While the sexier mergers of airlines seem to be getting all of the headlines in newspapers and blogs, the rental car industry has been on a course of consolidation itself during the past decade — reducing from eight major car rental companies to three.
Where we once had a choice of Hertz, Avis, Enterprise, Dollar, Thrifty, Budget, National and Alamo, we now have three. Those three are Hertz, Avis and Enterprise.
No matter what the big rental car companies say, when competition is reduced, consumers lose. Though Hertz will be claiming that they will be running Dollar and Thrifty as separate entities, those entities will be folded within one money-making and competition-eliminating corporation.
The new company will be massive — the biggest in the world. Enterprise will still be the largest US player by far, with 6,000 locations vs. Hertz’s 2,500.
The combined company would have more than 10,000 locations world-wide. In the year ended June 30, Hertz and Dollar Thrifty had combined sales of $10.2 billion and earnings before interest, tax, depreciation and amortization of $1.8 billion.
If the Dollar Thrifty deal is approved by regulators, the U.S. industry’s major players will be Hertz, Enterprise Holdings Inc. and Avis Budget Group Inc., which is a former Dollar Thrifty suitor. The consolidation has worried consumer advocates who fear price increases in a shrunken industry.
Hertz caters primarily to business travelers and customers seeking high-end rides. Dollar targets mainly leisure travelers, while Thrifty is more budget-oriented.
There is a silver lining. That is the proliferation of bargain car rental companies that will eventually grow into majors and that will help keep prices down in locations where they are players.
At least within the United States, companies such as Payless, Fox, Sixt, Advantage, U-Save, Economy, EZ Rent-a-Car and Ace are cropping up in big cities and municipalities that have significant rental car activity. They will force the three majors to keep rental car costs in some kind of check.
I just checked the “in-terminal” rentals in Orlando and found economy, mid-September, daily rental rates ranging from $9 for EZ Rent-a-Car and $10 for Payless to $44 and $45 a day from Avis and Hertz, respectively. Now that is a whopping difference. I have rented from all four of those companies and, honestly, I can’t figure out why there is the big $35/day difference.
In the meantime, domestically, where Avis, Hertz and Enterprise are the big players (and often the only players with the demise of Dollar and Thrifty), consumers will lose by having reduced choice and competition. Internationally, options will drop as well as consolidation takes hold. It is the nature of the economic beast.