Renting a car seems like a rather mundane business, certainly not one that would elicit any tales of exciting growth opportunities. But perhaps as an adjunct of an improving economy, the industry is in the midst of a turnaround that is in many ways mirroring the growth experienced in the overall travel business.

Rental agency Dollar Thrifty Auto Group (NYSE: DTG) recently reported earnings that, despite showing flat revenues and falling profits, still beat analyst expectations. The harsh winter had an impact on business (not surprisingly), but in March rentals perked up again -- enough for Dollar to raise its outlook for the year and to cause Hertz Global (NYSE: HTZ) to consider making a new bid for the company.

Sitting up on blocks
Last year Hertz had bid for and lost to a shareholder vote an offer of $1.5 billion. Avis Budget Group (NYSE: CAR) then stepped in and bid $1.8 billion, but that offer is still mired in a regulatory morass with the FTC mulling whether to approve the merger. Hertz now says it will sweeten the pot. If the Avis bid can't pass regulatory scrutiny after a full year of discussions, then maybe shareholders would be interested in a $2.2 billion offer.

As Dollar Thrifty's quarterly results show, but which are also born out by others too, rental cars are back. (Nasdaq: PCLN) -- best known for its name-your-own-price airfare and hotel booking system -- bought car rental company Travel Jigsaw last year that operates in 80 countries, primarily in Europe and Asia. Business is booming, and though precise numbers haven't been released, management describes growth as "impressive."

The better prospects for rentals have actually lifted sales at carmakers Ford (NYSE: F) and General Motors (NYSE: GM), where fleet sales comprise the major portion of the numbers they made.

A speedy recovery
The advent of the shared rental car as exemplified by Zipcar (NYSE: ZIP) is another indicator of the strength the market is seeing. It only went public last month, but the market has already accorded it a valuation approaching $1 billion. Shares jumped 56% on the first day of trading, making it the second-best IPO of the year so far.

It's an attractive business model that's drawn the attention of both Hertz and privately held Enterprise Rent-a-Car, though the latter wonders about the sustainability of the model. Zipcar had a net loss of $14 million in 2010 and doesn't expect to be profitable in 2011, either, so it might only warrant being placed on your watchlist at this time. With earnings due out this week, we'll get to see how well it performs on the open road.

It Hertz so good
With Avis posting better year-over-year results, handily beating analyst expectations, and Hertz losing less as demand strengthened, Zipcar may just surprise to the upside. And a sweetened offer from Hertz for Dollar Thrifty may entice shareholders to hitch a ride with the industry leader after waiting so long on the side of the road for Avis to drive by. Considering market valuations are in the low double digits, and the industry just getting ready to step on the gas, both Hertz and Avis might be worth a test drive for your portfolio.

Do you see car rental companies on the road to riches or down a path to the poorhouse? Sound off in the comment box below.