Penske buys Hertz locations in Memphis; broader plan possible
DETROIT -- Penske Automotive Group Inc., the nation’s second-largest dealership group, has signed an agreement with Hertz Corp. to become the sole franchise operator of Hertz rental locations in the Memphis, Tenn., market -- a relationship Hertz says may expand to other markets.
Under the agreement, Penske Automotive Group will purchase Hertz’s 15 company-owned airport and off-airport rental car locations in that market and will be licensed to operate them under the Hertz brand.
The deal, subject to the completion of closing conditions, is part of Hertz’s strategy to turn select corporate markets over to franchisees, Hertz says.
Hertz CEO Mark Frissora said in a statement that Penske is a premier brand that will enhance Hertz’s local and neighborhood marketing efforts. He says he expects the franchise relationship with Penske over time to grow into other markets as well.
'Accelerate our growth'
“By partnering with Penske, Hertz will be able to accelerate our growth in key U.S. markets and further strengthen our franchising network,” Frissora said in the statement. He is also the former CEO of supplier Tenneco Inc.
A Hertz spokeswoman said the partnership “is to help us increase business, especially in the off-airport marketplace.” But she said she could not comment about future plans between the companies.
Penske CEO Roger Penske said the commercial and operating synergies between Hertz’s car rental and Penske’s car dealership businesses will benefit both companies.
“Hertz’s ability to harness technology and deploy the latest customer service innovations, coupled with its established customer base, will bring increased value to Penske Automotive Group’s local operations,” Roger Penske said in a statement.
The Hertz deal would not be Roger Penske’s first venture into the vehicle rental business.
Penske Truck Leasing, a joint venture owned by Penske Corp., Penske Automotive Group and GE Capital, operates Penske Truck Rental. The Hertz-Penske deal centers on car rentals, not trucks, the Hertz spokeswoman said.
Publicly held Penske ranks No. 2 on the Automotive News list of the top 125 dealership groups in the United States with retail sales of 154,829 new vehicles in 2011. It operates 145 auto dealerships.
Last month, Hertz’s parent, Hertz Global Holdings Inc. said it would acquire Dollar Thrifty Automotive Group Inc., pending clearance from the Federal Trade Commission. That deal is expected to close in October.
To satisfy the FTC and antitrust laws, Hertz Global said it will sell its Advantage Rent A Car business to Franchise Services of North America and Macquarie Capital. Certain other Dollar Thrifty assets and associated airport concessions also will be divested.
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