Thrifty Car Rental 2006 Annual Report Download - page 20

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disposed of 62% of its Non-Program Vehicles through auctions and 38% directly to used car dealers,
wholesalers and its franchisees during the year ended December 31, 2006.
Maintenance
DTG Operations has automotive maintenance centers. These facilities are accepted by automotive
manufacturers as eligible to perform and receive reimbursement for warranty repairs. Collision damage
repairs are generally performed by independent contractors. Dollar’s and Thrifty’s franchisees are
responsible for the maintenance of their fleet vehicles.
Vehicle Financing
The Company requires a substantial amount of debt to finance the purchase of vehicles used in its rental
and leasing fleets. The Company primarily utilizes asset backed financing programs to finance its
vehicles. Under these programs, the Company is required to provide collateral at different levels for
Program Vehicles and Non-Program Vehicles. The Company also uses commercial paper programs,
bank lines of credit and vehicle manufacturer lines of credit to finance the remainder of its vehicles.
Fleet Leasing Programs
DTG Operations makes fleet leasing programs available to Dollar and Thrifty U.S. franchisees for each
new model year. The terms of its fleet leasing programs generally mirror the requirements of various
manufacturers’ residual value programs with respect to model mix, order and delivery, vehicle
maintenance and returns, but also include Non-Program Vehicles. Dollar and Thrifty monitor the
creditworthiness and operating performance of franchisees participating in the fleet leasing programs and
periodically audit franchisees’ leased fleets. For the year ended December 31, 2006, approximately 3%
of the Company’s total revenue was derived from vehicle leasing programs. As the Company continues
to implement its corporate strategy of acquiring franchise operations and converting them to corporate
operations, leasing revenue will continue to decline.
DTG Operations sets lease rates after considering depreciation rates for Program Vehicles, estimated
Non-Program Vehicle depreciation rates, interest costs, model mix, administrative costs and market
conditions. Average monthly lease rates vary depending on vehicle model, and the average lease period
is between seven and nine months. Although DTG Operations leases both Non-Program Vehicles as
well as Program Vehicles to Dollar and Thrifty franchisees, these fleet leasing programs eliminate the
residual value risk for such franchisees. Franchisees may, however, elect to assume some residual value
risk on certain Non-Program Vehicles they lease in exchange for a lower lease rate.
U.S. Fleet Data
2006 2005 2004
DTG
Average number of vehicles leased to
franchisees 8,836 11,230 16,622
Average number of vehicles in
combined fleets of franchisees 29,095 34,277 42,491
Average number of vehicles in combined
fleets of company-owned stores 113,762 107,344 96,675
Total 142,857 141,621 139,166
Year Ended December 31,
14