Enterprise to Acquire National and Alamo

Enterprise Rent-A-Car's announcement of its intent to purchase Vanguard Car Rental Group Inc., which operates the National Car Rental and Alamo Rent A Car brands, seems to bode well for both agents and consumers due to the complementary nature of the businesses. Ron Cerko

St. Louis-based Enterprise's primary strength lies in the in-town and insurance replacement segments of the industry whereas Vanguard, based in Tulsa, serves the airport segment of the market. This transaction is expected to close later this year.

"We think this is very good news for consumers and travel agents," says Ron Cerko, vice president, travel industry sales, Enterprise Rent-A-Car. "This acquisition will bring together two rental car companies with highly complementary businesses and will enhance the combined operations' ability to offer low rates and quality service to all customers. We'll also be able to offer a broader range of services to consumers—whatever their needs and wherever they rent from us."

Cerko notes that the agreement will enable the company to utilize fleets more efficiently, since National and Alamo have a strong airport presence, and Enterprise has off-airport locations covered. "The dynamics of our industry have evolved over the past several years, and it is clear to us the future belongs to [those] who offer the broadest array of services," says Cerko.

Industry Coalescence

Travel agents have witnessed these types of acquisitions before. After 9/11, car rental companies were reeling from the resultant corporate travel recession. In 2002, Cendant, which already owned Avis, bought Budget out of Chapter 11 bankruptcy. Cendant positioned Avis as its premium brand and Budget its value-oriented brand. During these tough times, Avis cut its workforce by 10 percent and reduced its fleet. Avis shifted some of its efforts to opening new residential locations and to attracting more of the leisure market. By 2004, Cendant had Avis and Budget sharing a common rental system, fleet, and back-office operation, creating annual cost savings of $100 million.

"With this purchase, I don't think we'll see too may changes in procedures," says Janet LaMacchia, travel consultant with Camarillo Travel in California. "Things will be fine if Enterprise stays aggressive and continues to concentrate on customer service."

LaMacchia, a 25-year travel agency veteran, gives high marks to Enterprise's local rep. "He really makes a difference, even attending our monthly agency meeting," she says. She remembers when Avis bought Budget, and says after the sale it was pretty much business as usual.

It will be 90 to 100 days before the details of the merger are disclosed.

"Many of the questions about branding will have to be evaluated and answered once the transaction is completed," says Cerko. "We want to take as much time as necessary to figure out what makes sense."

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