Question-and-Answer Session
Operator
(Operator instructions). Your first question or comment is from the line of Jim Barrett with CL King & Associates.
Jim Barrett - CL King & Associates
Good morning, everyone. Joe, could you talk a bit about pricing and competition? As you know, your number one competitor reported Tuesday night and indicated that pricing was flattish to down slightly, that one-way moves had improved their mix. What is your view of the world on those two metrics?
Joe Shoen
And just between you and me, who is this?
Jim Barrett - CL King & Associates
Oh, okay. We were talking Avis Budget.
Joe Shoen
Okay. Avis Budget. Okay, great. Okay.
Jim Barrett - CL King & Associates
I know you don't have much competition, but that was who I was referring to.
Joe Shoen
Well, we have lots of competition, and as I think we consider our biggest competition to be owned and borrowed, in other words, and not Avis or Budget or the rest of those people. Well, from what I see, budget specifically is pricing in a way that won't be sustainable. For them to come to that conclusion they may have to go through a whole equipment cycle, which for them is three or four years; I don't know how long they consider their equipment cycle. In other words, they need to go sell the trucks and replace them and see whether they made any money or not.
Our equipment cycle is closer to an eight year to ten-year cycle. But when I see them, I've seen them repetitively pricing below the cost of the rental. Now, in a lot of markets, I can still price in a manner that allows us to recover our full cost and some margin, but not in every case. And from its anecdotal evidence if somebody said, well Company X was $200 cheaper, that's why we took them. Okay, well great. The pricing system you see with our competitors its not -- do your own monitor. Take the total price the one way move; divide them into the miles that would give you a $1 per mile or cents per mile. Multiply times 100,000, which is about where they're going to flip that truck, and see if you want to run that truck for that much money and have to sell it at the end of the cycle and buy a new one. So that's the equation.
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