Enterprise Rent-A-Car's surprise announcement late last week of plans to acquire Vanguard Car Rental Group could provide renewed strength to corporate travel player National Car Rental, although analysts said it's still too early to know ramifications on pricing and positioning.
St. Louis-based Enterprise, the largest car rental company in North America, said late Friday that it had entered a definitive agreement to purchase the Tulsa, Okla.-based Vanguard, parent of the National and Alamo Rent A Car brands. Pending regulatory approval, the deal is expected to close in the third or fourth quarter of this year.
"As the dynamics of our industry continue to evolve, it's clear to us that the future belongs to the service providers who offer the broadest array of services for anyone who needs or wants to rent a car," Enterprise chairman and CEO Andrew Taylor said in a prepared statement.
The news caught some analysts off guard, as many in the industry speculated that Vanguard and Dollar Thrifty Automotive Group would merge, with Vanguard as the dominant player
(BTN, March 5).
Vanguard's two brands and Enterprise all have different primary focuses. National does a large share of corporate negotiated rentals, Enterprise long has dominated the off-airport replacement market and Alamo serves primarily the leisure on-airport market. Neil Abrams, president of Purchase, N.Y.-based Abrams Consulting Group, said a merged company would be wise to keep its three brands focused on their respective niches. Enterprise has been making headway in penetrating the corporate market, but Vanguard—unlike competitors Avis Budget Group and Hertz—has not been making significant moves toward building an off-airport presence, he said.
Abrams said the deal could be a particular boon for the Alamo and National brands, which were in bankruptcy only a few short years ago but since have strengthened to their strongest position in a decade.
"The National and Alamo brands take on a more formidable presence now that they have the new money and manpower operating on the sidelines with a seasoned management organization," Abrams said. "They've got tremendous financial strength."
The financials of the agreement were not disclosed, nor were the logistics of how the acquisition would take place. While it's too soon to know about potential pricing effects, Abrams said the deal could be positive because of consolidation opportunities.
"They have a great ability now to take an awful lot of back-end stuff and leverage the value of that integration," Abrams said.