Hertz Buys Dollar/Thrifty, Will Car Rates Soar?

Consolidation has lately been the domain of the airline industry, but today’s big news comes from the world of car rentals. Hertz has bought the Dollar-Thrifty Automotive Group, which owns and runs Dollar Rent-a-Car and Thrifty Car Rental. The deal expands Hertz’ global reach, as the deal will boost its number of worldwide locations to roughly 9,800.

For consumers, there’s a lot to ponder here. There are no details yet regarding reward programs for any of the agencies involved, though presumably Hertz will inherit these programs and their members. The Tulsa World reports that Hertz will likely retain the Dollar and Thrifty names in some form. The Dollar-Thrifty Group is based in Tulsa.

More importantly, perhaps, is the matter of car rental rates. The car rental industry is now dominated by three major players: Hertz (with Dollar/Thrifty), the Avis Budget Group (which owns Avis and Budget), and Enterprise Holdings, Inc., which owns Enterprise, Alamo, and National. That, along with a handful of regional agencies (Fox Rent-a-Car in the western U.S., for example), is your domestic car rental market. Doesn’t sound like the ideal environment for robust competition, does it?

Further, Hertz says it plans to cut about $180 million in overlapping costs, “primarily in fleet, IT systems, and procurement.” That all sounds benign enough, but “fleet” likely means some consolidation of each agency’s automobiles. This could be nothing more than swapping old Thrifty cars with new Hertz ones, or it could mean more drastic measures such as closing overlapping branches. The latter could have implications on rates through the reduction of supply. Something to keep an eye on.

Readers, what do you think about the Hertz deal? Do you think rental rates will go up? Leave a comment below with your thoughts.