The Company’s strategies are aimed at increasing its market share in the car rental business maintaining high returns. In the fleet rental business, it seeks to add value for shareholders by taking advantage of synergies with the car rental business. The Company intends to turn its targets into concrete realities through implementation of the following main strategies:
Organic expansion to take advantage of market potential
- The Company seeks to increase its revenue in each market where it operates, taking advantage of the expected GDP growth and the consequent consumption expansion;
- Investments in infrastructure, oil and gas exploration and the increase in the fairs and events industry should increase demand for car rentals and as a result, will bolster the revenue growth in all business divisions;
- It aims to increment car rental revenues by taking advantage of the growing Brazilian middle class, with the rise in air traffic, replacement car and credit cards, as well as in the sale of decommissioned cars for fleet renewal;
- It will stick to its strategy of consolidating the car rental business in Brazil, keeping rates competitive but at the same time guaranteeing profitability thanks to its scale, searching for increasing its market share;
- By means of its loyalty program, the Company expects to continue encouraging its customers to rent cars more frequently and keep them faithful to its brand. Localiza Loyalty Program, which rewards customers with free rental days, is an important tool that allows expansion of customer base and maintenance of their loyalty to Localiza brand. It is also the Company’s intention to expand its rental network to offer customers more convenience on renting a car;
- It will continue using media such as national newspapers and magazines, in-flight magazines, radio and TV, as well as sponsorship of events, theatrical productions and shows. By maintaining this communication strategy, Company expects to encourage demand for car rental in Brazil; and
- The growing trend toward fleeting outsourcing (resulting from companies that seek to maintain greater focus on the essential lines of their businesses and to reduce non-essential assets) gives us the opportunity to expand the fleet rental division.
Geographic expansion by means of broadening the rental network. The Company has the largest car rental network in Brazil, in number of rental locations, and plans to expand even more the network of owned and franchised rental locations, based on its knowhow and the strength of its brand. Owing to expectations for growth in Brazil countryside, the establishment of new factories in the country’s inland and a rise in the number of Brazilian cities to be served by airline companies, Localiza plans to expand its services in Brazil, strengthening its presence all over the country. In addition, the Company intends to use the franchise system to boost the number of car rental locations inside and outside of Brazil. Its current strategy is to grow organically, rather than to grow through mergers and acquisitions. Furthermore, the projects for construction of rental locations are flexible and easy to adapt, with emphasis on high levels of functioning and low costs. Its rental locations are generally located in strategic spots and are visibly recognized and readily accessible. The Company believes that expectations for Brazilian economic growth justify its geographic expansion strategy.
Maintenance of a solid capital structure and a conservative cash management policy. The Company intends to grow with profitability and operating cash generation, as well as to maintain an adequate indebtedness profile level, obtaining long-term funding in capital markets in order to meet its needs for growth. The Company will maintain its investments in cash-generating fixed assets, which are basically cars for rental that are readily monetized to adjust operating assets to demand in order to maximize productivity. It will also continue to hedge against the risks of currency fluctuations, by placing priority on safety and liquidity when compared to profitability.