The Car Rental Industry
Market Overview
The vehicle rental industry is a multi-billion dollar sector of the US market. The US section of the business averages about $18.5 billion in revenue a year. Today, there are approximately 1.9 million leasing vehicles that support the US segment of this marketplace. Additionally, there are lots of rental agencies besides the industry leaders who subdivide the total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the rental car market is highly consolidated which obviously puts potential new comers at a cost-disadvantage since they confront high input prices with reduced possibility of economies of scale. Moreover, the majority of the gain is generated by a few firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise made $7.4 billion in total revenue. Hertz arrived in 2nd position with about $5.2 billion and Avis with $2.97 in earnings.
Level of Integration
The rental car industry faces a completely different environment than it did five decades ago. According to Business Travel News, vehicles have been rented until they have gathered 20,000 to 30,000 miles till they are relegated to the used car industry whereas the turn-around mileage was 12,000 to 15,000 kilometers five years back. Due to slow business growth and narrow profit margin, there's no imminent threat to backward integration inside the industry. In fact, one of the industry players just Hertz is vertically integrated through Ford.
Scope of Competition
There are lots of elements that form the competitive landscape of the auto rental market. Competition comes from two chief sources throughout the chain. On the holiday customer's end of the spectrum, the competition is fierce not simply because the market is saturated and well guarded by industry pioneer Enterprise, but competitors operate at a cost disadvantage combined with smaller market shares since Enterprise has established a network of dealers over 90 percent the leisure segment. Because the industry underwent a massive economic downfall in recent years, it has updated the scale of competition within the majority of the companies that survived. Competitively speaking, the rental vehicle market is a war-zone as many rental agencies including Enterprise, Hertz and Avis one of the significant players participate in a battle of the fittest.
Growth
Within the previous five decades, most firms are working towards enhancing their fleet sizes and raising the amount of profitability. Enterprise now the company with the biggest fleet in the US has added 75,000 vehicles into its fleet since 2002 that help increase its number 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 rather than 140 in 2002. Over the years after the economic downturn, though most companies throughout the industry were fighting, Enterprise among the industry leaders were growing steadily. As an instance, annual earnings 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 a year for the past four years. According to Exotic Car Rental Cleveland Ohio , the better days of the rental car industry have yet to come. Over the course of the upcoming several decades, the business is forecast to undergo rapid growth valued at $20.89 billion each year following 2008"which equates to a CAGR of 2.7 % [growth ] in the 2003-2008 period.
The vehicle rental industry is a multi-billion dollar sector of the US market. The US section of the business averages about $18.5 billion in revenue a year. Today, there are approximately 1.9 million leasing vehicles that support the US segment of this marketplace. Additionally, there are lots of rental agencies besides the industry leaders who subdivide the total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the rental car market is highly consolidated which obviously puts potential new comers at a cost-disadvantage since they confront high input prices with reduced possibility of economies of scale. Moreover, the majority of the gain is generated by a few firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise made $7.4 billion in total revenue. Hertz arrived in 2nd position with about $5.2 billion and Avis with $2.97 in earnings.
Level of Integration
The rental car industry faces a completely different environment than it did five decades ago. According to Business Travel News, vehicles have been rented until they have gathered 20,000 to 30,000 miles till they are relegated to the used car industry whereas the turn-around mileage was 12,000 to 15,000 kilometers five years back. Due to slow business growth and narrow profit margin, there's no imminent threat to backward integration inside the industry. In fact, one of the industry players just Hertz is vertically integrated through Ford.
Scope of Competition
There are lots of elements that form the competitive landscape of the auto rental market. Competition comes from two chief sources throughout the chain. On the holiday customer's end of the spectrum, the competition is fierce not simply because the market is saturated and well guarded by industry pioneer Enterprise, but competitors operate at a cost disadvantage combined with smaller market shares since Enterprise has established a network of dealers over 90 percent the leisure segment. Because the industry underwent a massive economic downfall in recent years, it has updated the scale of competition within the majority of the companies that survived. Competitively speaking, the rental vehicle market is a war-zone as many rental agencies including Enterprise, Hertz and Avis one of the significant players participate in a battle of the fittest.
Growth
Within the previous five decades, most firms are working towards enhancing their fleet sizes and raising the amount of profitability. Enterprise now the company with the biggest fleet in the US has added 75,000 vehicles into its fleet since 2002 that help increase its number 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 rather than 140 in 2002. Over the years after the economic downturn, though most companies throughout the industry were fighting, Enterprise among the industry leaders were growing steadily. As an instance, annual earnings 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 a year for the past four years. According to Exotic Car Rental Cleveland Ohio , the better days of the rental car industry have yet to come. Over the course of the upcoming several decades, the business is forecast to undergo rapid growth valued at $20.89 billion each year following 2008"which equates to a CAGR of 2.7 % [growth ] in the 2003-2008 period.
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