Where Is The Best BEST CAR RENTAL?
The car rental industry is a multi-billion dollar sector of the US economy. The US segment of the industry averages about $18.5 billion in revenue a year. Today, there are approximately 1.9 million rental vehicles that service the united states segment of the market. car rental company Furthermore, there are plenty of rental agencies aside from the industry leaders that subdivide the total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the rental car industry is highly consolidated which naturally puts potential new comers at a cost-disadvantage given that they face high input costs with reduced possibility of economies of scale. Moreover, the majority of the profit is generated by way of a few firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 billion in total revenue. Hertz came in second position with about $5.2 billion and Avis with $2.97 in revenue.
Level of Integration
The rental car industry faces a totally different environment than it did five years back. In accordance with Business Travel News, vehicles are being rented until they have accumulated 20,000 to 30,000 miles until they are relegated to the car or truck industry whereas the turn-around mileage was 12,000 to 15,000 miles five years ago. Due to slow industry growth and narrow profit margin, there is no imminent threat to backward integration within the industry. In fact, on the list of industry players only Hertz is vertically integrated through Ford.
Scope of Competition
There are several factors that shape the competitive landscape of the car rental industry. Competition originates from two main sources through the entire chain. On the vacation consumer?s end of the spectrum, competition is fierce not merely as the market is saturated and well guarded by industry leader Enterprise, but competitors operate at a cost disadvantage along with smaller market shares since Enterprise has generated a network of dealers over 90 percent the leisure segment. On the corporate segment, however, competition is quite strong at the airports since that segment is under tight supervision by Hertz. As the industry underwent a massive economic downfall recently, it has upgraded the scale of competition within most of the companies that survived. Competitively speaking, the rental car industry is a war-zone as most rental agencies including Enterprise, Hertz and Avis on the list of major players engage in a battle of the fittest.
In the last five years, most firms have been working towards enhancing their fleet sizes and increasing the level of profitability. Enterprise currently the company with the largest fleet in america has added 75,000 vehicles to its fleet since 2002 which help increase its number of facilities to 170 at the airports. Hertz, alternatively, has added 25,000 vehicles and broadened its international presence in 150 counties instead of 140 in 2002. Furthermore, Avis has increased its fleet from 210,000 in 2002 to 220,000 despite recent economic adversities. Through the years following the economic downturn, although most companies throughout the industry were struggling, Enterprise among the industry leaders had been growing steadily. For instance, annual sales reached $6.3 in 2001, $6.5 in 2002, $6.9 in 2003 and $7.4 billion in 2004 which translated right into a growth rate of 7.2 percent a year for the past four years. Since 2002, the has started to regain its footing in the sector as overall sales grew from $17.9 billion to $18.2 billion in 2003. According to industry analysts, the higher days of the rental car industry have yet to come. Over the course of the next several years, the is expected to experience accelerated growth valued at $20.89 billion every year following 2008 “which equates to a CAGR of 2.7 % [increase] in the 2003-2008 period.?
Over the past few years the rental car industry has made a great deal of progress to facilitate it distribution processes. Today, there are approximately 19,000 rental locations yielding about 1.9 million rental cars in the US. Because of the increasingly abundant amount of car rental locations in america, strategic and tactical approaches are considered so as to insure proper distribution through the entire industry. Distribution occurs within two interrelated segments. On the organization market, the cars are distributed to airports and hotel surroundings. On the leisure segment, alternatively, cars are distributed to agency owned facilities which are conveniently located within most major roads and metropolitan areas.