Why Volkswagen plans to buy Europcar

German automaker Volkswagen plans to acquire the troubled car rental company Europcar, victim of the drop in tourism caused by the health crisis, a source familiar with the discussions told AFP on Wednesday, confirming press rumors.

Between Volkswagen and Eurazeo, the main shareholder of Europcar, “there are discussions on a deal”, said this source, while adding that there was “no offer for the moment”.

Questioned by AFP, Volkswagen, Eurazeo and Europcar did not wish to comment.

Collapse of activity

Eurazeo announced on November 14 that it would study the sale of all or part of its 29.9% stake in this group, acquired in 2006 precisely from Volkswagen.

“There was a project by Eurazeo to sell its stake which had been put to sleep during the crisis we have just gone through and which was awakened,” said the source, on condition of anonymity. She stressed that it was necessary to remain “cautious” on the outcome of discussions with the German manufacturer.

Europcar Mobility Group was hit like the whole car rental sector by the economic crisis and the collapse of tourism caused by the Covid-19 pandemic.

The lessor has published a net loss of 105 million euros in the first quarter, an increase of 55% over one year. The operating loss almost doubled to 89 million euros.

Sold for 3 billion euros, Europcar only weighs 400 million

At the end of May, the American car rental company Hertz, more than a century old, had filed for bankruptcy under the American regime, also a victim of the Covid-19 pandemic which had shattered the car rental market.

The assumption of this takeover makes sense for Volkswagen. Main interest for the German giant: the German manufacturer could find outlets for its future fleet of electric vehicles. Indeed, today, a third of Europcar’s cars are of the Volkswagen brand.

Another advantage of a takeover: this would allow the manufacturer to strengthen its mobility services. In addition to its traditional vehicle rental business, Europcar has the leading car-sharing operator: Ubeeqo. A rapidly growing subsidiary.

Finally, this buyout could be a good deal for the manufacturer. Volkswagen already owned the car rental specialist 14 years ago. He sold it to the Eurazeo fund for 3 billion euros. Europcar now weighs only 400 million euros on the stock market and is heavily in debt.

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