Chrysler Corp. agreed Tuesday to buy Los Angeles-based Dollar Rent A Car, the nation's largest privately owned auto rental company and the fourth largest overall.
Neither company would disclose the purchase price. When it was reported earlier this month that the two were talking, one source said the price would be $70 million to $90 million.
But Dollar founder Henry J. Caruso said in a telephone interview Tuesday that such estimates were "way off base." He would not say whether the price was more or less than the estimated range.
Caruso said that the firm's 500-member headquarters staff will remain in Los Angeles and that he will stay on as a consultant.
"I hope to continue to be active," he said. "I will not be as close to the day-to-day operations as I have been in the past. But I intend to offer what I can from my past experiences in the growth of this company and from my marketing experiences."
The transaction, scheduled to be completed Aug. 15, follows a trend in which auto makers have turned the rental industry into a distribution system for their products. Rental companies are the leading buyers of cars.
Owning a rental company also gives manufacturers a means of letting prospective buyers sample their products in hopes that they will purchase them. "It gives an auto manufacturer the ability to offer the consumer an experience he would not get otherwise," said Thomas F. O'Grady, president of New York-based Automotive Resources, a market research firm.
In a separate development Monday, Mitsubishi Motor Sales of America, in Cypress, completed its acquisition of a majority investment in Value Rent-A-Car Inc. of Deerfield, Fla. It was said to be the first purchase of a car rental company by an automotive importer.
Value has about 25 locations in Florida, Georgia, Louisiana, Arizona, Colorado and Nevada.
Among American manufacturers, Ford Motor owns a portion of Hertz, the nation's largest rental company, and has also invested in Budget Rent A Car Corp. General Motors owns part of National Car Rental System and Avis Inc.
Chrysler bought Thrifty Rent-A-Car last July for $263 million and, five days later, Thrifty bought Snappy Car Rental for $40 million. Dollar and the other two rental firms will operate as separate entities under a Tulsa, Okla.-based subsidiary of Chrysler, Pentastar Transportation Group.
Dollar, which buys 70,000 to 80,000 cars annually, has used General Motors cars primarily.
"When you get volume orders like those from a rental company," said Chrysler spokesman Tom Jakobowski, "it gives you more solid production. It keeps your plants in operation, and that translates into quality."
But owning a rental car company doesn't guarantee that a subsidiary will buy all its cars from its parent. Thrifty earlier this year bought about 4,000 autos from Mitsubishi, even though Thrifty is owned by Chrysler, because the cars were less expensive.
Dollar, which has 762 rental locations in the United States and 550 overseas, is primarily a franchising company. It owns only about about 18 of its locations, including ones in Los Angeles, San Francisco, Burbank, Ontario and Detroit. It has a fleet of 82,000 vehicles, 57,000 in the United States.
Although most of Dollar's locations are on airport property, most Thrifty counters are just outside airports. Snappy specializes in renting cars to people whose autos are being repaired. Caruso founded Dollar Rent A Car in 1966 as Dollar A Day. It had a fleet of 18 Volkswagens operating from one location in downtown Los Angeles. Within a year, he had opened another five branches in Los Angeles, and the company began selling franchises nationwide.