Car Rental Stocks Quake; 'Watch Out . . .Here Comes Sir Richard Branson' (HTZ) (CAR)

Shares of Hertz Global (NYSE: HTZ) and Avis Budget (Nasdaq: CAR) were active on Friday afternoon. Shares declined after Bloomberg reported Sir Richard Branson, founder and chairman of Virgin Group, is eying entry into the U.S. car-rental market. Reporters cited a letter sent by Virgin to the FTC.

Nick Fox, a spokesman for Virgin, confirmed the letter, saying "We feel the car-rental sector is Virgin territory."

Specifically, Virgin Group has its eye on Advantage Brand. Hertz sold Advantage to Macquarie Group Ltd.'s private-equity arm under a consent agreement with the FTC. The move was part of Hertz conditions for acquiring Dollar Thrifty.

Prices in the industry have been trending higher recently. For example, Avis boosted prices twice in June and, based on comments, management plans to continue with price increases. Considering the reaction in Avis and Hertz stock, investors may fear the effects created by Virgin's potential entry into the market.

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