July 1 (Bloomberg) -- Dollar Thrifty Automotive Group Inc. plunged the most in 10 1/2 years in New York trading, leading other rental-car companies lower, after saying full-year profit may be less than half its previous forecast.

Dollar Thrifty fell $3.75, or 40 percent, to $5.70 at 4:15 p.m. in New York Stock Exchange composite trading, the most since its initial share offering in December 1997. Avis Budget Group Inc. declined $1.08, or 13 percent, to $7.29, while Hertz Global Holdings Inc. dropped $1.13, or 12 percent, to $8.47.

The three largest publicly traded rental car companies lost money in the first quarter after they couldn't raise prices enough to counter higher costs to purchase vehicles from manufacturers. Dollar Thrifty said the number of cars available to rent industrywide will drop later this year, helping it increase rates.

``Even small fluctuations in margins can lead to significant changes to earnings per share'' for Dollar Thrifty, said Michael Gallo, an analyst with CL King & Associates, who lowered his rating on the stock to ``neutral'' today.

The lower forecast means Dollar Thrifty may fail to meet lending requirements, said Gallo, who is based in New York. Dollar Thrifty's $600 million credit agreement specifies it must maintain a ratio of corporate debt to earnings before interest, taxes, depreciation and amortization of 3.5 to 1, he said.

Credit Waivers

``With $250 million in corporate debt outstanding and the expected Ebitda well below that, we would expect Dollar Thrifty to need waivers,'' he said. ``Given a challenging financing environment, there are no guarantees of this and we believe it is prudent at this time to move to the sidelines.''

Ebitda is now expected to decline to at least $50 million for the year, Dollar Thrifty said.

The car-rental company previously forecast full-year Ebitda of $97 million to $115 million and per-share earnings excluding some costs of $1 to $1.50, Chief Executive Officer Gary Paxton said today in a statement.

Dollar Thrifty had 2007 Ebitda of $107.5 million. The company will release second-quarter results Aug. 5.

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To contact the reporter on this story: Carol Wolf in Cleveland at cwolf@bloomberg.net; Melissa Moser in New York at mmoser15@bloomberg.net.

Last Updated: July 1, 2008 17:14 EDT