Chrysler May Buy Dollar Rent A Car : Automobiles: A deal would give the No. 3 car maker a captive customer for its products.
Chrysler Corp. and Los Angeles-based Dollar Rent A Car are discussing the sale of Dollar, the nation’s largest privately owned auto rental company, to Chrysler, a well placed source said Wednesday.
“I think that discussions are at a fairly advanced stage,” said auto analyst Charles H. Finnie of Alex. Brown & Co., a Baltimore investment company. Another source said, “It’s just a matter of time.”
Spokesmen for both companies declined to comment on the reports.
A source who declined to be identified said Dollar would be worth somewhere between $70 million and $90 million.
If the transaction is consummated, it would follow a trend of transforming the auto rental industry into a distribution system for the nation’s auto makers, giving them captive customers for their cars.
“The auto rental firms are coveted by the auto makers because they are the largest buyers of cars,” Finnie said. Such deals give the auto makers a place to sell cars even when individual sales decline, he added. Dollar, which purchases between 70,000 and 80,000 cars annually, has been using mostly General Motors cars.
Ford owns a portion of Hertz Corp., the nation’s largest car rental company, and has also invested in Budget Rent A Car. General Motors has invested in National Car Rental System and Avis. And Chrysler already owns Thrifty Rent-A-Car Inc., which it bought last July for $263 million. Five days later, Thrifty bought Snappy Car Rental for $40 million.
Dollar, which has 762 locations in the United States and 550 outside the country, is largely a franchising company and owns only about 10% of its locations. It has a fleet of 82,000 vehicles, with 57,000 in the United States and the rest overseas.
According to Automotive Fleet magazine, Dollar is the sixth-largest U.S. rental car company in terms of total revenue, including that taken in by franchisees.
Dollar Rent A Car was founded in 1966 by Henry J. Caruso as Dollar A Day with a fleet of 18 Volkswagens operating from one location in downtown Los Angeles. Within a year, Caruso had opened another five branches in Los Angeles, and the company’s first airport site was at the Burbank Airport. The company then began selling franchises nationwide.
It is believed that Caruso, who is in his 60s, “has reached the point in his life where he wants to quit working,” Finnie said.
THE RENTAL-CAR MARKET
Chart shows how rental-car companies share the industry’s estimated 1989 revenue of $6.11 billion (business and leisure rentals only).
Hertz: $1.53 billion
Avis: $1.3 billion
Budget: $ 920 milllion
National: $825 Million
Other: $160 million
American Int’l. $175
General, $235 million
Dollar, $255 million
Alamo, $525 million
