Dollar And Thrifty Drive Down Separate Paths
<B> Dollar And Thrifty Drive Down Separate Paths</B>
By Lynn Woods
Set loose by Chrysler through a public offering in December, Dollar Rent A Car and Thrifty Car Rental are being run as separate operations, and so far have retained their individual identities.
Dollar's first focus has been on the global arena, where it inked a new partnership with EuropCar earlier this year. The agreement will enable renters to reserve EuropCar vehicles in Europe, the Middle East and Africa through Dollar's reservation system (and vice versa for renters overseas booking Dollar cars in the United States). EuropCar is a significant player in the European market, with a 14.5 percent market share, according to the European Car and Truck Rental Association.
The EuropCar alliance replaces the partnership Dollar maintained for many years with Euro Dollar, which ended with the purchase of Euro Dollar by Republic Industries. Since then, Euro Dollar has partnered with National Car Rental, another Republic company.
Dollar and Thrifty--formerly part of the Pentastar Transportation Group and now known as the Dollar Thrifty Automotive Group Inc.--were taken public in December by Chrysler Corp., following a path blazed by the other major car rental companies. Chrysler had long been trying to sell them, and they remained, ironically, the only two major firms besides Hertz not to be snatched up by an outside company. With the public offering, Chrysler divested itself of all stock in DTAG.
In outlining its strategy in its prospectus to stockholders, Dollar Thrifty Automotive noted that it intended to take advantage of "higher average rental rates." Dollar plans to expand in the leisure market, specifically in the international tour business, while Thrifty, which emphasizes local ownership and operation, plans to grow through expanding exisiting franchisees and by adding new ones.
Since the beginning of 1995, DTAG has invested $22.8 million in reservation, tour and other information systems, and it plans to invest an additional $10 million in these systems this year.
The move to Wall Street financing came on the heels of a profitable year for both car rental firms. In 1997, Dollar Thrifty Automotive reported nearly $844 million in revenues, compared with $705.6 million in 1996. Net income for 1997 was $18 million, compared with a net loss of $147.3 million in 1996. Dollar reported revenue of $617.5 million in 1997, a 23.7 percent increase over sales in 1996, while Thrifty reported $225.3 million in revenues, a 9.9 percent increase over the year before.
Dollar's success was attributed in large part to the growth in international tours, which constitute a big chunk of its business, as well as the acquisition of new franchise operations. Thrifty's growth came as a result of increased vehicle leasing revenue that was generated from its existing franchisees and from new ones in a number of key markets, including Hawaii, southern Florida, and San Diego.
Joseph Cappy, formerly a vice president of Chrysler, was named chairman of the board, CEO, president and director of DTAG. No other major management changes have followed the public offering.