lebar auto bplan
TRANSCRIPT
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LEBAR AUTO
SERVICES, LLC.
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October 2010
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NOTICE
This Business Plan has been prepared on the basis of information furnished by the management of LEBAR AUTO
SERVICES, LLC. (“LEBAR AUTO” or the “Company”). The Company and its personnel expressly disclaim any liability
for damages, direct, special or consequential, arising out of or related to this Business Plan, or omissions there-
from, or any other information provided in writing, orally or otherwise regarding a potential transaction. Any party
considering a transaction with the Company agrees to look solely to its own due diligence and any representations,warranties and/or covenants set forth in a fully-executed, definitive written agreement with the Company relative to
the transaction.
This Business Plan is being provided on a confidential basis and is intended strictly for use by a limited number of
interested parties for the sole purpose of determining potential interest in pursuing a transaction with the
Company. By accepting this Business Plan, recipients agree to keep confidential the information contained herein
or made available in connection with any further investigation of the Company. Each recipient agrees to treat it in
a confidential manner and not, directly or indirectly, to disclose or to permit its advisors, agents or affiliates to
disclose any such information without the prior express written consent of the Company. Recipient agrees not to
copy Business Plan, in whole or in part, except as authorized in advance in writing by the Company personnel
designated below. Recipient agrees both to return this Business Plan and to certify the destruction of all work
product derived from its contents upon request form the Company. Recipient agrees to make no contact with the
Company except as authorized in advance by the Company personnel designated below.
Any estimate, forecast or projections as to future events are based upon the assumptions stated herein and the judgment of the management of the Company are believed to be reasonable as of the date of the document.
However, no assurance can be made as to the achievement of these estimates, forecasts and projections.
Statements made in this Business Plan are made as of the date hereof, unless stated otherwise, and neither the
delivery of this Business Plan at any time, nor any subsequent transaction with the Company, shall under any
circumstances create an implication that the information contained herein is correct as of any subsequent time.
By receipt of this Business Plan, recipients agree to the terms and limitations set forth herein and recognize and
accept the need to conduct their own through investigation and due diligence before considering a transaction with
the Company. Recipients should not construe the contents of this Business Plan or any prior or subsequent
communications from the Company as legal, investment or tax advice. Each party should consult their own
competent counsel, accountants or business advisors as to legal and related issues concerning a transaction.
Neither this Business Plan nor its delivery to any party constitutes an offer to sell or the solicitation of an offer to
buy any securities. The Company reserves the right to negotiate with one or more prospective parties at any time
and to enter into a definitive agreement with a party without prior notice to other prospective parties.
LEBAR AUTO SERVICES, LLC.
October 2010
Issued To: Date Issued:
Issued By: Copy Number:
Direct inquiries regarding this plan to:
Salomon Levis Marc Baron
Managing Member Member
[email protected] [email protected]
Office: 787.707.1818 Office: 787.707.1818
Mobile: 787.903.2505 Mobile: 787.910.8202
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LEBAR AUTO SERVICES, LLC.
1510 F.D. ROOSEVELT, PISO 12, GUAYNABO, PR. 00968
TABLE OF CONTENTS
I. OPPORTUNITY 5
II. MARKET 9
III. COMPETITION 20
IV. RENTAL OPERATIONS 27
37
V. SALES & MARKETING 38
VI. SERVICE, TECHNOLOGY & ADMINISTRATION 50
VII. MANAGEMENT 57
IX. BUSINESS RISKS 58
VIII. IMPLEMENTATION 59
VIII. FINANCIAL 60
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I. OPPORTUNITY
LEBAR AUTO SERVICES, LLC. (“LEBAR AUTO”) will introduce low-cost auto rental to the Puerto
Rico market in the fourth quarter 2010, filling a void in budget priced car rental market.
LEBAR AUTO is specifically targeting the “non-banked” and “non-credit card” segments of the
market. LEBAR AUTO will provide non-traditional auto rental products, which include but are
not limited to:
• Low Cost daily, weekly, monthly rental
• Rent to Buy
• Rent by the Hour
• Rent by the Minute (specifically targeted to “Contractors” and “Do-It-
Yourselfers” that shop at partner hardware and lumber stores – NationalHardware and Lumber)
• Taxi + Livery Rent by the Month – (specifically targeting taxi cab drivers who
are operating in San Juan metro area)
The opportunity rests in addressing the substantial segment of the Puerto Rico community
that has been locked-out from the major auto rental market due to either high daily cost, lack
of a credit or debit card, and insufficient or poor credit. LEBAR AUTO will deliver a combination
of price and service to auto renters in the Puerto Rico market.
LEBAR AUTO will develop a distinct brand identity and seize market share in Puerto Rico by
providing consumers benefits not offered by the competition, namely compelling cost, smallerrental increments, non-banked client friendly and quality after sale protection (see Figure 1).
Cost: Low daily rental rates by forming a fleet of vehicles that are either 18-24months old or have 15,000 – 30,000 miles of usage. These vehicles are purchased atwholesale prices, decreasing LEBAR AUTO’s initial fleet investment.
Smaller Rental Increments: In addition to the traditional rental increments (daily,weekly, monthly) LEBAR AUTO will rent vehicles in smaller rental increments – ie.rental by the minute or rental by the hour;
Non-banked Client Friendly: With a population of 3, 996, 213 and a labor force of 1,479,000 and a GDP per capita of $17,100 there is a significant segment of thepopulation that is working but does not meet the income or credit standards of the U.S
structured financial system – this segment live and operate on a cash-basis. LEBARAUTO will develop programs that are risk-managed but friendly to this segment of themarket; and
Quality After Sale Protection : LEBAR AUTO vehicles are late-model vehicles thatare clean and mechanically sound. LEBAR AUTO will offer clients a buffet of VehicleProtection Plan services that offer additional comfort and re-assurance to clients thattheir decision to purchase a LEBAR AUTO vehicle was a wise decision.
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Figure I – LEBAR AUTO COMPARATIVE ADVANTAGE
Car rental rates in Puerto Rico can be high if the rental client does not have the gate-opening
keys (ie. credit card, debit card with $500 - $700 cash availability, credit card with CDW
feature). The daily rental rate balloons to $50 per day when the client is required to take the
insurance (CDW) coverage. The non-tourist Puerto Rican rental car client rents for 4-5 days
per rental period – this client may want to rent 2-3 times per month, the $50 daily rate
suppresses the local client.
Rent to Buy
The Rent to Buy client is a niche opportunity for LEBAR AUTO. Though the major car rental
companies (Hertz) offer Rent to Buy, the price of the car is not much less than the retail, and
the credit qualification is the same as retail. LEBAR AUTO’s Rent to Buy business model is
designed to appeal to the price conscious buyer that can afford a monthly car operational cost
(Car Payment + Insurance + VPP) ranging $350 -$470 per month.
Figure II – RENT TO BUY MODEL
Car
Cost/Monthly
Insura
nce
VP
P
Fuel
12,000 miles
/ yr
$4.00 pergallon
Model A - $350 – (5.71% Finance – 36
months)
2003 Toyota Matrix 4dr Wagon – 35.5
mpg
6,441/ $189 $155$15
$114
6
OPPORTUNITY MARKET IMPERFECTION LEBAR AUTO SOLUTION
Non –Banked ClientMajor car rental companies require major credit card.Provide client with the option to make cash deposit
High-Cost RentalsMajor car rentals charge high daily rates, that do not takeinto account the activity patterns of the local population
Implement a simple yield management system that takes ilocal holiday, time of day, area of Puerto Rico , season
Rent to Buy There are a significant element of the population withInsufficient credit to be qualified for bank or coop financing
A Rent-To –Buy program with a creative qualification mod
Smaller Rental Periods The traditional rental period is daily, weekly or monthlyProvide rentals by the minute, the hour or the half day,
Vehicle Protection PlansHertz offers a 60 day/2,000 mile limited warranty
This does not provide a long term coverage options.
LEBAR AUTO will offer a buffet of vehicle protection plans
the client is assured of worry free driving
Used CarsMajor car rental companies are forced to purchase new fleetseach year.the 1st year (15 – 20%) depreciation is significant
LEBAR AUTO purchases vehicles 18-24 mos or 15 – 30 kmiles – the 2nd and 3rd (10% annually) year depreciation .
COMPARATIVE ADVANTAGE
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Model B - $470 – (5.71% Finance – 36
mos)
2007 Toyota Yaris 2Dr. Hatchback Auto
– 32mpg
9,490.00/$304 $155$1
5$125
Rent By The Hour
The Rent By The Hour product is also a niche opportunity for LEBAR AUTO. There is no rental
car company in Puerto Rico that is offering hourly rentals. The product is designed to have
the attributes of a car sharing club. There is an application and membership fee, there is a
hourly rental charge. There are 3 different price membership levels and the price that the
client pays to drive is dependent upon the membership level. If the client books for eight or
more hours, the maximum charge is for 8 hours.
The hourly rate includes:
• Gas
• Insurance
• GPS turn-by-turn navigation
• 24/7 Roadside Assistance
• 24-hour Member Care Center
• 180 free miles per day
Figure III – RENT BY THE HOUR - MEMBERSHIP PLANS
Rent by the Minute
The Rent by the Minute product targets the “do-it-yourself” home owner or the small
contractor that is purchasing supplies from the big box hardware distributors or the
construction material suppliers. In Puerto Rico the target partners for this program would be
National Ferreteria, Empresas Donestevez, Empresas Nido, Empresas Massó. The product
provides a Ford F-350 heavy duty Pick-up truck. The customer makes the purchase at the
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Vámonos
• $50 Annual
Membership
• $25 Application Fee
• 180 free miles per day
From $10 per hour
Vámonos 50
• $50 per month, no
Annual fee
$25 Application Fee
180 free miles per day
• From $9 per hour
w/free gas
Vámonos 125
• $125 per month, no
Annual fee
$25 Application Fee
180 free miles per day
• From $8.500 per hour
w/free gas
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store, rents the truck for 15, 30, 60, 90 minutes in order to take the purchased supplies to the
work site and returns the vehicle to the store. The store is the rental agent for the vehicle and
participates in a profit-sharing scheme.
Taxi + Livery Rent by the Month
Taxi + Livery Rent by the Month product targets the commercial taxi operators that work inthe metro San Juan area. The Puerto Rico Tourism Company currently offers an incentive for
new car purchasing by a registered cab driver. Under the current law, the Company provides a
$3,500 credit to the driver to buy a new car. LEBAR AUTO will target the taxi operators that
have insufficient credit in a monthly lease purchase program.
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II. MARKET
Industry Overview
The automotive industry is a multi-billion dollar sector of the U.S. economy. This segment of
the U.S. industry on the average beginning in 2004 recorded $ 18,500,000,000 turnover per
year. Today there are about 1.9 million vehicles in the rental segment of the U.S. market. In
addition to industry-leading companies, there are many independent companies, that share
the total income for example Dollar Thrifty, Budget and Vanguard. Unlike other mature service
industries, the car rental industry is highly consolidated, which obviously leads potential
competitors to have a cost disadvantage, since they scale with high production costs, with
reduced economies. Moreover, most of the profit has been found in the coffers of a few
companies, such as Enterprise, Hertz and Avis. For fiscal year 2004, Enterprise has generated
total sales at $ 7,400,000,000. Hertz came in second place with about $ 5,200,000,000 and
Avis, with $ 2.97 billion in Revenue.
Level of integration
The rental car industry is facing a very different environment than it was five years ago.
According to Business Travel News, will be leased vehicles are now averaging 20,000 –
30,000 miles before they re-enter to the automotive market in the past this number was
12,000 to 15,000 km of five years. Due to the slow growth of the sector, and the narrow profit
margin, there is no immediate threat to backward integration in the area. In fact, as of 2008
there are no vertically integrated car rental companies – in regard to be affiliated with a car
manufacturer (previously Hertz was a part of Ford Motor Company, Inc.).
Scope of competition
There are many factors that characterize the competitive environment of the car rental
industry. Competition comes from two sources in the business model – the consumer and the
competing companies. In the consumer spectrum, competition is tough, not only because the
market is saturated and well guarded from the industry leader Enterprise, but also from
smaller competitors with lower cost. In respect to market share Enterprise has established a
network of dealers for over 90 percent of the leisure segment. In the corporate segment,
there is very strong competition at airports because this segment is under close surveillance
by Hertz. The industry has suffered huge economic decline in recent years (fy 2007 - 2010), it
has been the leaders that have survived the current round of competition, as it has been in
most businesses since 2008. Competitively speaking, the car rental industry is a war zone, like
most landowners, including Enterprise, Hertz and Avis strongest among the key players
involved in this battle.
Growth
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Over the past five years, many companies have worked to improve the fleet size and increase
profitability. Enterprise is currently the company with the largest fleet in the U.S. , it added
75,000 vehicles in its fleet and in 2002 the number of airport locations increased to 170. In
comparison Hertz, during this same time period added 25,000 vehicles and expanded its
international presence in 140 locations to 150 in 2002. In addition, Avis has increased its fleet
of 210,000 in 2002 to 220,000, despite the recent hardships. In subsequent years of economiccrisis, although most companies fought, industry leaders has been constantly under the
Enterprise '. For example, the annual sales achieved in 2001 $6.3 billion, 2002 $ 6.5 billion, in
2003 $ 6.9 billion and $ 7,400,000,000 in 2004, which translates into a growth rate of 7.2
percent annually over the last four years . Since 2002, the industry has started growing again
as the industry, total sales increased from $ 17,900,000,000 to $ 18,200,000,000 by 2003.
According to analysts, the industry's best days rental cars are coming. In the next few years,
the industry should experience of growth accelerated to $ 20,890,000,000 in the following
year 2008, "leading to a CAGR of 2.7% increase which corresponds to the period 2003-2008."
Distribution
In recent years, the rental car industry has made progress, in incorporating systems and
strategies as it relates to car distribution. Today there are approximately 19,000 rental
locations producing about 1.9 million cars in the United States. Due to the increasing number
of car rental locations in the United States, strategic and tactical approaches are critical to
consider in order to ensure proper distribution. The distribution is effected within two
connected line segments. On the corporate market, the cars at the airports and the hotel are
prevalent. In the leisure segment, on the other hand, are cars that agencies have structures
that can be found in larger metropolitan roads and distributed.
In the past, operators of car a rent used to use intuitive gut-feelings or guesses to makedecisions, like keeping a lot of cars on a particular fleet or the use and performance of some
car in a lot. With this method was not very balanced, the level of consumer demand and
maintain the desired level of return. The method of distribution is relatively simple in the
industry. First, managers must determine the number of cars that have the inventory on a
daily basis. Since a very significant problem occurs when too much or not enough machines
are available, including the largest car rental company Hertz, Avis and Enterprise, use a
"pool", which is a group of independent car rental services that share a fleet of vehicles. In
essence, with pools in place to manage the stores more efficient by reducing the risk of low
stock car or even eliminate bottlenecks.
Market Segmentation
Most companies profit in the whole group of the type of cars that are rented. The primary
categories are economy, compact, intermediate, premium and luxury. Among the five
categories, the income from the commercial sector will benefit the most. For example, the
economy segment is solely responsible for 37.7 percent of total market revenue in 2004.
Furthermore, the compact segment made for 32.3 percent of total sales. The rest of the other
categories include the remaining 30 percent – this in the US market.
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Historic levels of profitability
Over the past five years, the auto rental industry, and the travel industry as a whole, has
been in a major fight. In fact, right after 9-11 and continuing into 2003, the U.S. market, saw a
moderate reduction in the level of profitability. In particular, revenues fell from $
19,400,000,000in 2000 to $18,200,000,000in 2001. Subsequently, the sector's total revenuein 2002 further eroded $17.9 billion dollars, an amount just equally the smallest revenues in
the past decade of $ 17.7 billion in 1999, the total turnover is minimal for the year. In 2003,
the industry has suffered material gain just brought to $ 18.2 billion. As a result of the
economic crisis in recent years, the younger players who were/are highly dependent on air
transport have seen their businesses grow more slowly. These smaller “majors” have
adopted a consolidation strategy as a way their companies will cope and grow with the
hardships that surround them. For 2004, on the other hand, the economic situation of most
companies have improved after years in the industry. For example, Enterprise has an annual
turnover of $7,400,000,000; Hertz and Avis sales of $ 5,200,000,000 and
$2,900,000,000respectively for the 2004 fiscal year. According to analysts, the rental car
industry is expected to experience steady revenue growth of 2.6 percent in the coming
years, leading to increased profits.
Competitive rivalry among sellers
There are many factors that affect competition within the car rental industry. In recent years
expanded the fleet size and increase in profitability was the focus of most car rental
companies. Enterprise, Hertz and Avis are among the leaders in both higher revenue and fleet
size. Moreover, strong competition, as companies are constantly trying to improve their
current conditions and offer more to consumers. Enterprise has nearly doubled the size of the
fleet from 1993 to about 600,000 vehicles today. Because the industry is working on suchtight profit margins, competitive pricing is not important, but most companies are actively
involved in creating and values offers a range of gadgets to satisfy even a rent-free for
customers. Hertz, for example, integrated its Never-Lost GPS system in his car. Enterprise, on
the other side uses sophisticated yield management software to manage their fleets. Finally,
using its OnStar system “ Skynet” Avis offers its best customers a free weekend rental if a
customer rents a car for five consecutive days. The companies face high fixed operating costs
including insurance rent property, and maintenance. Consequently, the car rental prices are
sensitive only to recover operating costs and to meet its customers' needs adequately.
Furthermore, because the sector has experienced slow growth in the last few years due to
economic stagnation and led to a massive drop in business travel and leisure sector, including
industry-leading companies are more aggressively trying to reposition its business arena
through a gradual reduction of dependency on airlines and regain their competitive position in
your free time.
The potential entry of new competitors
In the post- 9-11 environment new-comers Start the car rental industry is a serious
disadvantage – specifically in the immediate aftermath. In recent years, begun after the 2001
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economic recession, most major car rental companies increased their market share in the
holiday sector as a way of ensuring stability and reduces the level of dependence between the
airline and car rental. While this trend for existing businesses has produced a long-term
success, it has increased the level of competition for new arrivals. Constantly monitoring
increases in competition, existing businesses, such as Enterprise, Hertz and Avis are always
looking at the business environment to develop new strategies to inhibit new entrants.Another barrier to entry is created by saturation in the industry. Today, an Enterprise rental
location is within 15 miles of 90 percent of the U.S. population. Because of the network of
dealers Enterprise has established a business model is relatively stable, recession proof and
more importantly, less dependent on air transport than its competitors. Hertz, on the other
side, uses the full range of its 7,200 branches to consolidate its market position.
The threat of substitutes
There are many substitutes available for the rental car industry. From a purely convenience
point of view, to rent a car and to travel some distance for a meeting , is a less attractive
alternative to video conferencing, virtual teams and /or collaboration software that a company
may install, allowing for colleagues to meet from around the world at a cheaper price. There
are also other alternatives such as a taxi, a satisfactory substitute based on quality and costs
of the activity, but may not be attractive as a rental car for the course of a day. While public
transport is the least expensive alternative is more expensive in terms of process and how
long it takes to achieve his goal. Finally, flying because it offers comfort, speed and
performance, compensation is very attractive, but it is an unattractive alternative in terms of
price than renting a car. At work, the car rental companies have more protection against
substitutes, as many businesses have implemented travel policies that define the parameters
for when renting a car or a replacement is the best fit.
The bargaining power of suppliers
The most significant weapon the auto rental industry has is low “daily” rate. Because of the
availability of substitutes and the degree of competition, suppliers have little influence on the
conditions of supply of cars for hire. Since rental cars are usually purchased in large
quantities have a significant impact on car rental sales agent, while playing off the ability of
one supplier against another to get the lowest price. Another factor that reduces service
providers is the lack of switching costs. This means that the buyer is purchasing a hand on the
other, and mainly affected the conversion products are barely perceptible another supplier,
and does not affect consumer decisions to use one rental car company over another.
The bargaining power of buyers
While the leisure sector has little or no power, the corporate sector has a major influence in
the car rental hire decision. An interesting development is on-going, currently the industry one
which is aligning car rental clients with the needs of society. This trend has significantly
reduced the purchasing power of suppliers or rental companies and has increased the
awareness of corporate values such as: (i) the business community is painfully sensitive to
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price, (ii) the business community is well informed on the impact they play in the market and
the power of their large purchases, and (iii) using the Internet to force prices lower. Holiday,
leisure buyers, on the other hand, have less impact on the conditions of hire. Why tourists
are generally less price sensitive, buy in small quantities or buy less frequently, resulting in a
weak negotiating position.
Five Forces
Today, the rental car industry is facing a completely different context than five years ago.
Competitively speaking, the revolution of the five forces of all the car rental industry carries
some strong economic pressures, the industry has significantly tarnished the attractiveness of
the competition. As a result of the economic crisis in recent years, many companies went
under budget, and this is the avant-garde group, because their business infrastructure,
succumbed to the instability of the competitive situation environment. Today, few companies,
including Enterprise, Hertz and Avis again slightly above the average sales increase compared
to the rest of the industry. Realistically, car rental industry, is attractive in niche markets, this
is because the industry, the degree of competition, barriers entry and competitive pressures
from companies replaced.
Strategic Group Mapping
As a moderately concentrated industry there is a clear hierarchy in the car rental industry.
From an economic standpoint, the differences from a number of dimensions including
revenue, the fleet size and market size of the company. For example, Enterprise dominates
the sector with a fleet of 600,000 vehicles, with its market size and profitability. Hertz is in
second place with its number of market share and fleet volume. In addition, Avis is third on
the card. Avis is a leading in the use of new applications using its revenues from margin to theeconomic crisis. For example, in 2000, returned Avis sales of approximately $ 4,230,000,00.
Over the next few years after 2000, revenues of Avis were significantly lower than in 2000. As
a way to reduce uncertainty, most companies are gradually reducing the dependency on air
transport and recreation emerging. This trend is not in the best interest of Hertz since its
business strategy is expensive airports in the report.
Key success factors
There are many important factors, the profitability of the entire car rental industry. Capacity
utilization is one factor that determines the success of the sector. In the rental car industry
companies experience loss of revenue, too few or too many cars sitting in their lots, so it is of utmost importance for the efficient management of the fleet. This success factor, fleet
management, is a strong point for the industry as it is the very core of the business. Efficient
distribution is another factor that keeps the industry profitable. Despite the positive
relationship between fleet size and the level of profitability, the company is increasing the size
of its fleet because of the competitive forces surrounding the area. Moreover, the convenience
is one of the key features consumers take into account when selecting rental companies. That
is, consumers are more prone to car rental companies, car rentals are cheaper and drop-off
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locations. Another important success factor is technology, which shared between competitors
is to integrate technology in your business. Through technology, for example, it is possible to
better manage rental car fleets, increase consumer demand for rental car. Moreover,
companies with navigation systems offer customers piece of mind sharing integrated to hire a
car.
Industry attractiveness
There are many factors that influence the attractiveness of the car rental industry. Because
the industry is moderately concentrated, puts new entrants at a disadvantage. That is, its
low concentration is a natural barrier to enter the sector because it allows existing firms to
consider retaliatory measures against the new sharp. Because of the risk factors associated
with entry into the sector, among other things, is not a very interesting market. From the
standpoint of competition, the leisure market is 90 percent, because the active involvement of
enterprises in this sector of the market is dominated by leaders. On the other side of the
terminal facilities are heavily guarded by Hertz. Realistically, the entry offers low profitability
compared to the costs and risks. For most consumers are the most important factors when
choosing a company over another price and convenience. For this reason, leasing companies
are very careful about setting their prices, the major industry players position offers
consumers more for less, just to remain competitive in order. Hertz, for example, offers
wireless Internet, customers can simply add more convenience of their travel plans. Avis
offers the other side gives a free weekend, when a customer rents a car for five consecutive
weekdays. Based on the effects of the five forces, the rental car industry is a sector very
attractive for potential entrants.
Completion
The rental car industry is in a state of recovery. Although it may seem like the industry
are doing well economically, is still slowly gatheringin proportion to the actual economic
situation over the past five years. As a kind of insurance profitability next to the search market
share and stability, most companies in the chain have a common goal, that the reduction in
the level of dependence of the airline industry and moving towards the leisure segment . This
state of the movement has created some competition between the shares of industry
seeking to protect market competition fierce, his. From a futuristic perspective the best days
of car rental sector are yet to come. As profitability increases, I believe that industry leaders
including Enterprise, Hertz and Avis and newcomers will be mostly limited to competitive and
economic barriers to the mobility of their strategic groups through greater opportunity to
infiltrate and achieve success, the car rental industry.
Market Overview
Puerto Rico
The economy of Puerto Rico is one of the most
diverse in the Caribbean region. Services and
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industrial production have surpassed agriculture as the primary focus of economic activity and
income. Encouraged by duty-free access to the US and by tax incentives, United States firms
have invested heavily in Puerto Rico since the 1950s. US minimum wage laws apply. Sugar
production has lost out to dairy production and other livestock products as the main source of
income in the agricultural sector. Tourism has traditionally been an important source of
income for the island, with estimated arrivals of nearly 5.9 million tourists in 2007.
Population: 3,966,213 (July 2009 est.)
3,808,610 (Census 2000 Population)
Interesting Fact
Puerto Rico's population density of 1,100 people per square miles is among the world's
highest - only Bangladesh, The Maldives, Barbados, Taiwan, South Korea and the city-states of Hong Kong and Singapore are more crowded.
The population is 3.8 million, although about another 2 million Puerto Ricans live in the USA.
The Census Bureau publishes estimates of total population and demographic components of
change (births, deaths, and migration) for the Commonwealth of Puerto Rico and its 78
municipios (municipalities). A municipio is the government unit that is the primary legal
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subdivision of Puerto Rico; the Census Bureau treats the municipio as the statistical equivalent
of a county.
Population Density: 1,127 density per sq mi/435 persons per sq km (2004 est)
Population Split: Urban 71%; Rural 29%
Population Growth Rate: 0.298% (2009 est.)
Population Projection: 4,438,000 (for 2010).
Population Doubling Time: 88 years (2002)
Total Urban Population: 2,664,000
Migration:
According to the 1990 Census of Population and Housing, 2.7 million Puerto Ricans reside in
the U.S., of which approximately one half are second and third generation, having been born
in the mainland.
Net migration rate: -0.96 migrant(s)/1,000 population (2009 est.)
Urbanization:
urban population: 98% of total population (2008)
rate of urbanization: 0.8% annual rate of change (2005-10 est.)
Birth Rate: 11.72 births/1,000 population (2009 est.)
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Death Rate: 7.78 deaths/1,000 population (July 2009 est.)
Age Structure:
0-14 years: 19.9% (male 404,635/female 386,733)
15-64 years: 66% (male 1,260,114/female 1,361,193)
65 years and over: 14.1% (male 240,318/female 318,027) (2009 est.)
Median Age:
total: 36.2 years
male: 34.5 years
female: 37.9 years (2009 est.)
Sex Ratio:
at birth: 1.05 male(s)/female
under 15 years: 1.05 male(s)/female
15-64 years: 0.93 male(s)/female
65 years and over: 0.76 male(s)/female
total population: 0.92 male(s)/female (2009 est.)
Marriage Rate: 9.2 per 1000 persons
Divorce Rate: 4.47 per 1000 persons (2004)
Life Expectancy at Birth:
total population: 78.52 years
male: 74.86 years
female: 82.36 years (2009 est.)
Family Average Size: 3.5 people
Ethnic Composition: white (mostly Spanish origin) 76.2%, black 6.9%, Asian 0.3%,
Amerindian 0.2%, mixed 4.4%, other 12% (2007)
Education:
Today, education is a matter of high priority for Puerto Rico, it is evident in the island's overall
literacy rate of 90 percent and its budget for education, approximately 40 percent. Education
is obligatory between 6 to 17 years old. Primary school consists of six grades; the secondary
levels is divided into 2 cycles of 3 years each. The school term in public schools starts in
August through mid-December and January through late May.
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The school system is administered by the Department of Education and has several levels of
learning. The language used in the schools is Spanish, however, English is taught from
kindergarten to high school as part of the school curriculum. Some private schools provide
English programs where all classes are conducted in English except for the Spanish class.
Puerto Rico has more than 50 institutions of higher education. Puerto Rico has achieved one of the highest college education rates in the world (6th) with 56% of its college-age students
attending institutions of higher learning, according to World Bank data.
Registered Students by Education Levels: (1998-99 academic year)
Elementary ........ 350,714
Secondary ........ 144,157
High School ........ 114,684
University ........ 168,000 (estimate)
Registered Students by School Groups: (1999-2000 academic year)
Public Schools ....... 612,793
Private Schools ....... 149,000
Schools: 1,532 public schools, 569 private schools and 44 universities. (1999)
Literacy Rate:
definition: age 15 and over can read and write
total population: 94.1%
male: 93.9%
female: 94.4% (2002 est.)
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III. COMPETITION
Tier I -- Major Rental Car Firm – Full Service – Airport presence
Tier II -- Major Rental Car Firm – Full Service – Off Airport presence
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Location(s): Airport,
Aguadilla, Cabo Roja,
Condado, Ponce
Ownership: (1953) Puerto
Ricancars, Inc., Puerto
Ricancars Transporting ,
Inc., Puerto Ricancars Fleet,
Hertz Puerto Rico Holdings,
Inc., Mr. Craig R. Koch, (63)
CEO
Location(s): Airport,
Aguadilla, Ceiba, Hatillo
Condado, Mayaguez, Ponce
Ownership: Avis Rent A Car
de Puerto Rico, Inc., Mr.
Sean Slater PR & USVI Gen.
Mgr.
Tel: 787 253 5925
Location(s): Airport,
Aguadilla, Añasco, Ponce
Ownership: Avis Budget
Group, Inc., Mr. Sean Slater
PR & USVI Gen. Mgr.
Tel: 787 253 5925
Enterprise Rent-a-Car
Location(s): Carolina,
Aguadilla, Fajardo,
Ponce
Ownership: Enterprise
Rent-a-Car, Inc., Mr.
Neil Hafer, Group VP –
Gen.Mgr .
Tel: 314 512 4178
Thrifty Car Rental
Location(s): Carolina,
Aguadilla, Fajardo,
Ponce, Mayaguez,
Culebra
Ownership: Dollar
Thrifty Automotive
Group, Inc., Hertz.
Inc.
Dollar Car Rental
Location(s): Carolina,
Aguadilla, Isla Verde,
Ponce
Ownership: Dollar
Thrifty Automotive
Group, Inc., Hertz.
Inc.
Payless Car Rental
Location(s): Carolina,
Ponce
Ownership: Avalon
Global Group
SIXT Car Rental
Location(s): Santurce
Ownership: Sixt
Leasing AG.
(joint venture with
Quality Car Rental)
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Tier III - - Local Car Rental Companies
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Charlie Car Rentals
Location(s): Carolina,
Aguadilla, Isla Verde,
787 728 2418
Target Rent-a-car
Location(s): Carolina,
Bayamon, Cayey, Rio
Piedras, Barceloneta,
Isla Verde, Caparra,
787 728 1447
Acevedo’s Car Rental
Location(s): Vieques
787 741 4380
Allied Car & Truck
Rental
Location(s):
Aguadilla,Caguas,Cond
ado,Isla Verde,Manati
787 726 7350
Angelo’s Car Rental
Location(s): Rincón
787 741 4380
Barranquitas Car
Rental
Location(s):
Barranquitas
787 857 7283
Bella Intl. Car Rental
Location(s): Puerto
Nuevo, Hato Tejas
787 620 7484
Cabo Rojo Car Rental
Location(s): Cabo Rojo
787 851 8055
Cabrera Car Rental
Location(s): Carolina
787 791 4444
Cabrera Renta Diaria
Location(s): Hatillo
787 880 8080
Calesa Car Rental
Location(s): Caguas
787 747 9343
Carlos Jeep Rental
Location(s): Culebra
787 742 3514
Cars Rentals
Location(s): Bayamon
787 740 2277
Champion Rent-a-Car
Location(s): Caparra
787 782 3232
Chejo Auto Rental
Location(s): San
Sebastian
787 280 1105
Chepito’s Car Rental
Location(s): Vieques
787 649 2542
Dick & Cathie’s Car
Rental
Location(s): Culebra
787 742 0062
Economy Car Rental
Location(s): Toa Baja
787 784 3875
Island Car Rental
Location(s): Vieques
787 741 1666
Jerry’s Jeep
Location(s): Culebra
787 742 0587
Lanes Car RentalLocation(s): Carolina
787 268 6161
Leaseway of PuertoRico
Location(s): Cataño,
Hato Rey, Isla Verde,
Ponce, San Juan
787 791 5900
Marcos Car RentalLocation(s): Vieques
787 741 1388
Maritza Rental CarLocation(s): Vieques
787 741 0078
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Figure IV - CONCENTRATION OF CAR RENTAL COMPANIES
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Martineau Car Rental
Location(s): Vieques
787 741 0087
Quality Car Rental
Location(s): Santurce
787 727 6300
Ramar Auto
Location(s): Humacao
787 852 0015
Romero Rent a Car
Location(s): Rio Piedras
787 767 3004
SS Car RentalLocation(s): San
Sabastian
787 896 1184
Salinas Car RentalLocation(s): Salinas
787 824 4142
Universal Car RentalLocation(s):
Barceloneta
787 846 2600
U Save Car & TruckRental
Location(s): Condado,
Isla Verde,
787 717 7368
Vias Car Rental of PR
Location(s): Dorado,
Humacao, Isla Verde
787 791 2600
Vieques Car & Jeep
Rental
Location(s): Vieques
787 741 1037
World Car Rental
Location(s): Fajardo
787 860 4808
Zambrana Car Rental
Location(s): Bayamon
787 778 0000
Regional Car Rental
Location(s): Isla Verde
787 851 8055
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Competition Spotlight – Charlie Car Rental
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IV. RENTAL OPERATIONS
LEBAR AUTO SERVICES will focus on two distinct, but related services (a) the rental of cars and
(b) the sale of cars. Each of these services will be different from the competitions current
offering by focusing on tailoring the service to uniquely fit the clients economic capacity,either in the amount of time rental period or in tailoring sales packages that take into account
the budget limitations of the middle to lower middle market client.
Fleet Composition:
Standard Rental - The fleet composition of the traditional rental fleet will be the following:
The launch fleet composition will have XX vehicles - the breakdown is the following:
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Econom
yCompact Mid-Size Full Size SUV Mini-Van
Specialt
y
(Jeep)
# of
Units
35 25 15 5 10 5 5
% of
Fleet35 25 15 5 10 5 5
$ per
Unit$8,850 $9,250 $11,050 $13,600 $13,600 $13,600 $19,400
Total $309,750 $231,250 $165,750 $68,000 $136,000 $68,000 $97,000
Launch Locations:
San Juan Airport Locations
Laguna Shopping Center
Advantages: Proximity to Luis Munoz Marin Intl Airport.
High Customer Traffic Good for
local rental
Disadvantage: Parking for rental fleet
Surrounded by competition
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Norte Shopping Center
Advantages: Secure Parking for rental fleet.
High Customer Traffic Good for
local rental
Disadvantage: Surrounding neighborhood
Further from airport
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Car-Sharing - The composition of the Car-Sharing fleet will be the following:
Mini
Cooper
BMW 1
SeriesSmart
Fortwo
# of
Units8 8 9
% of
Fleet
40 40 20
$ per
Unit
19,975 29,750 13,550
Total $159,800 $238,000 $121.950
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Launch Location(s) : Hato Rey -- there needs to be 3 locations in Hato Rey – so that there is
no more than a 2 block walk to get to a car.
Base #1 Base #2
Base #3
Banco Popular Center McConnel Valdes BldgT-Mobile Bldg
Advantages: Advantages: Advantages
Disadvantages: Disadvantages
Disadvantages
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Hours of Operations:
The rental office hours of operations will be from 0600hrs until 2345hrs 7 days per week. The
following shifts are required:
SHIFT START TIME END TIME PERSONNEL
OPENING 0555HRS 1355HRS COUNTER/LOT
SWING 0900HRS 1700HRS MANAGER
CLOSING 1545HRS 2345HRS COUNTER
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INSURANCE:
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VIOLATION MANAGEMENT:
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V. SALES & MARKETING
Positioning & Target Audience
To be a leading car rental agency in Puerto Rico while posting top of industry profitability,
LEBAR AUTO must offer a value proposition to both the consumer and corporate saleschannels that compels high rates of trial and repeat purchase. In an era when car rental often
resembles a commodity purchase – with the lowest price winning, LEBAR AUTO will, simply
put, offer “Rent Only As Much As You Need,” a compelling package of cost, availability,
convenience and quality via efficient, customer-centric, high value, “cost per use” car rental
service. LEBAR AUTO will provide (i) clean late model cars; (ii) pricing plans that offer the
most value for the client dollar; and (iii) locations that are easily accessible.
Rather than solely chasing the tourist trade like so many other rental car companies here in
Puerto Rico, LEBAR AUTO initial target audience will be the local market, (i) clients who do not
have credit cards, (ii) clients who prefer to rent on an hourly basis, (iii) local companies that do
not have a corporate vehicle, (iv) clients who rent on the weekends, (v) insurance and repair
clients, and (vi) clients who are interested in a rent to buy.
Channels
Puerto Rico and the latino culture is a market noted for relationship-based sales channels.
Consequently, LEBAR AUTO will employ a two-stage strategy with first-stage growth in Years 1
to 3 via local activities:
Local Marketing: Advertising via flyer, radio and word-of-mouth, FaceBook and Twitter
Website Marketing: In-bound tourist via website, Travel Search Engine sites (Kayak)
LEBAR AUTO shall also engage in direct sales to the trade and consumer, seeking to develop
traffic with programs to engage the target audience, organizations and companies, via the
website, inbound call center and kiosks.
The direct sales structure will grant LEBAR AUTO several key benefits:
• Speed to Market. This strategy enables the Company to simultaneously entermultiple geographic markets, services (rental, rent to buy, used car sales) andchannels.
• Diversification. The Company will not be dependent upon a single individual orentity, ultimately with no more than 30% of total sales generated by one revenuestream. Finally, marketing expenses are spread among the entities/markets, offering agreater range in customer and sales development.
• Marketing Costs. A key challenge for a start-up consumer service is the marketingexpense: where and when to invest in sales, advertising, marketing, publicity andpromotion programs to spur the growth of customers and sales? Under this structure,LEBAR AUTO leverages existing and ongoing relationships that specific parties mayhave in their markets.
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Pricing
The rates in the market are established by the large rental car companies that are marketing
to the in-bound tourist. The prices noted below do not include optional insurance(s) (CDW or
PIA) that are standard in the car rental industry. LEBAR AUTO pricing strategy focuses on
providing only as much car rental time that the client requires, so instead of competing on
daily rental rates – LEBAR AUTO seeks to provide flexible rental models that allow clients to
purchase car rental in minutes, hours or days.
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Marketing, Advertising, Promotion and Publicity
LEBAR AUTO shall : (i) generate public awareness, (ii) establish a clear brand identity, (iii)
promote trial purchase, and (iv) increase frequency of use, both among intermediary 3 rd
parties (trade) and end-use flyers (consumers) in each geographic market it enters and in
each channel it operates.
The Company realizes that the most cost-effective way to achieve profitability is through
acquiring new customers by word-of-mouth and repeat purchases. As a value-priced service,
LEBAR AUTO will develop and maintain low customer acquisition costs and unit sales costs (on
a revenue basis 10% in Year 1, declining to 5% in Year 5). Entry into each new geographic
market and/or category will be accompanied by an aggressive promotion and publicity
program targeted to the communities that influence car rental purchases: (i) travel and leisure
industry, (ii) general and trade press, (iii) business and political community, and (iv)
entertainment and style notables. Consistent quality service supported by selective
sponsorships, product placements and innovative general advertising, will be matched with a
focused direct marketing program targeting the travelers and trade (see Figures 11 and 12
below).
These programs shall seek to make LEBAR AUTO a readily recognizable brand among not only
in-bound travelers and the travel community, but also with the local car rental client with a
clear identity of “Rent Only As Much As You Need” and LEBAR AUTO’s comparative advantage
to other car rental companies.
Figure 11 Figure 12
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VI. SERVICE, TECHNOLOGY & ADMINISTRATION
SERVICE
LEBAR AUTO will use the services of Rent-A-Wreck and PRICELESS Rent-A-Car for the
structural foundation of the company. The advantages of the franchise system primarily
relate to having a tested structure with models and processes that have yielded success.
LEBAR AUTO will begin with an off-site Airport location and an in-city location. The services at
the two locations will be different – the off-site Airport location offering traditional car rental
products, rent to buy and used car sales, the in-city location offering the Car-Sharing program.
TECHNOLOGY
There are two different technology suites that will be required. The traditional rental will be asystem that is offered by BlueBird (though Rent-A-Wreck and PRICELESS Rent-A-Car call it
“Web-Rent), a New Jersey based car rental software developer. The Car-Sharing program will
use eileo – this system is specifically for car-sharing programs and includes all of the
interfaces that allow the program to operate in a non-traditional manner.
Blue Bird:
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Eileo:
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Website Technology:
Technology and the Internet have profoundly altered financial models of the car rental
industry. Enterprise and Hertz report over 70% of bookings take place on proprietary websites.
Third party internet-based travel services (e.g., Expedia, Orbitz, Travelocity and
CheapTickets.com) and opaque websites (e.g., Hotwire and Priceline.com) have become major
factors as well built a large business of direct-to-consumer (“DTC”) sales in a short period of time by cutting out the high-cost intermediaries and making prices transparent . Car rental
companies have used technology to rapidly grow sales while smaller independent car rental
firms have not followed the trend. While lagging, these forces will likewise prevail in the
Puerto Rico car rental industry industry due to (i) the smaller size of market, (ii) the weak
financial condition of smaller independent car rental companies, (iii) a technology
infrastructure reliant on high-cost, legacy global distribution systems (“GDS”) (e.g., Sabre,
Amadeus and Galileo), and (iv) poor management processes and systems incompatible with
running a profitable car rental business.
LEBAR AUTO services will develop a robust website that will enable clients to book
reservations in real-time. More importantly LEBAR AUTO will hire an top-notch Search EngineOptimization consultant that understands the car rental business and the client purchase
patterns that are found in an web-enhanced market place.
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BAY STREET – Search Engine Optimization Consultants
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Administration
LEBAR AUTO’S business model separates core from non-core activities. Core activities, those
that pertain specifically to running a car rental business, such as marketing, finance, fleet
operations, and general management are handled internally, non-core activities are
outsourced to companies that specialize in those fields. LEBAR AUTO’s back-office accountingis a perfect example of our outsourcing strategy.
Professional Services
The Company has retained the following professional services to advise PRINAIR in the
development and operations:
Legal
General Counsel – Ferraiuoli Torres, Marchand, Rovira, P.S.C., San Juan (Fernando Rovira)
Financial & Administrative
Accounting – Cordero CPA & Co., P.S.C., (Sergio Cordero)
Marketing
General Advertising – ARCO Publicidad, San Juan (Michelle Menedez, Creative Director)
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VII. MANAGEMENT
PRINAIR’ management team brings diversity of talent and experience, from international
investment banking to senior management of a leading Caribbean regional airline (key: †
officer ‡ director).
Officers
Salomon Levis, Chairman/CEO Managing Member
Mr. Levis is the Chairman/CEO and Managing Member of LEBAR AUTO. Mr. Levis brings
years of business experience to the company, including experience in start-up companies.
Mr. Levis is the founder of Doral Bank, and was the Chairman/CEO when the bank was
taken public on the New York Stock Exchange. Mr. Levis will be responsible for overall
strategy and direction of the company.
Marc Baron, President, Member
Mr. Baron is responsible for overall operations. Mr. Baron brings start-up experience to the
table, which includes developing strategies from inception to implementation. In the past 7
years he has worked as a senior consultant for Clayton Capital, an M&A firm that focused
on middle market companies. In the past 3 years Mr. Baron was involved in the
restructuring of two companies in the material handling industry (Clarklift of
California/Industrial Material Handling Systems), each with gross revenues of $20 million.
Mr. Baron was awarded a B.S. from Howard University and a J.D. from Univ. of MiamiSchool of Law.
Raquel Buitrago Corredor, Vice President – General Manager
Dra. Raquel Buitrago C. has been involved in the tourism industry for 18 years. She
graduated from, Bogotá, Colombia with a degree in Tourism Administration. She has
focused her professional development in marketing of tourism and developing new tourist
markets in Colombia. Her professional career has taken her to assignments in the United
States, Western Europe and the Middle East. She is the President of Pacific Hoteles
Colombia, which is the Master Franchiser for Choice Hotels International (NYSE:Choice) inColombia.
Open Positions
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Operational Manager (to fill 1st quarter 2011). Oversee and manage the majorfunctional areas of PRINAIR’ information technology including reservation systems andwebsite maintenance.
IX. BUSINESS RISKS
Starting an airline (air service) is speculative in nature, involves a high degree of risk and
should not be made by any party who cannot bear the risk of pursuing a transaction with the
Company. Accordingly, prospective parties should consider carefully the following risk factors,
in addition to all of the other information presented in this Business Plan, before pursuing a
transaction with the Company. This Business Plan contains historical information and forward-
looking statements that involve risk and uncertainties. The Company’s actual results could
differ materially from the results discussed in the forward-looking statements. Factors thatcould cause or contribute to such differences include but are not limited to those below as well
as those elsewhere in the Business Plan.
Sales
• Loss of general sales agent(s) or alienation of sales intermediaries (e.g., travel agents).
• Weak consumer or trade awareness.
• Failure to develop consumer or trade acceptance.
• Extraordinary price pressure from consumer or competitor.• Slow internet penetration.
Competition
• Dominant players become anticompetitive and/or destructively opportunistic.
• Government consistently takes protective action for larger companies
• Vamanos fails to achieve critical mass to fuel organic growth and pursue strategicobjectives.
Tourism
• Cyclical nature of tourism industry.
• Sustained rise in fuel costs.
• Hurricane in Caribbean
General Business
• Sustained economic downturn (recession).
• Failure to hire and retain key personnel.
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VIII. IMPLEMENTATION The implementation plan below defines the objectives and milestones for LEBAR AUTO since
its inception (October 2010) and through its first year of operation (2011).
Achieved Milestones PRICELESS Rent-A-Car – October 2010
Received franchise disclosure document
LEBAR AUTO - October 2010
Business plan developed
Pre-Launch Milestones
Corporate Entity Formed – November 2010 (Corporate)Completed formation of LEBAR AUTO SERVICES, LLC.LEBAR AUTO SERVICES, LLC registered and approved to do business in Puerto Rico.
Rental Locations – December 2010 ( Operations)Letter of Intent is signed for rental locations.
Franchise Purchase – December 2010 (Corporate)
Rent-A-Wreck / PRICELESS rent-a-car franchise is purchased
Reservation System – December 2010 (Service, Technology & Administration)Agreement signed with eileo for system construction (car-sharing)
Key Management Position Filled – December 2010 (Management)Commitment received to fill positions of Operational Manager.
Funding – January 2011 (Finance)Funding and Credit Facilities are executed for fleet acquisition
Sales Channels - November 2010 (Sales & Marketing)
Website is commissionedSearch Engine Optimization consultant is secured
Year 1 Milestones
Rental Operations Traditional car rental operation – 100 vehiclesCar-Sharing operation – 20 vehicles
Rental Car Operations
One off-site Airport locationHato Rey “in-city” site with – 3 PODS
Financials & Metrics
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5/17/2018 Lebar Auto Bplan - slidepdf.com
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VIII. FINANCIAL
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