Avis 2015 Annual Report Download - page 31

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adversely impact our profitability and potentially lead to decreased capacity in our asset-backed car rental funding
facilities due to the collateral requirements for such facilities that effectively increase as market values for vehicles
decrease.
The costs of our non-program vehicles may also be adversely impacted by the relative strength of the used car
market, particularly the market for one- to two-year old used vehicles. We currently sell non-program vehicles
through auctions, third-party resellers and other channels in the used vehicle marketplace. Such channels may
not produce stable used vehicle prices. A reduction in residual values for non-program vehicles in our rental fleet
could cause us to sustain a substantial loss on the ultimate sale of such vehicles or require us to depreciate those
vehicles at a more accelerated rate while we own them.
If our ability to sell vehicles in the used vehicle marketplace were to become severely limited at a time when
required collateral levels were rising, the outstanding principal amount due under our asset-backed financing
facilities may be required to be repaid sooner than anticipated with vehicle disposition proceeds and lease
payments we make to our vehicle program subsidiaries. If that were to occur, the holders of our asset-backed
debt may have the ability to exercise their right to instruct the trustee to direct the return of program cars and/or
the sale of risk cars to generate proceeds sufficient to repay such debt.
We face risks related to safety recalls.
Our vehicles may be subject to safety recalls by their manufacturers that could have an adverse impact on our
business when we remove such recalled vehicles from our rentable fleet. We cannot control the number of
vehicles that will be subject to manufacturer recalls in the future. Recalls often cause us to retrieve vehicles from
customers and/or not to re-rent vehicles until we can arrange for the repairs described in the recalls to be
completed. As such, recalls can result in incremental costs, negatively impact our revenues and/or reduce our
fleet utilization. If a large number of vehicles were to be the subject of simultaneous recalls, or if needed
replacement parts were not in adequate supply, we may be unable to re-rent recalled vehicles for a significant
period of time. We could also face liability claims related to vehicles subject to a safety recall. Depending on the
nature and severity of the recall, it could create customer service problems, reduce the residual value of the
vehicles involved, harm our general reputation and/or have an adverse impact on our financial condition or results
of operations.
Weakness in general economic conditions in the United States, Europe and other areas in which we
operate, weakness in travel demand and/or a significant increase in fuel costs can adversely impact our
business.
If economic conditions in the United States, Europe and/or worldwide were to weaken, our financial condition or
results of operations could be adversely impacted.
Any significant airline capacity reductions, airfare or related fee increases, reduced flight schedules, or any events
that disrupt or reduce business or leisure air travel such as work stoppages, military conflicts, terrorist incidents,
natural disasters, disease epidemics, or the response of governments to any such events, could have an adverse
impact on our results of operations. Likewise, any significant increases in fuel prices, a severe protracted
disruption in fuel supplies or rationing of fuel could discourage our customers from renting vehicles or reduce or
disrupt air travel, which could also adversely impact our results of operations.
Our truck rental business can be impacted by the housing market. If conditions in the housing market were to
weaken, we may see a decline in truck rental transactions, which could have an adverse impact on our business.
We face risks related to our ability to successfully implement our business strategies and to preserve the
value of our brands.
Our objective is to focus on strategically accelerating growth, strengthening our global position as a leading
provider of vehicle rental services, continuing to enhance our customers’ rental experience and controlling costs
and driving efficiency throughout the organization. If we are unsuccessful in implementing our strategic initiatives,
our financial condition or results of operations could be adversely impacted.