Do we need both Hertz and Dollar Thrifty?
Customers stand in the lobby of a Hertz car rental location in New York City.
Kai Ryssdal: Once you get past the headline news o' the day -- the weather forecast in New Orleans and the GOP doings down in Tampa Bay -- there is some not-small corporate news to pass on.
Next time you're out looking for a rental car, your choice of company will have narrowed. Hertz is going to spend $2 billion -- $2.3 billion, to be a bit more specific -- to buy Dollar Thrifty.
Sabri Ben-Achour reports.
Sabri Ben-Achour: You might imagine that the whole point of consolidation is to save money -- economies of scale, sharing one name, sharing facilities, offices. But that’s really not why Hertz is doing this. I mean, sure they say they will save money -- $160 million.
Chris Brown is editor of Auto Rental News.
Chris Brown: The consolidations and savings come in the back office. They’ll be able to share fleet. Hertz has collectively more buying power with the auto manufacturers.
But maintaining separate brands is the whole point of this takeover.
Neil Abrams is a consultant; he’s been in the business 36 years.
Neil Abrams: Hertz is a premium brand. Most recognized as a leading brand to the corporate community.
Dollar Thrifty is how Hertz will get more access and compete in the discount car rental scene and reach value-oriented consumers.
Abrams: Millions of other rental customers that they otherwise would not have access to.
All the other big car companies do this. They have their high-end brands -- Enterprise, Avis -- that focus on say business clients, and they also all have their own lower tier brands like Budget or Alamo.
Brown: You still have same number of brands and they’ll be competing against each other.
Still, with this takeover, you’ll have three companies controlling 95 percent of a $23 billion industry. That’s more than enough to tip off the the spidey sense of antitrust regulators. So to help the deal survive, Hertz is selling off its discount Advantage brand. The thinking is if everything goes according to plan, consumers shouldn’t notice much of anything.
I’m Sabri Ben-Achour for Marketplace.