again.
«We create the future of our company together with the team»
- Since you started talking about starting your career, I have a personal question. Whom did you dream of as a kid? Have you ever dreamed of a profession?
- My parents and uncle were engineers, and I often saw my father build ships after midnight, so I dreamed of becoming a shipbuilding engineer. However, I became an engineer in mathematical sciences. I like engineering systems - creating business models, improving old ones and building new algorithms and seeing how they work in practice. For example, I am the first director of Otokoc Ukraine LLC. Before that I had other management experience, but to be at the start was also my dream. We were also fortunate to have such a wonderful team.
- This is just my next question.
- We were fortunate to have a wonderful experienced team. I realized that when we started working together. The role of the team in the company is very important. My team has experience in the automotive, rental and long-term car leasing sectors. They are open to new decisions and creative ideas. Therefore, they adapt very quickly and help the process and the business as a whole. They have made great efforts to ensure that the Budget brand is recognized worldwide.
Therefore, I can confidently say that our good reputation is a credit to our team.
- Is the company a large team in the Ukrainian office?
- 77 employees. There are 30 people in the central office. We organize many corporate events, meetings. This is often improvisation. Not only do we work side by side day after day. Together with the team, we create the future of our company! That is why we support different initiatives, share ideas within the team, create opportunities for synergy of thoughts, ideas. We can even change the company's business model and structure if it improves efficiency and effectiveness. We maintain a supportive atmosphere within the company, and we value the drivers of change as everything around us changes rapidly. I think this is our strength. That is why we have been 19 years old.
Looking to the future
- What are the expectations from the Ukrainian market and forecasts for the next 5 years?
- We have recently started a new project, a type of leasing - rental of equipment (tracks) for construction and industry. Previously, we only provided operational leasing services, now we are certifying financial leasing. Moreover, when we see progress in the market, leasing electric trucks will be the next step.
- Is it easy for you to trust the people you work with?
-Yes.This is our philosophy - to trust from the beginning. It's like a marriage, or you trust it or not. If not, then why marry or cooperate? (Smiles) When interviewing candidates, I always ask if you like the company and do you understand the essence of our business? I choose you if you choose us! We are interested in the candidates' plans for the future, what they want to do to understand whether this industry is suitable for them. I believe that this is the right and effective approach to the selection of the team.
- What are your expectations for the next 5 years?
- Market growth, of course. Because from 2017 the market started to grow steadily. Of course, the level of the National Bank's discount rate is an important criterion for attracting funds and, accordingly, for business development, as well as for the country's GDP growth rate. If the growth is more than 4%, the automotive sector will grow and we will be able to diversify our services, scale our business, and ensure that car-leasing services grow as demand for rental and leasing grows.