Dollar Rent A Car 2011 Annual Report Download - page 8

The SEC also maintains a Web site that contains all of the Company’s filings at http://www.sec.gov. Information on the Company’s Web site is not
incorporated into this Form 10-K.
The Company has a code of business conduct, which is available on the Company’s Web site under the heading, “About DTG”. The Company’s Board of
Directors has adopted a corporate governance policy and Board committee charters, which are updated periodically and can be found on the Company’s Web
site under the heading, “Corporate Governance”. A copy of the code of business conduct, the corporate governance policy and the charters are available
without charge upon request to the Company’s headquarters as listed on the front of this Form 10-K, attention “Investor Relations” department.
Industry Overview
The Company competes primarily in the U.S. car rental industry. The U.S. daily car rental industry has two principal markets: the airport market and the
local market. Vehicle rental companies that focus on the airport market rent primarily to leisure and business travelers. Companies focusing on the local
market rent primarily to persons who need a vehicle periodically for personal or business use or who require a temporary replacement vehicle. Rental
companies also sell used vehicles and ancillary products such as refueling services, navigation systems and loss damage waivers to vehicle renters. As a
general matter, the car rental industry is significantly dependent on conditions in the overall leisure and business travel markets.
Vehicle rental companies typically incur substantial debt to finance their fleets which makes them dependent on access to the fleet financing and capital
markets to fund operations, and also has a direct impact on profitability due to the interest costs associated with the debt and fluctuations in interest
rates. Although the fleet financing market has improved significantly since 2009, new issuances in these markets, including those undertaken by the
Company, have required higher collateral enhancement rates than the industry has faced historically. This increase in collateral enhancements will have a
direct impact on the capital required to support operations in future periods.
Vehicle rental companies are also dependent on vehicle manufacturers and overall economic conditions in the new and used vehicle markets, as these factors
directly impact the cost of acquiring vehicles, and the ultimate disposition value of vehicles, both of which impact operating cost. Historically, rental
companies acquired a large portion of their fleets under residual value programs (“Residual Value Programs”), under which vehicle manufacturers repurchase
or guarantee the resale value of the vehicle in future periods, thereby allowing the rental companies to fix their holding cost of the vehicle (“Program
Vehicles”). Most vehicle rental companies have in recent periods increased their vehicle purchases made outside of Residual Value Programs to lower fleet
costs and reduce the risk related to the creditworthiness of the vehicle manufacturers, which has increased their dependence on the used vehicle market in
terms of both determining holding cost, and for ultimate disposition of the vehicles. Vehicle rental companies bear residual value risk for these vehicles,
which are referred to as “Non-Program Vehicles” or “risk vehicles”.
The U.S. rental car industry has nine top brands which are owned by four companies. Three of the companies are publicly held: Dollar and Thrifty operated
by the Company; Avis and Budget operated by Avis Budget Group, Inc. (“Avis Budget”) and Hertz and Advantage operated by Hertz Global Holdings, Inc.
(“Hertz”). The remaining three brands of Alamo, National and Enterprise are operating subsidiaries of Enterprise Rent-A-Car Company, which is privately
held. The Company also faces competition from local and regional car rental companies in the United States, some of which have the ability to impact pricing
in numerous large airports in the United States. There is intense competition in the U.S. car rental industry on the basis of price, service levels, vehicle
quality, vehicle availability and the convenience and condition of rental locations.
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