Republic Industries purchased Alamo Rent-A-Car in 1997 from its founder, Mike Egan, to augment its earlier purchase of National Car Rental. Alamo had been a very profitable company in the late 1980’s and early 1990’s based on its ability to leverage fleet purchase plans from the domestic car industry when it was struggling with foreign competition. However, in late 1990’s, as the domestic automobile business recovered, it modified the rental car companies fleet purchase conditions and essentially eliminated Alamo’s profit margins. When Alamo was purchased by Republic in 1997, it was losing $100 million per year on $1.2 billion of revenue.
How could Republic turn Alamo’s financial performance around while maintaining National’s profitability and brand reputation for corporate travel excellence? The founders of Accelare, after extensive financial analysis, proposed an operating model tha t would extract the non-differentiating, but common capabilities from both National and Alamo and form a shared services organization. This approach would put 40% of the operating budget for each company in play as potential savings.
Alamo returned to profitability in 1999 by sharing fleet assets and processes with National Car Rental.