Hertz 2011 Annual Report Download - page 44

ITEM 1. BUSINESS (Continued)
Licensees
HERC licenses the Hertz name to equipment rental businesses in five countries in Europe and in
Afghanistan. The terms of those licenses are broadly similar to those we grant to our international car
rental licensees.
Competition
HERC’s competitors in the equipment rental industry range from other large national companies to small
regional and local businesses. In each of the six countries where HERC operates, the equipment rental
industry is highly fragmented, with large numbers of companies operating on a regional or local scale.
The number of industry participants operating on a national scale is, however, much smaller. HERC is
one of the principal national-scale industry participants in the U.S., Canada and France. HERC’s
operations in the United States represented approximately 65% of our worldwide equipment rental
revenues during the year ended December 31, 2011. In the United States and Canada, the other top
national-scale industry participants are United Rentals, Inc., or ‘‘URI,’’ RSC Equipment Rental, Inc., or
‘‘RSC,’’ Sunbelt Rentals and Aggreko North America. In December 2011, URI announced it had agreed
to buy RSC. A number of individual Caterpillar, Inc., or ‘‘CAT,’’ dealers also participate in the equipment
rental market in the United States, Canada, France, Spain and Italy. In France, the other principal
national-scale industry participants are Loxam, Kiloutou and Laho. Aggreko also participates in the
power generation rental markets in France, Spain and Italy. In China, the other principal national-scale
industry participants are Zicheng Corporation, Aggreko, Jin He Yuan, Lei Shing Hong and Far East
Rental. In Saudi Arabia, the other principal national-scale industry participants are Bin Quraya, Al Zahid
Tractors (CAT), Rapid Access, Eastern Arabia and Rental Solutions & Services (RSS) Saudi Ltd.
Competition in the equipment rental industry is intense, and it often takes the form of price competition.
HERC’s competitors, some of which may have access to substantial capital, may seek to compete
aggressively on the basis of pricing. To the extent that HERC matches downward competitor pricing
without reducing our operating costs, it could have an adverse impact on our results of operations. We
believe that HERC’s competitive success has been primarily the product of its more than 40 years of
experience in the equipment rental industry, its systems and procedures for monitoring, controlling and
developing its branch network, its capacity to maintain a comprehensive rental fleet, the quality of its
sales force and its established national accounts program.
Other Operations
Our wholly-owned subsidiary, Hertz Claim Management Corporation, or ‘‘HCM,’’ provides claim
administration services to us and, to a lesser extent, to third parties. These services include investigating,
evaluating, negotiating and disposing of a wide variety of claims, including third-party, first-party, bodily
injury, property damage, general liability and product liability, but not the underwriting of risks. HCM
conducts business at five regional offices in the United States. Separate subsidiaries of ours conduct
similar operations in seven countries in Europe.
Seasonality
Generally, car rental and equipment rental are seasonal businesses, with decreased levels of business in
the winter months and heightened activity during spring and summer. To accommodate increased
demand, we increase our available fleet and staff during the second and third quarters of the year. As
business demand declines, fleet and staff are decreased accordingly. However, certain operating
expenses, including real estate taxes, rent, insurance, utilities, maintenance and other facility-related
expenses, the costs of operating our information technology systems and minimum staffing costs,
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