GM Checks Off on Sale of National Car Rental : Deals: Auto maker reaches preliminary agreement for purchase of firm by investment group.

General Motors Corp. said Thursday it has reached a preliminary agreement to sell its National Car Rental System Inc. to an investment group led by Vestar Equity Partners for an undisclosed sum.

In June, National Car Rental President Lawrence Ramaekers told Reuters that the rental firm was expected to fetch more than $1 billion.

GM, the nation’s largest auto maker, said it signed a letter of intent for the sale of National, which has more than 5,000 locations in 132 countries.

The move marks the second time this month that one of Detroit’s Big Three auto makers has sold a stake in a rental car firm.

Earlier this month, Chrysler Corp. sold its stake in Snappy Rent-A-Car to a group of investors led by Jackson Partners in New York. Chrysler still owns a stake in Thrifty and Dollar Rent-A-Car. In April, Ford Motor Co. raised its stake in Hertz to 100%.

New York-based Vestar has organized 13 management buyouts during the last six years. The firm manages a $260-million equity fund dedicated to management buyouts.

The proposed National sale agreement includes provisions for the company to keep its 6,400 employees and maintain its long-term fleet agreement with GM to purchase vehicles. Additional terms of the agreement, including the sale price, were not disclosed.

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A spokeswoman for GM declined to comment on the price, saying the deal is contingent on the signing of a definitive agreement and the approval of GM’s board of directors.

GM said the sale reflects the company’s strategy to divest non-core assets. GM acquired a 45% stake in National in 1988 and since then has acquired full ownership of the company.

In 1993, GM retained Jay Alix & Associates, turnaround specialists, to improve National’s operating performance. In 1992, the car maker took a charge of $744.1 million, or $1.11 a share, related to losses at National.

“National Car Rental is an established franchise that we believe has real potential,” John Howard, co-chief executive of Vestar, said in a statement.

“We have been quite impressed with the efforts of GM and Jay Alix & Associates to improve National’s operating performance,” Howard said. “We will work closely with the management team to build on this progress.”