Marriage And BEST CAR RENTAL Have More In Common Than You Think

The car rental industry is a multi-billion dollar sector of the US economy. THE UNITED STATES segment of the industry averages about $18.5 billion in revenue per year. Today, there are approximately 1.9 million rental vehicles that service the US segment of the market. Furthermore, there are various rental agencies aside from the industry leaders that subdivide the total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike exotic car rental miami beach , the rental car industry is highly consolidated which naturally puts potential newbies at a cost-disadvantage given that they face high input costs with reduced chance for economies of scale. Moreover, most of the profit is generated by way of a few firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 billion in total revenue. Hertz came in second position with about $5.2 billion and Avis with $2.97 in revenue.

Level of Integration

The rental car industry faces a completely different environment than it did five years ago. According to Business Travel News, vehicles are being rented until they will have accumulated 20,000 to 30,000 miles until they’re relegated to the car or truck industry whereas the turn-around mileage was 12,000 to 15,000 miles five years back. Because of slow industry growth and narrow profit margin, there is no imminent threat to backward integration within the. In fact, on the list of industry players only Hertz is vertically integrated through Ford.

Scope of Competition

There are many factors that shape the competitive landscape of the car rental industry. Competition comes from two main sources through the entire chain. On the vacation consumer?s end of the spectrum, competition is fierce not merely because the market is saturated and well guarded by industry leader Enterprise, but competitors operate at a price disadvantage alongside smaller market shares since Enterprise has generated a network of dealers over 90 percent the leisure segment. On the corporate segment, on the other hand, competition is quite strong at the airports since that segment is under tight supervision by Hertz. As the industry underwent a massive economic downfall recently, it has upgraded the scale of competition within the majority of the companies that survived. Competitively speaking, the rental car industry is really a war-zone because so many rental agencies including Enterprise, Hertz and Avis on the list of major players take part in a battle of the fittest.

Growth

Over the past five years, most firms have been working towards enhancing their fleet sizes and increasing the amount of profitability. Enterprise the company with the biggest fleet in the US has added 75,000 vehicles to its fleet since 2002 which help increase its amount of facilities to 170 at the airports. Hertz, on the other hand, has added 25,000 vehicles and broadened its international presence in 150 counties as opposed to 140 in 2002. Furthermore, Avis has increased its fleet from 210,000 in 2002 to 220,000 despite recent economic adversities. Over time following the economic downturn, although most companies through the entire industry were struggling, Enterprise among the industry leaders have been growing steadily. For instance, annual sales reached $6.3 in 2001, $6.5 in 2002, $6.9 in 2003 and $7.4 billion in 2004 which translated into a growth rate of 7.2 percent per year for days gone by four years. Since 2002, the has began to regain its footing in the sector as overall sales grew from $17.9 billion to $18.2 billion in 2003. According to industry analysts, the better days of the rental car industry have yet to come. Over the course of the next several years, the industry is expected to experience accelerated growth valued at $20.89 billion each year following 2008 “which compatible a CAGR of 2.7 % [increase] in the 2003-2008 period.?

Distribution

Over the past couple of years the rental car industry has made a lot of progress to facilitate it distribution processes. Today, there are approximately 19,000 rental locations yielding about 1.9 million rental cars in the US. As a result of increasingly abundant number of car rental locations in the US, strategic and tactical approaches are considered so that you can insure proper distribution through the entire industry. Distribution takes place within two interrelated segments. On the corporate market, the cars are distributed to airports and hotel surroundings. On the leisure segment, however, cars are distributed to agency owned facilities that are conveniently located within most major roads and urban centers.

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