Global car rental leader Hertz (NYSE: HTZ ) will acquire a 20% stake and a seat on the board of directors of China Auto Rental, China's domestic market leader in short- and long-term car rentals, Hertz announced today.
Although financial details were not released, China Auto Rental will be granted an initial license for five years that will allow it to operate on behalf of Hertz in China. CAR will be required to develop a network of full-service Hertz locations in key cities to complement CAR's locations. Hertz will provide CAR with access to services including operational expertise, reservation capabilities, and fleet management efficiencies. Hertz and CAR will be co-branded at their locations.
Noting that China Auto Rental has the largest domestic rental footprint, with 700 locations in 66 cities, for a fleet of 50,000 vehicles, some four times larger than its nearest competitor, Hertz chairman and CEO Mark P. Frissora said, "It's a perfect fit for Hertz to partner with the largest and most recognized car rental company in China."
He further noted CAR has enjoyed a 200% annual growth rate between 2009 and 2012, which is six times greater than the growth of the overall market during the same period. It's forecast it will achieve better than 50% annual growth through 2016, which is more than triple the projected growth rate of the market.
In 2012, China's international travel expenditures exceeded $100 billion, tops in the world, according to Hertz, and its domestic rental business is expected to grow more than 15% annually through 2016.
Hertz operates its car rental business through the Hertz, Dollar, and Thrifty brands from approximately 10,400 corporate, licensee, and franchisee locations around the world.