A 'Stealth Company' No Longer

Management trainee Allynson Ford (center) helping a customer.

Getting a car for the first time from Enterprise Rent-A-Car can be disorienting. The smiles on the young workers behind the counter are charming, though seemingly out of place in that harried business. The jackets and ties are nice, if unusual for car rental shops. But it gets awkward when you reach for the keys and get a handshake instead. Seems the kid wants to tag along to the car, where he joins you in circling it for the damage check. Then he starts explaining where the switches are. The elusive rental-car switches! Here the headlights, there the wipers, and the gas-tank lever on the floor.

Some history helps explain the handholding. Unlike other big rental companies, Enterprise didn't start in the more glamorous part of the travel business at shiny airports. It started in city neighborhoods, sometimes gritty ones. Branches often sprouted among auto body and repair shops that left local drivers stranded without cars, hence the high-touch approach. "Most of our customers were not used to renting a car," says Enterprise President Pam Nicholson.

They were a natural and neglected market. Lots of independent shops rented cars there, says CEO Andy Taylor. "But it was ignored by the big companies." Not anymore. The industry has caught on to the strategy, but not before Enterprise emerged as the world's largest rental car company. St. Louis-based Enterprise generates nearly $13 billion in revenue and was already larger in sales and locations than No. 2 Hertz before it bought the Alamo and National brands last year. That's after years of what one analyst calls being a "stealth company."

Staying in private hands since its start in 1957 helped lower its profile. Principally owned by the Taylor family, Enterprise was run for several decades by founder Jack Taylor before he stepped aside for his son. The company has toyed at times with going public. But profits fueled growth without the headaches of dealing with public shareholders. "We have been fortunate to have all the resources we need," Andy Taylor says.

Mom and pop. Enterprise developed the continent's largest network of rental locations and gained a lock on the wreck-replacement business. Until Enterprise, it made sense that small rental stores served that market. The auto body business itself was also mostly mom and pop and still is. Those independent shop owners often phoned for the rentals or suggested where to call. "People trust them when they recommend a rental," says Jim Runnels, the senior vice president over Enterprise's rental business. Building neighborhood branches meant entrepreneurial managers establishing relationships with local shops.

It still does. Every Monday, an Enterprise agent brings doughnuts, says Brenda Rodewald, the mom of mom and popRick's Auto Body in a St. Louis suburb. The agent also stays to write rental contracts on site, having already delivered the cars. Customers lose less time in the process, one that pop Rick asked the local branch manager to set up. "It's that sort of thing that keeps us loyal to Enterprise," Rodewald says.

Doughnut drops are part of a typical morning at an Enterprise store in another St. Louis suburb. New workers might help manager Dee Moore deliver goodies to existing accounts. They'll soon do in-person marketing on their own, maybe to muffler or brake shops that aren't yet funneling renters to Enterprise. "There are a lot of potential partners out there," says Moore.

He's typical of the young college graduates at Enterprise's branches. They're drawn to a decentralized system that encourages, and pays, managers to act on their own. Company lore includes the Florida branch manager who started telling customers that "we'll pick you up," which blossomed into a national ad campaign.

Payoff. The first years as an Enterprise trainee can be tough. Many wash out—or end up washing. They're expected to clean cars when manpower is short. Employees have filed occasional lawsuits claiming they weren't paid for overtime, and the company has faced efforts to unionize some of its branch workers. But those who gut it out and make assistant manager not only get a salary but start earning performance pay that's based on branch profits. Enterprise, meanwhile, had also worked the insurers that often finance the wreck replacements. First it was small and regional offices. Then, when it had enough locations in place, Enterprise won national accounts. "That's how they really built the volume," says industry consultant Neil Abrams. The insurers feed customers to its 7,000 North American locations, or about as many as all other companies combined. Those locations positioned Enterprise to benefit from a more recent trend, consumers getting cars for weekend jaunts. Leisure rentals now account for about a third of Enterprise's nonairport business.