What do Dollar Thrifty, IGO Carsharing and ZipCar all have in common? They were all acquired by rental companies in the last year to cash-in on the short term car rental space. Although the rental car business has declined in the recent months, due to economic conditions, the the major players are looking for new growth opportunity within the short-term rental market.
Growing Fleets
Hertz Global Holdings, Inc. (NYSE:HTZ) picked up Dollar Thrifty in the later part of 2012 in order to cash in on the short term car rental business and grow market share. Hertz has over 10,400 locations in approximately 150 countries, as well as a worldwide equipment rental business with over 340 branches. They also operate a fleet leasing and management business called Donlen Corporation. With a wide variety of products, Hertz has grabbed the # 2 spot in the global marketplace of car rental.
Hertz Global Holdings, Inc. (NYSE:HTZ) strongly believes in integrating the travel experience into car rental. With the launch of their new travel app the Hertz NeverLost Mobile Companion, you can plan your trip anywhere with sightseeing apps, a beach feature, as well as a navigational assistant for direction-challenged users. This app creates revenue from downloads as well as a in house navigation system to an onboard GPS located within your rental car.
With Enterprise announcing several acquisitions of ride sharing companies and programs, it seems like these three market leaders are adding value to their bottom lines through acquisitions. IGO Carsharing is a non-profit that Enterprise bought for an undisclosed amount that serves the city of Chicago. Enterprise also recently addedMint Cars On-Demand in Boston and PhillyCarShare to their fleet portfolio.
Avis Budget Group Inc. (NASDAQ:CAR) finished the finel details of the purchase of Zipcar in the last quarterly earnings report. Zipcar is currently the world’s leading car sharing network, with more than 790,000 members worldwide. Added to Avis’s current 10,000 rental locations in approximately 175 countries, the acquisition of Zipcar contributed $14 million in revenue to top line sales.
With increased quarterly revenue of 4% to $1.7 billion, and a 4% pricing increase year-after-year, Zipcar will continue to drive industry growth in new and emerging markets, as well as contributing to Avis Budget’s future revenue growth. Avis Budget Group Inc. (NASDAQ:CAR) also acquired Apex Car Rentals late in 2012, a company which operates in New Zealand and Australia. These expansions into overseas markets will put Avis into a position to grow revenue, while still maintaining a focus on a restructuring initiative to cut down operating costs.
U-Haul
One of the holdings of AMERCO (NASDAQ:UHAL) is U-Haul. A company focused on do-it-yourself movers and their households, U-Haul is a company that rents trucks on a one-way, nationwide basis for all types of movers.. The four largest firms in the industry are Ryder System Inc, Penske Corporation, Enterprise Rent-A-Car Company and AMERCO. However, Ryder system was recently acquired by Budget of Avis Budget.
With the recovery of the housing market, as well as decreases in unemployment, U-Haul expects to see increases in truck rentals as the economy recovers. With companies renting fleets to hedge against rising fuel prices, it looks like U-Haul is positioned to capture the truck rental market as well.
