British Car Renter to Open Dollar Offices : U.S. Firm Says Move Could Double Revenue

Dollar Rent A Car Systems said Friday that a large British car rental firm has agreed to open Dollar franchises overseas and that the move will eventually double Dollar’s revenue.

Henry J. Caruso, president of Los Angeles-based Dollar, said Swan National Car Rental of London has agreed to convert its British rental car locations to the Dollar name and plans to open other Dollar locations at airports in France, West Germany, the Netherlands, Spain and several other European countries before the end of the year. Swan is the third-largest British rental car firm.

Caruso predicted that Dollar’s annual sales will increase to at least $800 million from $400 million by 1992 as a result of the expansion.

However, industry observers said Dollar, the fifth-largest car rental company in the United States, faces intense competition abroad. John S. Simmons, an analyst who follows the rental car industry for the Arnhold & S. Bleichoeder investment firm in New York, said the two leading American car rental firms, Hertz and Avis, are well established in Europe and already have valuable tie-ins with airlines and tour operators there.

Owns Half of Locations

In addition, he said, Dollar must compete for European customers with more familiar local car rental firms. Dollar “has a formidable task ahead,” Simmons said.

Caruso, 65, founded Dollar in Los Angeles in 1966 by renting Volkswagens for $1 a day, and he remains its sole owner. The company soon opened other locations around the state, and started its push to go national in 1967. The company now has 725 locations that are operated by 400 franchisees. In addition, Dollar owns and operates 25 other locations, mostly in California.

By contrast, Swan National owns about half of its British locations, the firm’s chairman, Freddie Aldous, said in a telephone interview. He said Swan National expects to own about half of the new locations it establishes under the Dollar name in Europe, Africa and the Middle East.

Aldous said Swan, with revenue of about $140 million last year, expects to move into continental Europe quickly by acquiring successful locally owned car rental companies. However, industry analysts said Aldous may find himself in a bidding war for prime local companies with Hertz and Avis, the largest firm in Europe with $1 billion in revenue.

Caruso and Aldous declined to discuss the terms of their franchise agreement, although Aldous said no money has yet changed hands.

“It is a typical franchise agreement,” Caruso said in a telephone interview. “They pay us royalties on the revenues that are generated, and they collect (money) from their franchisees.” He said Dollar will spend “very substantial sums” on its European marketing effort, but he would not be specific.