Hertz deal furthers rental consolidation

Customers stand in the lobby of a Hertz car rental location in New York City.

TEXT OF STORY

Tess Vigeland: Hertz is maneuvering to drive a hard bargain. The world's biggest rental car company historically focused its attention on the higher-paying business traveler. But now it's aiming to grab a bigger share of the vacation rental market. It's buying the Dollar-Thrifty Automotive Group for $1.2 billion.

As Marketplace's Bob Moon reports, consumers will still have plenty of rental-car brands to choose from, but just a few major corporations will hold the keys.


BOB MOON: In case you hadn't noticed, the rental car business has been consolidating for years. Avis and Budget are operated by one company. And not too long ago, Enterprise bought National and Alamo. Now, Hertz is snapping up two more of the bigger names, Dollar and Thrifty.

Neil Abrams is a rental car industry consultant.

NEIL ABRAMS: This is the last piece of the puzzle, the mosaic, that will become the U.S. rental industry. You'll have three corporations running the eight major brands.

So why maintain all those brands? It turns out a rental car company isn't that much different than, say, a cereal company.

ABRAMS: Kellogg's owns a lot of cereal brands. They offer different values, different experiences to different customers, and it's no different in the rental industry.

Not everyone, for example, needs the speed or convenience the Hertz Number One Club offers. But Dave Kilduff, who follows the industry for Carlson Wagonlit Travel, says Hertz still wants to compete in the less demanding leisure market.

DAVE KILDUFF: You know, Hertz has to gear up for that businessman that comes in on Monday and Tuesday, and they put a lot of structure, and you have to have a lot of people and planning for that. You know, you're not going to get that with Dollar-Thrifty. So it's a different level of service. It's still a good service.

And it's still going to be cheaper, to appeal to leisure travelers. Analysts say that market remains competitive, and if anything, combining the back-office expenses might actually help Hertz hold the line on prices.

I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...