The two largest Brazilian car rental companies, Localiza and Unidas announced an intent to merge. Localiza would take over rival Unidas for about 12 billion reais (US $2.18 billion), the companies said on Wednesday. Localiza will hold a 76.9% stake in the combined company. The newly formed company would have a combined fleet of about 470,000 vehicles.
The deal would consolidate the largest players in the Brazilian car rental market — Localiza, Unidas, and Movida — from three to two. The combined companies control about 50% of the market. As a result, analysts say the deal faces antitrust scrutiny by CADE, Administrative Council for Economic Defense, and by shareholders from both sides.
Regarding the potential merger, ABLA, the Brazilian car rental association, is taking a wait-and-see approach. "We will have to wait to see what will happen in the stock market and what it will mean in the daily activities of the sector," wrote Paulo Gaba Jr., executive director of the association, to Auto Rental News.
Unlike the U.S. and European markets, the Brazilian market for leasing, both consumer and corporate, is satisfied by Brazilian car rental companies in the form of long-term rentals. Overall, this “outsourced” market in Brazil stood at 52% in 2018, with leisure daily rentals for accounting for 27% and corporate daily rentals making up 21%, according to ABLA.
As well, the Brazilian car rental market has benefited from renting cars to ride-hailing and gig economy workers, a market that has blossomed in Brazil during the global coronavirus pandemic.