Dollar Thrifty Automotive Group has raised its full-year 2010 adjusted earnings expectations, with falling costs cited as a key factor.

In a statement to markets, Dollar said its corporate adjusted earnings before interest, taxes, depreciation and amortisation will now range between $240 million and $260 million for 2010.

This represents a $40 million increase from the car rental company’s previous guidance, issued earlier this year.

The car rental giant credited an improved estimate on operating performance and cost control efforts as reasons for the change.

Lower fleet costs – with Dollar lowering its target for the full year to between $230 to $240 per unit, per month – were also key.

Moving into 2011, Dollar expected a cost of $300 to $310 per unit, per month.

Dollar anticipates demand for used cars will be firm next year, while supply remains somewhat constrained.

Overall, however, it expects the used car market will be slightly less robust next year than it is right now.

Takeover

Dollar Thrifty is presently at the centre of a bidding war between rivals Hertz Global Holdings and Avid Budget Group - both of which are seeking a takeover.

Shareholders in Dollar Thrifty are expected to vote on the proposed $1.2 billion Hertz deal later this month. However, stakeholders are challenging the decision to hold the vote in light of the rival bid from Avis.

Ahead of the vote Hertz chairman Mark Frissora questioned the competition implications of a Dollar-Avis merger. 

He explained: “The major value brands in the car rental market at US airports today - Budget, Dollar, Thrifty, Alamo and Enterprise - effectively control this key leisure rental segment.

“If Avis Budget merges with Dollar Thrifty, all of these brands and, thus, the value leisure segment, will be controlled by either Avis or Enterprise, and that is a bad deal for car rental customers.

“The data support the same conclusion, which is why a Hertz merger with Dollar Thrifty is better for consumers as well as our respective shareholders,” he added.

The latest Dollar Thrifty earnings estimates exclude costs related to the proposed deals.

Shares in Dollar Thrifty slipped a penny to $47.03 in aftermarket trading after falling 69 cents to $47.04 during the regular session yesterday.