Hertz 2011 Annual Report Download - page 39

ITEM 1. BUSINESS (Continued)
December 31, 2011, our approximate average holding period for a rental car was fourteen months in the
United States and thirteen months in our international operations.
Under our repurchase programs, the manufacturers agree to repurchase cars at a specified price or
guarantee the depreciation rate on the cars during established repurchase or auction periods, subject
to, among other things, certain car condition, mileage and holding period requirements. Repurchase
prices under repurchase programs are based on either a predetermined percentage of original car cost
and the month in which the car is returned or the original capitalized cost less a set daily depreciation
amount. Guaranteed depreciation programs guarantee on an aggregate basis the residual value of the
cars covered by the programs upon sale according to certain parameters which include the holding
period, mileage and condition of the cars. These repurchase and guaranteed depreciation programs
limit our residual risk with respect to cars purchased under the programs and allow us to determine
depreciation expense in advance, however, typically the acquisition cost is higher for these program
cars.
Program cars as a percentage of all cars purchased by our U.S., International and worldwide operations
were as follows:
Years ended December 31,
2011 2010 2009 2008 2007
U.S. ............................................. 45% 54% 48% 55% 42%
International ........................................ 55% 56% 57% 59% 65%
Worldwide ......................................... 48% 55% 51% 57% 50%
Within our Donlen subsidiary, revenue earning equipment is under longer term lease agreements with
our customers. These leases contain provisions whereby we have a contracted residual value
guaranteed to us by the lessee, such that we do not experience any gains or losses on the disposal of
these vehicles.
We have purchased a significant percentage of our car rental fleet from General Motors Corporation and
its successor, General Motors Company, together ‘‘General Motors.’’ During the year ended
December 31, 2011, approximately 47% of the cars acquired by us for our U.S. car rental fleet, and
approximately 21% of the cars acquired by us for our international fleet, were manufactured by General
Motors. During the year ended December 31, 2011, approximately 12% of the cars acquired by us for our
U.S. car rental fleet, and approximately 4% of the cars acquired by us for our international fleet, were
manufactured by Toyota Motor Company. During the year ended December 31, 2011, approximately 5%
of the cars acquired by us domestically were manufactured by Ford and its subsidiaries and
approximately 22% of the cars acquired by us for our international fleet were manufactured by Ford and
its subsidiaries. During the year ended December 31, 2011, approximately 17% of the cars acquired by
us for our U.S. car rental fleet and approximately 1% of the cars acquired by us for our international fleet
were manufactured by Nissan Motor Company.
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,’’ in this Annual Report.
We maintain automobile maintenance centers at certain airports and in certain urban and off-airport
areas, which provide 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.
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