Fitch Ratings Affirms Wheels' 'A/F1' Secured Debt; Outlook Stable

NEW YORK--Dec. 3, 2004--Fitch Ratings affirms Wheels Inc.'s (Wheels) ratings as follows:

-- Senior secured debt 'A'

-- Commercial paper 'F1.'

The Rating Outlook is Stable.

Wheels' rating strengths center on its strong asset quality, which is augmented by a comprehensive menu of ancillary vehicle services, and a consistent focus on the vehicle fleet leasing, with the same ownership, for over 65 years. Over 95% of the company's earning assets are composed of open-ended operating leases of vehicles to a customer base that consists largely of investment grade clients. The open-ended operating lease structure has, over time, substantially insulated Wheels from losses related to declining vehicle resale values.

Wheels continues to develop and implement ways of enhancing its services through its fleet management program. The company continually seeks and implements technologies that help customers manage their vehicle fleets and reduce fleet costs. Fitch believes that this has helped the company in its efforts to attract and retain high quality customers.

Although a private company with the same family ownership throughout its history, Fitch notes that Wheels has implemented many of the corporate governance practices that are found in public companies. This includes having a board of directors that is comprised of more than 50% company outsiders as well as an independent directors' review committee that meets with Wheels' outside auditors.

Rating concerns focus on Wheels' weak internal capital formation rate. However, this is more a result of large dividend payments due to limited asset growth between 2001 and 2003. With the domestic economy strengthening, Fitch believes that Wheels' asset growth will resume and earnings retention and internal capital formation will improve to support increased debt levels.

Additional concerns focus on the competitive nature of the fleet leasing business, as Wheels competes against institutions with significantly larger financial resources. To date, the company has successfully differentiated itself through product innovation and strong customer service. Wheels financial flexibility may also be limited by a funding profile that is composed of 100% secured debt, as well as a lack of access to public unsecured debt and equity markets. However, as a private company, the company is not subject to the same pressures from investors encountered by publicly owned companies as well as the costs arising from the implementation of section 404 of Sarbanes-Oxley. With the implementation of a titling trust in 2002, Wheels streamlined its collateral record-keeping process, which should allow the company to enter the term asset-backed market over the near term and thereby further diversify its funding sources.

Based in Des Plaines, IL, Wheels is a top-five provider of fleet leasing and fleet management services. At Aug. 3, 20041, 2004, the company had approximately 197,000 vehicles on operating lease including cars, sport utility vehicles and light trucks. Typical customers have fleet requirements ranging from 100 to over 5,000 vehicles for use by a professional sales force, delivery service, or repair technicians.