Mark P. Frissora, chairman and CEO of Hertz, said: "As the leading global car rental brand, it's a perfect fit for Hertz to partner with the largest and most recognized car rental firm in China."

China Auto Rental's 200 percent annual growth rate from 2009 to 2012 is six times higher than the market over the same period, and its more than 50 percent annual forecasted growth rate through to 2016 is more than three times higher than the overall market projection.

"As a result, Hertz is now uniquely positioned among American and European car rental brands to support the rapidly expanding Chinese rental market, as well as China Auto Rental's growth," he said.

"Not only will we be able to fulfill business and leisure rentals throughout the country, we will also provide rental solutions for international travelers to and from China - two markets with strong growth projections."

China Auto has the country's largest network, with 700 locations in 66 cities, and a 50,000-strong vehicle fleet, which is more than four times the size of its nearest rival.

The company said it aimed to expand the fleet to 100,000 units in 2015.

According to international consulting firm Roland Berger Strategy Consultants, China's car-leasing market is expected to grow from $2.5 billion in 2010 to $6.1 billion in 2015.

Statistics also show that since 2005, the value of China's car-rental market has grown by about 30 percent annually.

Lu Zhengyao, China Auto's chairman and CEO, said it has chosen to partner with Hertz because of its "extensive industry experience, advanced technology, strong brand influence and rich customer resources", adding the alliance would "reinforce China Auto Rental's leading position in the sector".

Both sides said they are considering a more effective way of recycling cars and will try and use cars that are no more than two years old.

Industry analysts said the cooperation was another milestone for auto leasing in China.

China Auto Rental has obtained strong financial support from investors including Lenovo and Warburg Pincus.

Experts said the Hertz cooperation will further strengthen the Chinese company both financially and in terms of its brand, widening the gap between it and its main competitors while paving the way for possibly raising cash on the international capital markets.

Hertz entered the Chinese market in 2002. However, it largely suspended its rental business on the mainland in 2006, after it ended a cooperation with Chinese partner China National Automotive Anhua (Tianjin) International Trade Co Ltd.

China Auto Rental's biggest rival, the Shanghai-based car rental company eHi Auto Services Co Ltd, received a $70 million investment from a consortium, in which Goldman Sachs was the lead investor, in 2010. It used the money to further expand its fleet and its presence throughout the country.