Hertz 2008 Annual Report Download - page 39

ITEM 1. BUSINESS (Continued)
trans-Atlantic alliance with Vanguard. In every European country, there are also national, regional or
other, smaller companies operating in the airport and off-airport rentals markets. Apart from Enterprise-
branded operations, all of which Enterprise owns, the other major car rental brands are present in
European car rental markets through a combination of company-operated and franchisee- or licensee-
operated locations.
Competition among car rental industry participants is intense and frequently takes the form of price
competition. For the year ended December 31, 2008, based on publicly available information, we believe
some U.S. car rental companies experienced declines in transaction days and rental rate revenue per
transaction day, or ‘‘RPD,’’ compared to the year ended December 31, 2007. For the year ended
December 31, 2008, in the United States, we experienced a 3.7% decrease in transaction days and a
2.0% decrease in RPD versus 2007. During the year ended December 31, 2008, in our European
operations, we experienced a low to mid single digit increase in transaction days and a low to mid single
digit decrease in RPD versus 2007.
Our competitors, some of which may have access to substantial capital or which may benefit from lower
operating costs, may seek to compete aggressively on the basis of pricing. To the extent that we match
downward competitor pricing without reducing our operating costs, it could have an adverse impact on
our results of operations. To the extent that we are not willing to match or remain within a reasonable
competitive margin of our competitors’ pricing, it could also have an adverse impact on our results of
operations, as we may lose market share. As a result of the increased use of the Internet as a travel
distribution channel, pricing transparency has increased. See ‘‘Item 1A—Risk Factors—Risks Related to
Our Business—We face intense competition that may lead to downward pricing, or an inability to
increase prices.’’ We believe, however, that the prominence and service reputation of the Hertz brand
and our extensive worldwide ownership of car rental operations provide us with a competitive
advantage.
Worldwide Equipment Rental
Operations
We, through HERC, operate an equipment rental business in the United States, Canada, France, Spain
and China. On the basis of total revenues, we believe HERC is one of the largest equipment rental
companies in the United States and Canada combined. HERC has operated in the United States since
1965.
HERC’s principal business is the rental of equipment. HERC offers a broad range of equipment for
rental; major categories include earthmoving equipment, material handling equipment, aerial and
electrical equipment, air compressors, pumps, generators, small tools, compaction equipment and
construction-related trucks.
Ancillary to its rental business, HERC is also a dealer of certain brands of new equipment in the United
States and Canada, and sells consumables such as gloves and hardhats at many of its rental locations.
HERC’s comprehensive line of equipment enables it to supply equipment to a wide variety of customers
from local contractors to large industrial plants. The fact that many larger companies, particularly those
with industrial plant operations, now require single source vendors, not only for equipment rental, but
also for management of their total equipment needs fits well with HERC’s core competencies.
Arrangements with such companies may include maintenance of the tools and equipment they own,
supplies and rental tools for their labor force and custom management reports. HERC supports this
through its dedicated in-plant operations, tool trailers and plant management systems.
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