Hertz Acquires 20% Stake in China Auto Rental – Leading Lessor in China
The Hertz Corp. announced April 16 it has agreed to invest in China Auto Rental (CAR), acquiring a 20-percent stake in the company and taking a seat on its board of directors. CAR is China’s domestic market leader in short- and long-term car rentals.
CAR and Hertz will be co-branded at CAR’s full-service rental locations countrywide. Hertz’s car rental locations and operations in China will be contributed to CAR.
Hertz will continue to manage its outbound sales team in China, the company said. Its equipment rental business in the country is unaffected.
The partnership fulfills Hertz's objective to boost its presence in the rapidly expanding car rental market in China.
Additionally, Hertz and CAR will be exclusive car rental partners for inbound and outbound business, servicing international corporate and leisure customers. In 2012, China's international travel expenditures exceeded $100 billion – the leader worldwide. The nation’s domestic rental business is expected to grow more than 15% annually through 2016.
"As the leading global car rental brand, it's a perfect fit for Hertz to partner with the largest and most recognized car rental company in China,” said Mark P. Frissora, Hertz chairman and CEO. “China Auto Rental has the largest domestic rental footprint, with 700 locations in 66 cities, and a 50,000-vehicle fleet which is more than four times the size of its nearest competitor. Also, CAR is growing rapidly, having doubled its revenues in 2012 to $250 million, 2.5 times larger than any other domestic company.”
CAR's 200% annual growth rate from 2009-2012 is six times higher than the market over the same period, and the company’s 50%-plus annual forecasted growth rate through 2016 is more than three times higher than the overall market projection, according to Hertz.
Under the agreement, which is subject to normal closing conditions, CAR will be granted a license for an initial five-year term to operate on behalf of Hertz in China. CAR will develop a network of full-service Hertz premium locations in key cities to complement CAR's expanding location footprint.
Taken together, the Hertz/CAR services will encompass self-drive and chauffeur-driven rentals, as well as short, medium and long-term vehicle rentals and leases. Hertz will provide CAR with an array of services, including reservation capabilities and fleet management efficiencies.
"Hertz has extensive industry experience, advanced technology, strong brand influence and abundant customer resources,” said Charles Lu, chairman and CEO of China Auto Rental. “We are very pleased to enter into a comprehensive and in-depth strategic cooperation with Hertz. I believe this alliance will further intensify CAR's shareholder strength and reinforce CAR's leading position in China's car rental industry.”
China Auto Rental Holdings Inc. (CAR), established in September 2007, is headquartered in Beijing.