Lebar Auto Bplan

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LEBAR AUTO

SERVICES, LLC.



October 2010

2



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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mailto:[email protected]






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



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



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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http://www.thecompanymarketing.com/insurance




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

12



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

13



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

14


http://en.wikipedia.org/wiki/Caribbean


http://en.wikipedia.org/wiki/Caribbean



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

15

http://en.wikipedia.org/wiki/Agriculture

http://en.wikipedia.org/wiki/Puerto_Rico

http://en.wikipedia.org/wiki/Tourism

http://en.wikipedia.org/wiki/Agriculture

http://en.wikipedia.org/wiki/Puerto_Rico

http://en.wikipedia.org/wiki/Tourism



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.)

16



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.

17



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.)

18

http://escape.topuertorico.com/explore/education/highedu.shtml

http://escape.topuertorico.com/explore/education/highedu.shtml



19



III. COMPETITION

Tier I -- Major Rental Car Firm – Full Service – Airport presence

Tier II -- Major Rental Car Firm – Full Service – Off Airport presence

20

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


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


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


Aguadilla, Fajardo,

Ponce, Mayaguez,

Culebra

Ownership: Dollar

Thrifty Automotive

Group, Inc., Hertz.

Inc.

Dollar Car Rental


Aguadilla, Isla Verde,

Ponce

Ownership: Dollar

Thrifty Automotive

Group, Inc., Hertz.

Inc.

Payless Car Rental


Ponce

Ownership: Avalon

Global Group

SIXT Car Rental

Location(s): Santurce

Ownership: Sixt

Leasing AG.

(joint venture with

Quality Car Rental)



Tier III - - Local Car Rental Companies

21

Charlie Car Rentals


Aguadilla, Isla Verde,

787 728 2418

Target Rent-a-car


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


787 649 2542

Dick & Cathie’s Car

Rental


787 742 0062

Economy Car Rental

Location(s): Toa Baja

787 784 3875

Island Car Rental


787 741 1666

Jerry’s Jeep


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



Figure IV - CONCENTRATION OF CAR RENTAL COMPANIES

22

Martineau Car Rental


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


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



Competition Spotlight – Charlie Car Rental

23



24



25



26



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:

27



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

28



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:

33



34



35



VIOLATION MANAGEMENT:

36



37



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.

38



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.

39



40



41



42



43



44



45



46



47



48



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

49



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:

50



Eileo:

51



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.

52



BAY STREET – Search Engine Optimization Consultants

53



54



55



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)

56



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

57



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.

58



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

59



VIII. FINANCIAL

60

Documents

Lebar Auto Bplan