Avis 2012 Annual Report Download - page 17

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10
provide for relocation in the event of future construction and provide for abatement of the minimum annual guarantee in the
event of extended low passenger volume.
Competition
The car rental industry is characterized by intense price and service competition. Competition in our vehicle rental operations
is based primarily upon price, customer service quality, including usability of booking systems and ease of rental and return,
vehicle availability, reliability and national or international distribution. In addition, competition is influenced strongly by
advertising, marketing and brand reputation. We compete primarily with the following car rental companies: Enterprise Rent-
A-Car Company, which also operates the National Car Rental and Alamo brands in North America; Europcar, which also
operates the National Car Rental and Alamo brands in Europe; Hertz Global Holdings, Inc., which operates the Hertz, Dollar
and Thrifty brands; and Sixt AG. We also compete with smaller regional car rental companies.
TRUCK RENTAL BUSINESS
Operations
Budget’s truck rental business is one of the largest local and one-way truck rental businesses in the United States. The Budget
truck rental business has a combined fleet of approximately 27,000 trucks, which are rented through a network of
approximately 1,700 dealers and 350 Company-operated locations throughout the continental United States. A certain
number of our dealer locations are operated by our Budget car rental licensees. The Budget truck rental business serves both
the consumer and light commercial sectors. The consumer sector consists primarily of individuals who rent trucks to move
household goods on either a one-way or local basis. The light commercial sector consists of a wide range of businesses that
rent light- to medium-duty trucks, which we define as trucks having a gross vehicle weight of less than 26,000 pounds, for a
variety of commercial applications. In 2012, the Budget truck rental business generated total revenue of approximately $374
million.
We advertise in “yellow pages” telephone directories, purchase online advertisements and keyword referrals, and conduct
targeted email marketing campaigns to help promote our truck rental business to new and existing customers. Budget truck
rental customers can make reservations, through our Budget truck rental website at budgettruck.com, through the Budget
truck rental reservation center at 1-800-GO-BUDGET or by calling a specific location directly.
We have an exclusive agreement to advertise truck rental services in the Mover’s Guide, an official U.S. Postal Service
change of address product. In addition, we maintain relationships with businesses like Sears and Extra Space Storage to
promote Budget’s truck rental business, as well as a relationship with AARP offering reduced rates to members.
Ancillary Products and Insurance Coverages
We supplement our daily truck rental revenue by offering customers a range of ancillary products. We rent automobile
towing equipment and other moving accessories such as hand trucks, furniture pads and moving supplies, as well as portable
GPS navigation units. We also make available to customers a range of optional liability-limiting products and coverages such
as physical damage waivers, automobile towing protection, personal accident and cargo insurance and supplemental liability
insurance. These ancillary products enhance our appeal to consumers by offering customers “one-stop” moving services.
Distribution
Budget’s truck rental business is offered through a national network, which included approximately 1,700 dealers as of
December 31, 2012. These independently-owned dealers generally operate self-storage facilities, rental centers, hardware
stores, service stations and other similar retail service businesses. In addition to their principal businesses, the dealers rent our
light- and medium-duty trucks to consumers and to our commercial accounts and are responsible for collecting payments on
our behalf. The dealers receive a commission on all truck rentals and ancillary equipment rentals. Generally, agreements with
dealers may be terminated by either party subject to certain conditions.
Competition
The truck rental industry is characterized by intense price and service competition as well as competition based on location
(proximity to customer). We compete with a large number of truck rental companies throughout the country, including U-
Haul International, Inc., Penske Truck Leasing Corporation, Ryder System, Inc., Enterprise Rent-A-Car Company and many
others.