Apply an ointment that you'd apply to a baby's diaper rash. It's gentle enough for the dog. See if the dog is bothered by the rash when touched. If it is still there in 2 days then a vet visit is in order. Also, make sure that when the dog urinates he is lifting his leg properly. Sometimes the urine can cause this problem of a rash as you describe. Also, be careful when applying ointment near the dog's genitals and avoid the meatus.
It could just be that he had an allergic reaction to something he lay down on, sometimes grass will even cause a rash on my dogs. If you had him groomed lately or bathed him it could be the soap. It could also be fleas. Try washing him with warm water and if it doesn't clear up or if he starts having other signs of health issues call your vet. :) Hope it clears up though.