How Enterprise Remains The Car Rental Company Standard

Forbes

Chrissy Taylor’s grandfather founded the car rental giant. Her father built it into the industry’s dominant player. Now she’s driving the $35 billion firm into the future of mobility.  Read the full story on Forbes: https://www.forbes.com/sites/mattdurot/2024/05/22/why-enterprise-is-one-of-the-worlds-best-private-companies/?sh=350d4318936b  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Here's your Forbes Daily Briefing for Friday, May 24.

00:05Today on Forbes, why Enterprise is one of the world's best private companies.

00:11Scanning the first floor of the four-level parking garage outside Enterprise's suburban

00:16St. Louis headquarters, CEO Chrissy Taylor points out an all-electric Ford Mustang Mach

00:22E and a black Rivian R1T she's been test driving.

00:26She says, quote,

00:37Taylor is mostly joking about the ploy, though she gets to the office at her family's rent-a-car

00:42outfit, recently renamed Enterprise Mobility, most mornings before 8 a.m.

00:47But she's dead serious about testing out new technology and not forcing it on her customers

00:53especially electric vehicles.

00:56After hearing from renters that concerns about charging times, battery life, and infrastructure

01:01would make them hesitant to drive EVs, Enterprise slowed its rollout strategy.

01:06Taylor, who is 48 years old and the third generation of her family to run the privately-held giant,

01:12says, quote,

01:15But we have to make sure the customer is moving at the same pace we are.

01:20Contrast that approach with the one taken by rival Hertz, which made headlines in 2021

01:25and 2022 when it announced plans to purchase 100,000 Teslas and to electrify 25 percent

01:31of its fleet by the end of 2024.

01:34Despite aggressive discounting, it struggled to rent them.

01:38In March, the CEO of Hertz resigned.

01:41A month later, the company said it expects to lose $440 million,

01:45selling off half its electric vehicles.

01:48Of Enterprise's EV strategy, Taylor says, quote,

01:56However, she could just as well be describing the company as a whole.

02:00For 67 years, Enterprise has been outpacing its rivals thanks largely to the Taylor family's

02:06ability to keep their eyes on the long road ahead.

02:09Unusually for a company of its size, Enterprise remains 100 percent owned by its founding family,

02:15who have a combined net worth of some $21 billion.

02:19It is the seventh biggest private company in America, raking in $35 billion in revenue last year,

02:25mostly from renting cars, but also from smaller businesses like car sales and leasing

02:30as well as truck rentals.

02:33Enterprise's revenue dwarfs that of publicly traded rivals Hertz with $9.4 billion

02:39and Avis Budget Group with $12 billion.

02:42And its pristine balance sheet has earned it the only investment-grade credit rating

02:46among the industry's top three.

02:49An investment banker who has been covering the car rental industry for nearly two decades says, quote,

02:54I don't want to put my head in the sand and say there's no way to beat these guys,

02:58but it's really hard to beat these guys.

03:01Yet for all its domestic might, Enterprise commands just a sliver of the car rental business

03:06outside the U.S. and an even smaller slice of its global ancillary businesses.

03:12Growing its international footprint and expanding its non-core businesses

03:16while continuing to take share from Avis and Hertz will be crucial for Taylor,

03:21who took the top job in January 2020.

03:24Indeed, her biggest challenge may simply be to find new profitable places

03:28to move her aircraft carrier-sized company.

03:31Taylor can rely on one key advantage, though,

03:34being family-owned and comfortably insulated from the demands of myopic shareholders.

03:40Byron Trott, the chairman and co-CEO of merchant bank BDT and MSD Partners,

03:45who has been on Enterprise's board since 2000, says, quote,

03:50Most private companies have the advantage of being able to invest for longer-term goals and objectives

03:55rather than managing earnings quarterly in a public atmosphere.

03:59But the Taylor family is really awesome the way they do it.

04:02They reinvest capital over and over and over again to grow the business

04:06and to be able to plan for decades rather than quarters.

04:09It really is one of the best private companies in the world.

04:13Trott should know.

04:15He spent decades advising and investing in closely held companies

04:18controlled by founders and families with names like Koch, Pritzker, Mars, and Cox,

04:24first at Goldman Sachs and then later at his own firm.

04:27His most famous client, Warren Buffett, once tried to buy Enterprise from Jack Taylor,

04:32Chrissy's grandfather.

04:34The Oracle of Omaha was flatly rebuffed.

04:38For full coverage, check out Matt Duro's piece on Forbes.com.

04:43This is Kieran Meadows from Forbes.

04:46Thanks for tuning in.

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