Former SVP at Avis Budget Group Inc
- Competitive dynamics – Hertz (NYSE: HTZ), Avis (NASDAQ: CAR) and Enterprise
- Fleet management and regional operations
- Demand breakdown across airport, off-airport, corporate and insurance
- Sustainability and recovery measures for 2020
- Outlook, including immediate and short-term strategies
What is your high-level overview of this industry? What key trends and themes do you think everyone should be paying attention to and how would you describe the operating environment?
Could you elaborate on some of the points you mentioned around the novel coronavirus pandemic, especially around cost controls?
How are you assessing other aspects of rental car companies’ cost structures, such as occupancy charges, rent, staffing and airport concession fees and vehicle cleaning, and so on? To what degree can those costs be realistically eliminated, and what might be involved at the moment?
You mentioned evaluating existing stores and locations. What might be considered when assessing possible closures of existing locations? How much could be saved on average if a location is closed?
How are you assessing rent as a share of total operating costs? What rent concessions or reductions could realistically be achieved in this environment, generally speaking?
We spoke about the various P&L costs and you described fleet as the largest cost. How would you compare fleet cost vs rent and staffing, along with any other costs we’ve discussed? How much cost is involved here?
Do you think rental car companies will de-fleet and what does this process entail?
How are you assessing used car pricing and EBITDA cash flow impact to the companies in the industry with regards to the securitisation?
How many cars do you think could have been sold in March 2020, realistically? Do you think more cars can be sold in Q2 2020? If demand is down 80%, do you think 80% of the fleet should be sold, or somewhere below 80%?
What is the typical loan to value on risk vehicles today?
How would you estimate the expected decrease in selling price of used cars in this environment? How much liquidity could the companies generate from that?
From a high level, how are you assessing the ramp-up period once the coronavirus crisis passes? How might costs and revenues progress?
Do you think the residual values of fleet cars, when reaching the end of the fleet life, could extend or change in any way? Are you expecting any general changes as a result of the coronavirus crisis, when rental car companies sell cars at the end of their cycles?
What do you think are some of the downstream effects from fewer car rentals? What is the potential impact on the auto industry, or collision and repair shops, for example?
I understand that auction volumes and pricing are down, recently. How does that impact the ability of the rental car companies to de-fleet? What degree of depreciation per car would you expect?
What are your thoughts on fleet financing structures? Do you think sales of cars could create losses on the financing structures of fleets?
How could the rental car companies even get cars to auction that they’re in the process of de-fleeting, while also cutting out and furloughing employees?
Do you have any additional thoughts about what car rental companies can do to improve their liquidity positions, outside of drawing down the rest of their revolvers?
Public valuations of some of the publicly traded rental car companies have dropped significantly so far. Do you think any M&A activity or consolidation will arise from this coronavirus situation, or is it unlikely?
What questions should we be asking Avis’s interim CEO Joe Ferraro and his management team? How confident are you in their ability to weather and navigate the coronavirus situation?
Do you have any closing comments about the rental car industry?
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