Enterprise Rent A Car Company Business Information, Profile, and History

Company Perspectives:

Enterprise's mission is to fulfill the automobile and commercial truck rental, leasing, and car sales needs of our customers while exceeding their expectations for service, quality and value.

We strive to earn our customers' long-term loyalty by delivering more than promised, being honest and fair, and "going the extra mile" to provide exceptional personalized service that creates a pleasing business experience.

We must motivate our employees to provide exceptional service to our customers. We do this by supporting our employees' development, providing opportunities for personal growth, and providing fair compensation for successes and achievements.

We believe that it is critical to our success that we promote managers from within who will serve as examples of success for others to follow.

It is our goal to be the best--not necessarily the biggest or most profitable--company of our kind. Our success at satisfying customers and motivating employees will bring growth and long-term profitability.

History of Enterprise Rent A Car Company

Enterprise Rent-A-Car Company is the largest rental car company in North America. The firm has more than 5,400 offices in the United States; these offices are located within 15 miles of 90 percent of the U.S. population. More than 600 additional offices operate in Canada, the United Kingdom, Germany, and Ireland. Worldwide, Enterprise's rental fleet exceeds 700,000 vehicles, and its fleet services unit serving corporate clients includes an additional 135,000 vehicles. Largely avoiding the higher margin, highly competitive travel segment dominated by such companies as Hertz Corporation, Enterprise dominates the "local" segment of the automobile rental market, catering largely to those consumers who need to rent cars temporarily: to replace ones that have been stolen, have been in an accident, or are in need of a mechanical repair; or for a special occasion, such as a brief business or leisure trip; or to conduct business in-town. The replacement car niche tends to be resilient in times of recession, and its traditionally fragmented nature has allowed Enterprise plenty of room for growth. In addition to its rental car and fleet services businesses, Enterprise also has a car sales unit and a nascent rental truck operation, the latter largely offering trucks for replacement and supplemental purposes to commercial businesses.

Finding a Successful Rental Niche

Enterprise was founded in 1957 by Jack Crawford Taylor. An unlikely candidate to father such an ambitious company, Taylor had struggled to finish high school and drifted through two colleges in one year. During World War II he served in the U.S. Navy, becoming a fighter pilot in the Pacific and eventually witnessing the loss of one-third of his squadron. When he returned home he found enjoyable work and financial security as a Cadillac salesman for a dealership owned by Arthur Lindburg in St. Louis, Missouri. But before long he discovered that he had a desire to be an entrepreneur. Like Taylor the fighter pilot, Taylor the businessman enjoyed a little risk.

In his position at Lindburg's dealership, Taylor occasionally came into contact with Cadillacs leased out of Chicago by a Greyhound subsidiary. Struck by the apparent ease and convenience of leasing an automobile, he investigated the business, and found that the numbers looked promising. Taylor persuaded his boss to set up a leasing business, taking a 50 percent pay cut for a 25 percent share in the new business known as Executive Leasing Company. In a walled-off section of a body shop at one of Arthur Lindburg's Cadillac dealerships in St. Louis, the company that would later be called Enterprise was born, with a fleet of seven vehicles.

The company initially focused on long-term leasing, but Taylor began to examine the potential for car rentals, entering this field in 1962. At first the short-term rental business seemed more of a nuisance than a profitable business, but Taylor handed operations over to an energetic assistant, Don Holtzman, to see what he could do. Taylor asked how many cars would be needed to get started; Holtzman replied 17, a number that remains a mystery to Taylor. Holtzman took his 17 cars and, realizing that the small company was no match for Hertz and Avis, looked for a niche away from the airports to settle into. He soon discovered that insurance adjusters had a need for rental cars for clients whose cars had been damaged or stolen, and Enterprise directed its efforts at this market, offering more competitive rates than the bigger rental companies. After Holtzman left the company in 1965, Taylor nurtured this "home city" segment.

Branching Out in the 1970s As Enterprise

In 1969 the company branched out of St. Louis, opening an office in Atlanta, Georgia. Offices in Florida and Texas soon followed. To do so, however, a name change was in order because the Executive name was not available for use in some markets. Taylor therefore changed the company name to Enterprise Leasing Company in 1969, a name that honored the U.S.S. Enterprise, one of the aircraft carriers on which he had served during World War II. Taylor's national expansion got off to an excellent start in the early 1970s by targeting garage and body shop owners and persuading them to send their customers to Enterprise while their cars were in the shop. Motorists in the 1970s were so accustomed to freedom of movement that they could hardly live a day without a car, and drivers stranded while a car was being repaired were often happy to pay Enterprise's relatively low daily rate. Business improved in the early 1970s when a judicial precedent was set requiring casualty insurers to compensate insured motorists for economic loss due to being without a car. Another key development of the early 1970s came from a branch manager in Orlando, who began offering customers a free ride to the rental office. This service was quickly introduced throughout the growing Enterprise system, beginning the tradition that would be immortalized in the well-known company slogan, "We'll pick you up."

The energy crisis of 1974 hampered rent-a-car expansion for a short period. Although Enterprise continued to show a profit, the difficult economic conditions inspired the company to diversify. The purchase of Keefe Coffee Company, which provided in-room coffee service to hotel guest rooms, started what became Enterprise Capital Group, which expanded through acquisitions during the 1970s. The next acquisition was Monogramme Confections, a candy maker selling hotels and businesses candies with customized wrappers bearing their own logo. Other additions to the Non-Automotive Group included another coffee service, Courtesy Coffee, and Crawford Supply, a service provider to correctional facilities.

A key ingredient of Enterprise's success in all business segments was its emphasis on customer service. The "Customer Giveaway Account" was set up to allow any Enterprise Rent-A-Car employee to charge off items up to a certain limit in order to satisfy a customer. A motivated workforce was crucial to the operation, and Enterprise instituted a variety of bonus plans that provided incentives to everyone from assistant branch managers on up. Customer service was further enhanced in 1980 with the opening of the National Reservation Center, which enabled customers to call a toll-free number to rent Enterprise vehicles nationwide.

Accelerating Growth in the 1980s

Enterprise's growth, meanwhile, continued throughout the 1970s and accelerated in the 1980s, averaging 27 percent annually between 1984 and 1990. A new threat was presented in the 1980s, when Hertz and National entered the home-city rental market. The business was vastly different from business and leisure travel rentals, and Hertz quickly found the profit margins to be too low. Hertz decided to pull out of the market by the end of the decade, and National's operations struggled to stay afloat. Enterprise, meanwhile, began cultivating a market called "discretionary rentals" in the late 1980s. Aimed at families visiting relatives, or kids coming home for the holidays, "discretionary rentals" offered cars at low prices.

In 1987 Enterprise Capital Group purchased a cellular telephone company. Enterprise Cellular added millions of dollars in revenues. The group's experience with an unprofitable frozen Mexican food subsidiary in the 1980s convinced Enterprise that its success was more closely related to giving superior customer service than to the quality of any specific product they handled. Future diversifications would be made with this in mind. By the early 1990s, the Enterprise Capital Group represented about 10 percent of Enterprise's revenues. Meantime, in 1989, the company changed its name to Enterprise Rent-A-Car Company to reflect what had become by far its largest business, with more than 500 offices and a fleet of more than 50,000 rental vehicles.

In 1989 Enterprise began advertising with an eye toward creating brand recognition of its service. With an initial television advertising budget of only about $5 million, Enterprise decided to strategically place its messages so that they would be seen by a demographically favorable group. The company limited its television sponsorship to one network--CBS--hoping to reach the older upper-income audience watching 60 Minutes and Murder She Wrote. The practice seemed to work for the company as Enterprise's revenues hit $800 million in 1990.

Reaching the Industry Top in the 1990s

By the early 1990s, Enterprise's second generation of leadership was looking optimistically to the future. The company was the fifth largest car rental chain--behind Hertz, Avis, Budget, and National--but was the leader in the still fragmented home-city car market, where faster growth was expected. Though successful competitors such as Action, Agency, and Chrysler's Snappy Car Rentals had crept into Enterprise's domain, none had the foothold in the market enjoyed by Enterprise.

Jack Taylor's son Andrew, president of the company since the early 1980s and chief executive officer since 1991, picked up where his father had left off. Under Andrew Taylor's guidance, Enterprise's level of customer service was not allowed to suffer through overly ambitious expansion, with growth proceeding at a pace dictated by the number of qualified managers available. Enterprise already operated in nearly all of the nation's top 100 market centers by 1992, and the company's successful recruitment and training programs promised no delays in growth. That year, revenues surpassed $1 billion for the first time. The company's leasing division took on the name Enterprise Fleet Services as it focused on serving business with small to midsized fleets.

Enterprise's growth accelerated in the mid- to late 1990s. Revenues jumped to $2.46 billion by fiscal 1995 and then to $4.73 billion by 1999. By decade's end the rental fleet had reached half a million vehicles, which were offered through 4,000 offices worldwide. This growth was aided by an international push that saw the company open its first international office in Windsor, Ontario, in 1993 and then open its first office in Europe the following year in Reading, England. While the off-airport market remained Enterprise's core business--a sector in which it held as much as a 50 percent share of the U.S. market in the 1990s--the firm began encroaching on the sector still dominated by Hertz and Avis, opening its first on-airport location at the Denver International Airport in 1995. By the end of the 1990s Enterprise was renting vehicles at 95 of the top 100 airports in the United States; at about half of these it had counters in the airport terminal, while the remainder were served by nearby offices.

Meantime, Enterprise reached a milestone in 1996: it surpassed Hertz as the number one car rental company in the United States in terms of fleet size and number of offices. Enterprise also battled Hertz and other car rental companies over the use of the "We'll pick you up" line, which Enterprise had trademarked and had been using in advertising since 1994. The company reached an out-of-court settlement with Hertz over the matter in 1998. International expansion had continued in 1997 with the opening of offices in Ireland, Scotland, Wales, and Germany. In 1999 Enterprise launched its Rent-A-Truck business, which rented trucks for replacement and supplemental purposes to commercial businesses. That same year, the Taylor family split off Enterprise's nonautomotive businesses into a separate company, Centric Group.

Early 2000s and Beyond

Late in 2001 Jack Taylor became chairman emeritus, and Andrew Taylor took over as chairman while remaining CEO. The presidency, however, was bestowed upon Donald Ross, a 37-year company veteran who had most recently served as chief operating officer and who became the first non-Taylor to serve as president. Revenues stagnated in the post-9/11 travel downturn, but Enterprise fared better than its rivals, who saw their sales drop, because Enterprise continued to specialize more in the replacement car market, which held up better than the business and leisure travel markets. Revenues for fiscal 2002 were up just 3 percent, reaching $6.5 billion. Also in 2002 Enterprise agreed to a $2.3 million settlement of a class-action lawsuit alleging that Enterprise Leasing had discriminated against African American employees. By the end of 2002, Enterprise had 115 on-airport locations and had captured 3.3 percent of that market. Its 5,000th rental location opened that year, and its rental fleet included more than 533,000 vehicles.

Over the next two years, Enterprise added another thousand offices to its growing network, bringing the total to more than 6,000. The company expanded into Alaska for the first time, giving it a presence in all 50 states, and significantly stepped up its international growth. During 2004 more than $500 million in revenues was generated outside the United States, an increase of 20 percent over the previous year. Enterprise now had 63,000 rental vehicles in Canada, the United Kingdom, Ireland, and Germany. In the United States, another 27 airport outlets debuted, boosting the total to 170. The company's share of the airport market reached 7 percent. Worldwide, the company's rental fleet increased by more than 7 percent, reaching 600,000, and revenues of $7.4 billion also represented a jump in excess of 7 percent. The ongoing success of Enterprise, which remained a privately held company controlled by the Taylor family, meant that there was little need for change. Enterprise continued focusing particularly on two crucial ingredients for this success: customer service and hiring outstanding employees, treating them with respect and giving them opportunities to advance.

Principal Operating Units: Enterprise Rent-A-Car; Enterprise Fleet Services; Enterprise Car Sales; Enterprise Rent-A-Truck.

Principal Competitors: The Hertz Corporation; Budget Rent A Car System, Inc.; Alamo Rent A Car, LLC; Avis Group Holdings, Inc.

Chronology

• Key Dates:
• 1957: Jack Crawford Taylor founds Executive Leasing Company in St. Louis, Missouri, with a seven-vehicle fleet.
• 1962: Company expands into the rental car business with a fleet of 17 vehicles, focusing on the replacement vehicle niche.
• 1969: As expansion outside St. Louis begins, company changes its name to Enterprise Leasing Company.
• Early 1970s:A branch manager in Orlando begins offering customers a free ride to the rental office, beginning the firm's "We'll pick you up" tradition.
• 1974: A diversification drive begins with the purchase of Keefe Coffee Company.
• 1989: Firm changes its name to Enterprise Rent-A-Car Company; rental fleet surpasses 50,000 vehicles.
• 1993: Company opens its first international office, in Windsor, Ontario.
• 1994: First European office opens in Reading, England.
• 1995: First Enterprise on-airport rental location opens.
• 1996: Enterprise surpasses Hertz as the number one rental car company in the United States.
• 1999: Taylor family splits off Enterprise's nonautomotive businesses into a separate company, Centric Group.
• 2002: Company opens its 5,000th rental office.