Wholly Owned Subsidiary of Cendant Corporation
Incorporated: 1953 as Peterson, Howell & Heather, Inc.
Sales: $3.6 billion (2001)
NAIC: 53212 Truck, Utility Trailer, and RV (Recreational Vehicle) Rental and Leasing; 532111 Passenger Car Rental; 532112 Passenger Car Leasing
PHH Arval, formerly PHH Vehicle Management Services, operates as the second-largest fleet management company in the world. As a subsidiary of Cendant Corporation, the firm provides integrated fleet leasing, fleet management, and corporate payment programs through Wright Express, and a variety of services related to fleet vehicle selection, fleet policy, vehicle acquisition and resale, maintenance and fuel management, expense reporting, and accident and risk management. PHH, along with its European partner, Arval PHH, manages over 1.2 million vehicles. PHH’s clientele includes corporate, government, and service-related firms. The company serves approximately one-third of the Fortune 500 companies.
The company originated in 1946, when Duane Peterson, Harley Howell, and Dick Heather formed a partnership to manage corporate automobile fleets. They signed management agreements with two companies in their first year: Gibson Art Company and Johnson & Johnson. The assumption was that corporations would save money by hiring a group that specialized in running car fleets, rather than supervising the car rentals and management themselves. The idea was advanced at the time when postwar cars were just beginning to be produced, and the firm prospered. It was incorporated in 1953 as Peterson, Howell & Heather. By 1955, a Canadian branch had been formed. The first public offering of stock took place three years later. The client list grew to include Honeywell and Du Pont.
Growth Leads to Expansion: 1960s-1980s
After a decade of steady growth, the company was ready to expand and diversify its services. PHH acquired National Truckers Service (NTS) of Texas in 1969 and Homequity, Inc., of Connecticut in 1971. This latter marked PHH’s entry into relocation and real estate management services.
Homequity was then the nation’s largest provider of such services, which include the appraisal and purchase of homes from workers being transferred and the homes’ subsequent resale. The building of company headquarters in Hunt Valley, Maryland, began in 1972. In 1978 the company name was changed to PHH Group, Inc.
During the 1980s, PHH continued its expansion, especially in European markets. In 1980, the company purchased AllStar Petrol Card Ltd. of London. That same year, Jerome W. Geckle, then president and CEO, succeeded John Lalley as chairman. Geckle oversaw a decade of explosive growth. In 1981, PHH International was formed to manage the company’s European operations. The following year, business services grew to include aviation management, and over the next several years PHH acquired Aviation Information Services; Aviation Consulting, Inc.; Beckett Flight Management; and Ryan Aviation Corporation. Despite the recession of the early 1980s, PHH had 2,000 corporate clients in 1982 and a record of 24 consecutive years of increased earnings.
Relocation services were expanded in 1984 with the purchase of Transamerica Corporation’s relocation service, which was then ranked as the United States’ fourth-largest relocater of corporate personnel. PHH also acquired US Mortgage Corporation that year, adding the related service of mortgage lending to the relocation segment. Fleet management thrived in the United Kingdom, where the country’s tax structure encouraged such corporate perquisites as company-provided cars. PHH was listed on the London Stock Exchange in 1984 and the Toronto Stock Exchange in 1986.
PHH signed about 100 new fleet clients in 1984, involving almost 50,000 vehicles. The following year, 78 more clients signed on. At this time, just more than half the company’s profits came from fleet services. Aviation management was showing a slight return on investment by 1985. The company orchestrated 29,000 corporate relocations in 1985.
While PHH’s major competitor at the time—Gelco Corporation—branched out into containers and truck leasing, PHH broadened only into closely related services, such as credit cards for fuel, tire, and battery purchases, and vehicle expense and maintenance control. In addition to scale economies, PHH offered clients the advantages of its close attention to vehicle prices and values, while handling all the tax, title, and insurance paperwork. In 1985, PHH still ranked among the 100 fastest-growing and most profitable major U.S. companies, despite the fact that falling interest rates had reduced its earnings growth rate in 1983.
In 1986, PHH acquired the Avis Leasing domestic fleet operations from Wesray Capital Corporation for about $136 million. Avis added 35,000 cars to PHH’s 281,000 cars in the United States and Canada. More than three-quarters of Avis’ business was within 200 miles of New York City, but PHH soon widened the range. Also in 1986, PHH formed an office resources management business segment. These services were to include choosing design, construction, and telecommunications firms and sites for new offices and overseeing the purchase and resale of office equipment. To this new segment were added the 1986 acquisitions of Avenue Group, Inc., of Chicago, and Philadelphia’s Interspace, Inc.—both office design firms.
PHH continued expansion in Europe in the late 1980s. It acquired CashCard GmbH in 1987, thus moving into fuel management services in Germany. The company also opened offices in Dublin and Paris. The company’s name was changed to PHH Corporation in 1988. The following year, profits rose again, despite hard economic times for both the auto and housing industries. PHH sold its aviation management services business this same year.
Growth Slows: Late 1980s-Early 1990s
Company growth slowed considerably during 1988 and 1989, but profits were steady. Longtime chairman Geckle retired in 1990 and was succeeded by Robert D. Kunisch. The company picked up important new fleet management clients in 1990, including Coca Cola Enterprises and SmithKlineBeecham. PHH Relocation and Real Estate Management Services USA was formed the same year to oversee the PHH businesses in that area. Also formed were the used vehicle service and card service divisions as a complement to fleet management services. Profits dipped slightly in the fiscal year that ended in April 1991, largely due to the worldwide recession. PHH put off geographic expansion of its fleet services in Europe until the economy recovered.
PHH officials decided in 1990 to exit the facilities management services operations because the required investments of assets and time were too great. PHH seemed to know and build on its strengths as a streamlined provider of certain management services. The company spent the majority of the early 1990s revamping its cost structure and disposing of weak performing assets.
By 1995, PHH was operating as a $5.2 billion asset company with a client base of over 3,000 companies in the United States, Canada, and Europe. That year the firm’s mortgage services unit formed a joint venture with First Interstate Bancorp to originate and market home mortgage loans. PHH’s sales experienced a slight decline in 1995, falling to $2.07 billion. Profits however, increased 11 percent over the previous year.
Changes in Ownership: Late 1990s and Beyond
PHH’s success and position in the industry soon caught the eye of HFS Inc., a global consumer services company in the midst of a major acquisition spree. Its holdings included Avis Inc., a string of hotel chains, real estate broker Century 21, and Resort Condominiums International Inc., which was the largest vacation timeshare exchange provider in the world. In November 1996, HFS announced that it would purchase PHH in a $1.7 billion deal. Just as the PHH/HFS merger closed, HFS teamed up with CUC International Inc. to form Cendant Corp., which became the parent company for the PHH group of companies.
During the transition, PHH’s original fleet management operations, which had remained among the largest in the United States, became PHH Vehicle Management Services L.L.C. Its relocation and mortgage units took on the Cendant name. In 1999, Cendant sold PHH to Avis Rent A Car Inc. for $1.8 billion. An Avis executive commented on the deal in a 1999 Automotive News article, claiming, “PHH and Avis are a natural fit, since both companies principally serve corporate clients and there are a number of opportunities to cross market to each other’s customers.”
PHH entered the new century on solid ground. By this time, PHH had developed PHH Interactive, a new fleet information management system that allowed customers to control their fleets via the Internet. In late 2000, Avis strengthened PHH’s global reach by forming a joint venture with BNP Paribas, a European banking firm that owned Arval, a fleet management firm based in Europe. The venture merged the operations of both companies together, creating PHH Arval in North America and Arval PHH in Europe.
Everything we do at PHH revolves around our clients. From the way we are organized to serve our clients and their employee drivers, to the extensive consultative skills we bring to the table, to our leading edge technology and extensive network of preferred suppliers—customer satisfaction is the primary focus. At PHH, our clients are not just “accounts”—they are people whose specific fleet management needs are known and met.
The company’s ownership changed yet again in 2001 when Cendant purchased Avis Group Holdings. Operating as part of Cendant’s Vehicle Services division, PHH Arval stood well positioned for future growth. While the company had experienced significant change during the 1990s, it remained committed to its clients and customer service strategy. Indeed, over 300 companies had been using PHH services for over 20 years, a fact that PHH believed was true because of its long-standing focus on customer satisfaction. As the world’s second-largest vehicle fleet management firm, PHH Arval would no doubt remain among the leaders in the vehicle fleet industry in the years to come.
Enterprise Rent-A-Car; GE Equipment Management; Holman Enterprises.
- Duane Peterson, Harley Howell, and Dick Heather form a partnership to manage corporate automobile fleets.
- The firm incorporates as Peterson, Howell & Heather.
- The company goes public.
- National Truckers Service is acquired.
- The firm gains a foothold in relocation and real estate management services market with the purchase of Homequity Inc.
- The company changes its name to PHH Group Inc.
- PHH acquires London-based AllStar Petrol Card Ltd.
- The firm adopts the name PHH Corporation.
- HFS Inc. acquires PHH; HFS and CUC International Inc. merge to form Cendant Corporation
- PHH is sold to Avis Rent A Car Inc.
- The firm merges fleet operations with Europe-based Arval and changes its name to PHH Arval.
- Cendant acquires the Avis Group; PHH operates as a Cendant subsidiary.
“Avis Buys Corporate Leasing Unit,” Automotive News, May 31, 1999.
Brockman, Joshua, “Cendant’s Mortgage Unit Grows Quietly, Quickly,” American Banker, September 29, 1998, p. 1.
Cook, James, “The PHH Factor,” Forbes, November 4, 1985.
Forty-Five Years of PHH Quality, Hunt Valley, MD.: PHH Corp., 1990.
Graham, Scott, “PHH Site Cuts the Fat, Aims for Efficiency,” Baltimore Business Journal, September 14, 2001, p. 6A.
“HFS Inc. and PHH Corp. Announce Merger,” Business Wire, November 11, 1996.
Mulligan, Thomas S., “MD Firm to Handle First Interstate Mortgage Lending,” Los Angeles Times, September 1, 1995, p. D2.
Pitock, Todd, “The Artful Acquirer,” Journal of Business Strategy, March-April 1997, p. 16.
Timmons, Heather, “Merger Could Mean More Business for HFS Unit,” American Banker, June 3, 1997, p. 21.
—Carol I. Keeley
—update: Christina M. Stansell