The Car Rental Industry
Market Overview
The car rental market is a multi-billion dollar sector of the US market. The US segment of the business averages about $18.5 billion in revenue a year. Today, there are approximately 1.9 million rental vehicles that service the US segment of this marketplace. Additionally, there are many rental agencies aside from the industry leaders that subdivide the total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service businesses, the rental vehicle industry is highly consolidated which obviously puts prospective new comers at a cost-disadvantage because they face high input costs with decreased chance of economies of scale. Furthermore, most of the profit is made by a few companies including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 billion in total revenue.
Car Rental Ohio of Integration
In accordance with Business Travel News, vehicles are being rented until they have gathered 20,000 to 30,000 miles until they are relegated into the used car industry whereas the turn-around mileage was 12,000 to 15,000 miles five years back. Because of slow business growth and narrow profit margin, there's not any impending threat to backward integration within the industry. In fact, one of the industry players only Hertz is vertically integrated through Ford.
Scope of Competition
There are lots of factors that form the competitive landscape of the auto rental market. Competition comes from two main sources throughout the series. On the holiday customer's end of the spectrum, competition is fierce not only because the market is saturated and well guarded from business pioneer Enterprise, but competitors operate at a price disadvantage along with smaller market shares since Enterprise has created a network of traders over 90 percent the leisure segment. On the corporate section, on the other hand, competition is quite strong at the airports since that segment is under tight supervision by Hertz. Since the business underwent a huge economic downturn in recent years, it has upgraded the scale of competition within most of the companies that survived. Competitively speaking, the rental vehicle market is a war-zone as most rental agencies including Enterprise, Hertz and Avis among the major players engage in a battle of the fittest.
Growth
Over the previous five decades, most companies have been working towards improving their fleet sizes and raising the level of profitability. Enterprise now the company with the largest fleet in america has additional 75,000 vehicles into its fleet since 2002 that help increase its number of amenities to 170 at the airports. Hertz, on the other hand, has added 25,000 vehicles and broadened its international presence in 150 counties rather than 140 in 2002. Over the years after the economic downturn, although most companies throughout the sector were struggling, Enterprise among the industry leaders had been growing steadily. According to industry analysts, the greater days of the rental car sector have yet to come. Over the course of the next several decades, the business is expected to undergo rapid growth valued at $20.89 billion annually after 2008"that equates to a CAGR of 2.7 percent [growth ] in the 2003-2008 period.
The car rental market is a multi-billion dollar sector of the US market. The US segment of the business averages about $18.5 billion in revenue a year. Today, there are approximately 1.9 million rental vehicles that service the US segment of this marketplace. Additionally, there are many rental agencies aside from the industry leaders that subdivide the total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service businesses, the rental vehicle industry is highly consolidated which obviously puts prospective new comers at a cost-disadvantage because they face high input costs with decreased chance of economies of scale. Furthermore, most of the profit is made by a few companies including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 billion in total revenue.
Car Rental Ohio of Integration
In accordance with Business Travel News, vehicles are being rented until they have gathered 20,000 to 30,000 miles until they are relegated into the used car industry whereas the turn-around mileage was 12,000 to 15,000 miles five years back. Because of slow business growth and narrow profit margin, there's not any impending threat to backward integration within the industry. In fact, one of the industry players only Hertz is vertically integrated through Ford.
Scope of Competition
There are lots of factors that form the competitive landscape of the auto rental market. Competition comes from two main sources throughout the series. On the holiday customer's end of the spectrum, competition is fierce not only because the market is saturated and well guarded from business pioneer Enterprise, but competitors operate at a price disadvantage along with smaller market shares since Enterprise has created a network of traders over 90 percent the leisure segment. On the corporate section, on the other hand, competition is quite strong at the airports since that segment is under tight supervision by Hertz. Since the business underwent a huge economic downturn in recent years, it has upgraded the scale of competition within most of the companies that survived. Competitively speaking, the rental vehicle market is a war-zone as most rental agencies including Enterprise, Hertz and Avis among the major players engage in a battle of the fittest.
Growth
Over the previous five decades, most companies have been working towards improving their fleet sizes and raising the level of profitability. Enterprise now the company with the largest fleet in america has additional 75,000 vehicles into its fleet since 2002 that help increase its number of amenities to 170 at the airports. Hertz, on the other hand, has added 25,000 vehicles and broadened its international presence in 150 counties rather than 140 in 2002. Over the years after the economic downturn, although most companies throughout the sector were struggling, Enterprise among the industry leaders had been growing steadily. According to industry analysts, the greater days of the rental car sector have yet to come. Over the course of the next several decades, the business is expected to undergo rapid growth valued at $20.89 billion annually after 2008"that equates to a CAGR of 2.7 percent [growth ] in the 2003-2008 period.
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