Hertz buyout of Dollar Thrifty is no good for consumers

by Charlie Leocha on August 30, 2012


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.

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  • mtaabq

    In dealing with a “bargain” car rental outfit is the price the only difference? Is the customer service the same? My experience has been that the “bargain” companies really put the push on you to buy insurance and/or upgrade. (Dollar, while not necessarily a “bargain” company, is especially famous — or infamous — for this.) I’ll agree that $9 or $10 a day is a super deal but oftentimes I’ll pay extra at Hertz due to my #1 Gold membership simply for ease of rental and in picking up the car. It’s worth it to me to be able to (in most cases) by-pass the counter, get into my car (often with an upgrade) and go.

  • Jim6555

    I spent a week in Boston in mid-August. I started looking for rental cars in early July and the best deal that I could find at BOS for a seven day rental of a compact car was $540. I thought that the price might come down as I got closer to my August 15 departure date but it was not until August 5th or so that I saw the price from Enterprise fall to $349. That was still too much and I wound up going to Priceline where my bid of $18 per day was accepted. With taxes and fees, the total was $220.
    in Boston, there is little competition from the smaller companies. The only one that I could find was Advantage and they had rates that were almost the same as Hertz (I believed that they are owned by Hertz).

    My point is that with all of the consolidations that are occurring in the rental car industry, travelers maysoon find that $540 per week is the new norm for a one week rental of a compact car.

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