Car rental supplier Avis Budget Group officials today said the company by 2013 plans to double the revenue of Carey International, the chauffeured transportation supplier it invested in last year, and increase the amount of cars in its fleet for which it assumes responsibility for resale.
"We fully expect to be able to double the revenue of Carey over the next five years, and that's primarily based on increasing the penetration of corporate accounts," said Avis Budget chairman and CEO Ronald Nelson during the company's annual earnings call. "It presents some interesting packaging opportunities on the retail side of the business. Many of our largest corporate accounts have inquired about the ability to integrate car rental and limousine service. We see enormous value in our cross-selling with Carey and expect our investment to pay off handsomely."
Avis Budget acquired a 45 percent interest in Carey last October, with an option to increase it to 80 percent within one year
(BTNonline, Oct. 23, 2007). Carey reported $332 million in 2006 systemwide revenue in
BTN's 2007 Business Travel Survey.
Avis Budget also expects to increase the amount of risk vehicles—those that it can't return to automobile manufacturers at the end of their rental life—to 50 percent in 2008, from approximately 20 percent last year. The company forecasts a per-unit, all-inclusive fleet cost increase of 4 percent to 6 percent.
"We select cars to purchase on a risk basis in a way that limits the residual risk we take. From time to time, a model will stand out with exceptional residuals and we will convert a program car to a risk car to take advantage of that," said president and COO Bob Salerno.