Hertz 2013 Annual Report Download - page 15

Table of Contents

We have purchased a significant percentage of our car rental fleet from the following vehicle manufacturers:



General Motors Company 28%
15%
Toyota Motor Company 11%
10%
Ford Motor Company 13%
22%
Nissan Motor Company 16%
4%
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.
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 approximately 65 company-operated car sales locations
dedicated to the sale of used cars from our rental fleet.
During 2009, we launched Rent2Buy, an innovative program designed to sell used rental cars. The program was licensed to operate in 34
states as of December 31, 2013. Customers have an opportunity for a three-day test rental of a competitively priced car from our rental fleet. If
the customer purchases the car, he or she is credited with up to three days of rental charges, and the purchase transaction is completed
through the internet and by mail in those states where permitted.
During the year ended December 31, 2013, of the cars in our U.S. car rental operations that were not repurchased by manufacturers, we sold
approximately 47% at auction, 39% through dealer direct and 14% through our Rent2Buy program or at retail locations. During the year
ended December 31, 2013, of the cars in our international car rental operations that were not repurchased by manufacturers, we sold
approximately 83% through dealer direct, 12% at auction and 5% through our Rent2Buy program or at retail locations .
Franchisees Under Our Hertz Brand
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 U.S. and
international markets, we have found it more efficient to utilize independent franchisees, which rent cars that they own. Our franchisees
operate locations in approximately 140 countries, including most of the countries where we have company-operated locations. See “Item 1A
—Risk Factors” in this Annual Report.
We believe that our franchisee arrangements are important to our business because they enable us to offer expanded national and
international service and a broader one-way rental program. Licenses are issued principally by our wholly-owned subsidiaries, under
franchise arrangements to independent franchisees and affiliates who are engaged in the car rental business in the United States and in
many other countries.
Franchisees generally pay fees based on a percentage of their revenues or the number of cars they operate. The operations of all franchisees,
including the purchase and ownership of vehicles, are financed independently by the franchisees, and we do not have any investment
interest in the franchisees or their fleets. Franchisees in the U.S. share in the cost of our U.S. advertising program, reservations system,
sales force and certain other services. Our European and other international franchisees also share in the cost of our reservations system,
sales force and certain other services. In return, franchisees are provided the use of the Hertz brand name, management and administrative
assistance and training, reservations through our reservations channels, the Gold Plus Rewards and #1 Club Gold programs, our “Rent-it-
Here/Leave-it-There” one-way rental program and other services. In addition to car rental, certain franchisees outside the United States
engage in car leasing, chauffeur-driven rentals and renting camper vans under the Hertz name.
12
Source: HERTZ CORP, 10-K, March 31, 2014 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.