The Car Rental Industry
Market Overview
The car rental market is a multi-billion dollar sector of the US economy. The US segment of the business averages about $18.5 billion in revenue per year. Today, there are roughly 1.9 million rental vehicles that support the US segment of the market. In addition, there are many rental agencies aside from the industry leaders that subdivide the entire revenue, namely Dollar Thrifty, Budget and Vanguard. Contrary to other mature service businesses, the rental vehicle market is highly consolidated which naturally puts potential new comers in a cost-disadvantage because they face high input costs with reduced chance of economies of scale. Furthermore, most of the profit is made by a few firms including Enterprise, Hertz and Avis. For the financial year of 2004, Enterprise generated $7.4 billion in earnings.
Level of Integration
According to Business Travel News, vehicles have been rented until they've accumulated 20,000 to 30,000 miles till they are relegated into the used car industry whereas the turn-around mileage was 12,000 to 15,000 kilometers five years back. Because of slow industry growth and narrow profit margin, there's not any imminent threat to backward integration inside the business. In reality, among the industry players just Hertz is vertically integrated through Ford.
Scope of Competition
There are lots of factors that form the competitive landscape of the car rental market. Competition comes from two main sources throughout the series. On the holiday consumer's end of the spectrum, competition is fierce not only because the market is saturated and well guarded by business leader Enterprise, but competitors operate at a price disadvantage along with smaller market shares since Enterprise has established a network of dealers over 90% the leisure section. Since the industry underwent a massive economic downturn lately, it has updated the scale of competition inside the majority of the businesses that survived. Competitively speaking, Exotic Car Rental Ohio is a war-zone as most rental agencies such as Enterprise, Hertz and Avis among the significant players engage in a battle of the fittest.
Growth
Within the previous five decades, most firms have been working towards enhancing their fleet sizes and raising the amount of profitability. Enterprise now the firm with the largest fleet in america has added 75,000 vehicles to its fleet since 2002 that help increase its number of facilities to 170 in 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 following the economic recession, though most companies across the sector were struggling, Enterprise among the industry leaders were growing steadily. As an example, 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 per cent a year for the past four decades. According to industry analysts, the better days of the rental car sector have yet to come. Within the course of the upcoming several decades, the business is forecast to experience accelerated 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 car rental market is a multi-billion dollar sector of the US economy. The US segment of the business averages about $18.5 billion in revenue per year. Today, there are roughly 1.9 million rental vehicles that support the US segment of the market. In addition, there are many rental agencies aside from the industry leaders that subdivide the entire revenue, namely Dollar Thrifty, Budget and Vanguard. Contrary to other mature service businesses, the rental vehicle market is highly consolidated which naturally puts potential new comers in a cost-disadvantage because they face high input costs with reduced chance of economies of scale. Furthermore, most of the profit is made by a few firms including Enterprise, Hertz and Avis. For the financial year of 2004, Enterprise generated $7.4 billion in earnings.
Level of Integration
According to Business Travel News, vehicles have been rented until they've accumulated 20,000 to 30,000 miles till they are relegated into the used car industry whereas the turn-around mileage was 12,000 to 15,000 kilometers five years back. Because of slow industry growth and narrow profit margin, there's not any imminent threat to backward integration inside the business. In reality, among the industry players just Hertz is vertically integrated through Ford.
Scope of Competition
There are lots of factors that form the competitive landscape of the car rental market. Competition comes from two main sources throughout the series. On the holiday consumer's end of the spectrum, competition is fierce not only because the market is saturated and well guarded by business leader Enterprise, but competitors operate at a price disadvantage along with smaller market shares since Enterprise has established a network of dealers over 90% the leisure section. Since the industry underwent a massive economic downturn lately, it has updated the scale of competition inside the majority of the businesses that survived. Competitively speaking, Exotic Car Rental Ohio is a war-zone as most rental agencies such as Enterprise, Hertz and Avis among the significant players engage in a battle of the fittest.
Growth
Within the previous five decades, most firms have been working towards enhancing their fleet sizes and raising the amount of profitability. Enterprise now the firm with the largest fleet in america has added 75,000 vehicles to its fleet since 2002 that help increase its number of facilities to 170 in 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 following the economic recession, though most companies across the sector were struggling, Enterprise among the industry leaders were growing steadily. As an example, 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 per cent a year for the past four decades. According to industry analysts, the better days of the rental car sector have yet to come. Within the course of the upcoming several decades, the business is forecast to experience accelerated 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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