The Car Rental Industry

The automobile rental industry is a multi-billion dollar sector of the usa economy. America segment of the marketplace averages about $18.5 billion in revenue per year. Today, there are approximately 1.9 million rental vehicles that service america segment from the market. In addition, 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 market is highly consolidated which naturally puts potential newbees at the cost-disadvantage since they face high input costs with reduced possibility of economies of scale. Moreover, most of the profit is generated by a few firms including Enterprise, Hertz and Avis. For your fiscal year of 2004, Enterprise generated $7.4 billion in total revenue. Hertz came in second position with approximately $5.2 billion and Avis with $2.97 in revenue.
There are several factors that shape the competitive landscape in the car rental industry. Competition arises from two main sources through the chain. For the vacation consumer’s end from the spectrum, level of competition is fierce not merely since the marketplace is saturated and well guarded by industry leader Enterprise, but competitors operate at a cost disadvantage in addition to smaller market shares since Enterprise has built a network of dealers over 90 percent the leisure segment. On the corporate segment, on the other hand, level of competition is very strong with the airports since that segment is under tight supervision by Hertz. Since the industry underwent a massive economic downfall recently, it has upgraded the size and style of competition within almost all of the companies that survived. Competitively speaking, the rental car market is a war-zone as most rental agencies including Enterprise, Hertz and Avis among the major players embark on a battle from the fittest.

In the last couple of years the car hire industry has created significant amounts of progress to facilitate it distribution processes. Today, around 19,000 rental locations yielding about 1.9 million rental cars in the usa. Because of the increasingly abundant variety of rental-car locations in the usa, strategic and tactical approaches are taken into account in order to insure proper distribution throughout the industry. Distribution happens within two interrelated segments. Around the corporate market, the cars are given to airports and hotel surroundings. Around the leisure segment, conversely, cars are offered to agency owned facilities which might be conveniently located within most major roads and locations.
Before, managers of rental car companies accustomed to count on gut-feelings or intuitive guesses to create decisions regarding how many cars to get in the particular fleet or the utilization level and gratifaction standards of keeping certain cars a single fleet. With this methodology, it was tough to have a a higher level balance that would satisfy consumer demand and also the desired a higher level profitability. The distribution process is reasonably simple through the industry. Firstly, managers must determine the number of cars that must definitely be on inventory each day. Want . very noticeable problem arises when lots of you aren’t enough cars can be obtained, most car rental companies including Hertz, Enterprise and Avis, utilize a “pool” which is a group of independent rental facilities that share a variety of vehicles. Basically, with the pools available, rental locations operate more effectively because they prevent low inventory or even eliminate rental-car shortages.
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