Hertz 2008 Annual Report Download - page 36

ITEM 1. BUSINESS (Continued)
Motors Corporation, or ‘‘General Motors.’’ Over the five years ended December 31, 2008, approximately
23% of the cars acquired by us for our U.S. car rental fleet, and approximately 15% of the cars acquired
by us for our international fleet, were manufactured by General Motors. During the year ended
December 31, 2008, approximately 25% of the cars acquired by our U.S. car rental fleet, and
approximately 18% of the cars acquired by us for our international fleet, were manufactured by General
Motors. Additionally, during the year ended December 31, 2008, approximately 13% of the cars we
acquired, on a worldwide basis, were manufactured by Toyota.
In the past several years, Ford and General Motors, which are the principal suppliers of cars to us on
both a program and non-program basis, have experienced deterioration in their operating results and
significant declines in their credit ratings. In the fall of 2008, Ford and General Motors approached the
U.S. Congress to request assistance from the federal government in order to fund their continuing
operations. Subsequent to that request, the federal government has provided some assistance to
General Motors. In addition, General Motors has presented its reorganization plan to the U.S.
government, requesting additional funds. While Ford has publicly stated that it does not intend to seek
such assistance, there can be no assurance that it will not do so in the future. If the federal government
does not provide such assistance, one or both of these manufacturers could commence bankruptcy
reorganization proceedings. For a discussion of the impact that such an event may have on our
operations, see ‘‘Item 1A—Risk Factors—Risks Related to Our Business—We could be harmed by a
further decline in the results of operations or financial condition of the manufacturers of our cars.’’
Purchases of cars are financed through cash from operations and by active and ongoing global
borrowing programs. See ‘‘Item 7—Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources.’’
We maintain automobile maintenance centers at certain airports and in certain urban and off-airport
areas, providing maintenance facilities for our car rental fleet. Many of these facilities, which include
sophisticated car diagnostic and repair equipment, are accepted by automobile manufacturers as
eligible to perform and receive reimbursement for warranty work. Collision damage and major repairs
are generally performed by independent contractors.
We dispose of non-program cars, as well as program cars that become ineligible for manufacturer
repurchase or guaranteed depreciation programs, through a variety of disposition channels, including
auctions, brokered sales, sales to wholesalers and dealers and, to a lesser extent and primarily in the
United States, sales at retail through a network of nine company-operated car sales locations dedicated
exclusively to the sale of used cars from our rental fleet. During the year ended December 31, 2008, of
the cars that were not repurchased by manufacturers, we sold approximately 89% at auction or on a
wholesale basis, while approximately 6% were sold at retail and approximately 5% through other
channels.
Licensees
We believe that our extensive worldwide ownership of car rental operations contributes to the
consistency of our high-quality service, cost control, fleet utilization, yield management, competitive
pricing and our ability to offer one-way rentals. However, in certain predominantly smaller U.S. and
international markets, we have found it more efficient to utilize independent licensees, which rent cars
that they own. Our licensees operate locations in over 140 countries, including most of the countries
where we have company-operated locations. As of December 31, 2008, we owned approximately 96% of
all the cars in the combined company-owned and licensee-owned fleets in the United States.
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