The Car Rental Industry




  • The car rental market is a multi-billion dollar sector of the US economy. America segment of the profession averages about $18.5 billion in revenue per year. Today, roughly 1.9 million rental vehicles that service the united states segment with the market. Furthermore, there are lots of rental agencies apart from the industry leaders that subdivide the whole revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the rental car industry is highly consolidated which naturally puts potential beginners at a cost-disadvantage since they face high input costs with reduced possibility of economies of scale. Moreover, the majority of the profit is generated by a number of firms including Enterprise, Hertz and Avis. For that fiscal year of 2004, Enterprise generated $7.4 billion in whole revenue. Hertz came in second position about $5.2 billion and Avis with $2.97 in revenue.

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    There are numerous factors that shape the competitive landscape from the rental car industry. Competition emanates from two main sources through the chain. For the vacation consumer’s end of the spectrum, levels of competition are fierce not just because the information mill saturated and well guarded by leader in the industry Enterprise, but competitors operate at a price disadvantage in addition to smaller market shares since Enterprise has established a network of dealers over Ninety percent the leisure segment. For the corporate segment, on the other hand, levels of competition are very good at the airports since that segment is under tight supervision by Hertz. Because the industry underwent a massive economic downfall in recent years, it has upgraded the size and style of competition within a lot of the companies that survived. Competitively speaking, the car hire companies are a war-zone as most rental agencies including Enterprise, Hertz and Avis one of the major players embark on a battle of the fittest.

    Over the past couple of years the car hire industry makes a great deal of progress to facilitate it distribution processes. Today, there are approximately 19,000 rental locations yielding about 1.9 million car rentals in the US. As a result of increasingly abundant variety of car hire locations in the united states, strategic and tactical approaches are taken into account in order to insure proper distribution throughout the industry. Distribution comes about within two interrelated segments. On the corporate market, the cars are given to airports and hotel surroundings. About the leisure segment, alternatively, cars are distributed to agency owned facilities which are conveniently located within most major roads and towns.

    In the past, managers of rental car companies employed to depend on gut-feelings or intuitive guesses to produce decisions regarding how many cars to have inside a particular fleet or the utilization level and gratification standards of keeping certain cars a single fleet. With that methodology, it had been very difficult to conserve a level of balance that would satisfy consumer demand along with the desired a higher level profitability. The distribution process is pretty simple through the industry. In the first place, managers must determine the amount of cars that must be on inventory every day. Must be very noticeable problem arises when too many or otherwise enough cars can be obtained, most car hire companies including Hertz, Enterprise and Avis, utilize a "pool” that is a group of independent rental facilities that share a variety of vehicles. Basically, with all the pools in position, rental locations operate better since they reduce the risk of low inventory otherwise eliminate rental car shortages.
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