Car Rental Industry

Market Overview

Car rental industry is a multi-billion dollar sector of the U.S. economy. The industry average of 18.5 billion dollars in revenue a year, the U.S. segment. Today, nearly 1.9 million rental service that market segment of the U.S. vehicles. In addition, the total revenue section of industry leaders, namely Dollar Thrifty, Budget and Vanguard are in addition to many rental agencies. Unlike other mature service industries, highly consolidated rental car industry, which naturally puts a cost disadvantage because they are new comers in the potential economies of scale are less likely to face the high costs. In addition, some firms, including most of the profit generated by Enterprise Hertz and Avis are. For the 2004 fiscal year, Enterprise 7.4 billion in total revenue generated. Hz with about $ 5.2 billion came in second place with $ 2.97 in content and revenue.

The level of integration

Rental car industry, a completely different environment than it did five years ago faces. According to Business Travel News, the vehicle until they have accumulated 20,000 to 30,000 miles until they gain about five years 12,000 15,000 miles had to turn the used car industry is relegated to being hired is. Slow industry growth and narrow profit margins due to backward integration within the industry for there is no imminent threat. In fact, among the industry players only through Ford's Hertz vertically integrated.

Scope of competition

There are many factors that shape the competitive landscape of the car rental industry are. Competition in the series comes from two main sources. Leave the consumer at the ends of the spectrum, competition is fierce not only because the market is saturated and well protected by the undertaking is the industry leader, but competitors with a small market share of costs after the loss of over 90 dealers have established a network per working holiday section. Corporate segment, on the other hand, competition is very strong at the airports when the tight supervision of the section is under Hz. In recent years the industry has a huge economic collapse, most of the firms survive the competition within the scale has been upgraded. Competitively speaking, the Enterprise Hertz rental car industry, and key players engaging in a battle of the fittest among the rental agencies, including the object as a war zone.

Development

In the past five years, most companies increase the size of its fleet and increase the level of profits has been working towards. Enterprises currently the largest fleet in the U.S. with the company in 2002 to help increase your number of 170 facilities at airports since has added to its fleet to 75,000 vehicles. Hertz, on the other hand, 25,000 vehicles have been added and 150 as against 140 countries in 2002 broadened its international presence. Also, despite recent economic commodity adversities 220,000 from 210,000 in 2002 to increase its fleet. After the economic downturn, most companies were struggling in the industry over the years, industry leaders among the Enterprise was growing rapidly. For example, annual sales reached $ 6.3 in 2001, 2002, to $ 6.5, 7.4 in 2003 and $ 6.9 billion the previous four years in 2004 to 7.2 percent a year growth in the translation. Since 2002, the industry arrived at its position in the total sales of 17.9 billion dollars in 2003 was 18.2 billion U.S. dollars have begun. According to industry analysts, the rental car industry's best days are yet to come. During the next several years, the industry accelerated to 20.89 billion dollars each year since 2008 is expected to experience price increases "in the 2003-2008 period 2.7% [growth] for a CAGR of equates."

Distribution

Over the years, the rental car industry has been a great deal of progress that the distribution Processes. Today, there are approximately 19,000 rental in the U.S. produce about 1.9 million rental cars are places. U.S., strategic and tactical approach increasingly abundant car rental locations are taken into account because of the industry to ensure proper delivery. Distribution takes place in two interrelated areas. Company on the market, cars and hotels around the airport are distributed. Vacation on the block, on the other hand, cars owned agency that is easily the most major roads and facilities are located within metropolitan areas are distributed to.

In the past, rental car companies, managers of the gut - emotion or intuitive decision to rely on estimates about how many cars use a particular fleet or a fleet of some cars to the level of performance standards to used. With that method, it was very difficult balance to a level that consumer demand will be satisfied to maintain the desired level of profitability. Distribution process is fairly simple in the industry. To begin with, managers list of cars that should be done on a daily basis, should determine the number. Because a very important problem arises when too much or not enough cars are available, the Hertz car enterprise rental companies, including commodity, a "pool" which is part of a group that features free rental vehicles basically a fleet. Is in place for use with pools, rental locations and to operate more efficiently since they reduce the risk of less material to eliminate the shortage of rental car is not.

Market segmentation

Most companies in the chain is the type of a car hired by the benefits. Rental cars economy, compact, intermediate, premium and luxury are classified. In addition to the five categories, economic sector is the most profit. For example, the economy in its own section of the total market revenue in 2004 is responsible for 37.7 percent. In addition, 32.3 percent of total revenue, according to the compact segment. Other categories include the remaining 30 per cent for the U.S. section.

Historic levels of profitability

Car rental industry's total profits shrink in recent years. In the past five years, the industry is struggling like the rest of the travel industry. In fact, between the years 2001 and 2003 the level of profits in the U.S. market has experienced a moderate decrease. In particular, revenue of $ 19.4 billion in 2000 fell to $ 18.2 billion in 2001. An amount that is more than the minimum 17.7 billion total revenue for the year 1999, later, the total revenue of $ 17.9 billion industry in 2002 further eroded. In 2003, the industry is a barely noticeable increase profits to $ 18.2 billion brought experienced. In recent years, as a result of economic recession, small players that were highly dependent on the airline industry some of the companies to prepare their strategy realignments as a way to have a great deal of potential economic adversities that industry could be around to cope with. For the year 2004, on the other hand, most companies, the economic situation gradually improved in the industry since most rental agencies far greater than the anterior-year profits have returned. For example, Enterprise 7.4 billion of revenue realized; Hz, with 2.9 billion revenue in 2004 to $ 5.2 billion in fiscal year revenues and the object returned. According to industry analysts, the rental car industry into the next several years to increase profits 26 percent in revenue is expected to experience steady growth.

In addition to vendors competitive rivalry

There are many factors that drive competition within the car rental industry. Over the years, expanding the fleet size and growing profitability in the car rental industry has been the focus of most companies. Enterprise Hz, and among the leaders in commodity sales and fleet size has been both growing. Moreover, as competition intensifies for companies continuously improve their current situation and more are offered to consumers. Enterprises around 600,000 today to about cars in their fleet size has doubled since 1993. However, most companies actively creating and providing the rental values for free technological gadgets to satisfy customers in a range of features are included, such as the industry operates on narrow profit margins , price competition is not a factor. Hertz, for example, integrates, it never lost GPS system in their cars. Enterprise, on the other hand, sophisticated yield management software uses to manage its fleet.

Finally, the object and its OnStar system uses Skynet to better serve the customer base and offers free weekend rental if a customer renting a car for five consecutive days Also, the rental car industry customer base rather a switching cost is low. Conversely, high property rental agencies rental insurance, and fixed operating costs, including maintenance face. As a result, rental agencies, rental cars, pricing sensitivity there are just to recover operating costs, and adequately meet the demand of their customers. Also, because the industry in recent years due to the economic stability that the two companies resulted in steep decline in travel and leisure sector experience slower growth, most companies including industry leaders aggressively to gradually reduce dependence level by their location of firms are trying their level in the airline industry and leisure competitive again.

Potential entry of new competitors

Car rental new comers to enter the industry puts a serious disadvantage. After the 2001 economic downturn in recent years, the largest rental companies, insurance and airline industry's stability and reliance between the car rental industry as a way of reducing the level off in increasing your market share started. While this trend has engendered long-term success for existing companies, it has increased the competitive landscape for new comers. Severity of competition, Enterprise Hertz, and object because of the existing companies to carefully monitor your competitive radar Sharpe expected retaliation against new players. Another barrier to entry is created due to the saturation level of the industry.

For example, Enterprise 6000 features with its first mover advantage has taken the holiday not only high restrictions on the normal distribution channels to block by saturating, but also high resource requirements for new companies. Today, Enterprise 90 percent of the U.S. population within 15 miles in a rental space. Enterprise dealers across the country have been established due to the network, it is relatively stable, more recession proof and most importantly, less than its competitors airline industry has become dependent on. Hertz, on the other hand, using a full spectrum of its 7,200 stores to secure their position in the market. In fact, most of the industry leaders in the leisure market drives the emergence of not only competitiveness but also to enter the car rental industry varies directly with the level of complexity.

Replacement risk

There are several car rental options available to the industry. From a technical standpoint, to go away for a meeting for a hire car a less attractive option as video conferencing, virtual teams and collaboration software with a company that opposed the system from anywhere can instantly meeting with their employees around the world affordable cost. Also, there is a taxi which a satisfactory quality and switching costs relative to other options, including options to take, but glamorous as the course of a day or more as the price of a rental car can not be is. While public transport is the most cost effective option, the more the process and takes time to reach a destination in terms of expensive. Finally, offers convenience, speed and flight performance, because it is a very attractive option, however, an unattractive option in terms of price relative to rent a car. Business area, car rental agencies the option to visit since many companies have implemented policies when renting a car or using an alternative is the best course of action to get more protection against set standards .

Tracy Esch, director of marketing operations for a profit, according to her company's car rental before considering an alternative to a 200-mile journey.


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