Why the rental car market is so exciting

A Dollar Rent A Car office in New York City.

TEXT OF STORY

Steve Chiotakis: Last week, rental car giant Hertz that said it was planning to buy Dollar Thrifty for $1.2 billion. This week, rival Avis told Dollar Thrifty it's interested in them as well. Why's everyone so pumped up about the rental car market? Here's Marketplace's Alisa Roth.


Alisa Roth: When the economy fell apart, people started travelling a lot less. So the last couple of years have been a rough ride for the rental car industry.

John Healy follows the industry for Northcoast Research and he says things are starting to turn around.

John Healy: We're seeing a return of the corporate traveller as well as an anticipation of the return of the leisure traveller this summer.

Rental car companies want to be ready when that happens by having access to as much of the market as possible. Both Hertz and Avis are premium brands whose target customers are business travellers.

Healy says whoever wins the contest for Dollar Thrifty would get the tourist market as well.

Healy: You're able to have two bites at the apple and basically share a common infrastructure or back office which allows car rental companies to be very profitable.

Profitable for the companies. But don't expect to see big savings passed on to you. Healy says right now, four big firms do 95 percent of the rental car business. Once Dollar Thrifty is gone, there'll only be three.

I'm Alisa Roth for Marketplace.

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