What You Should Have Asked Your Teachers About BEST CAR RENTAL

The car rental industry is really a multi-billion dollar sector of the united states economy. THE UNITED STATES 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 US segment of the market. In addition, there are lots 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 minimal possibility of economies of scale. Moreover, most 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 altogether 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. According to Business Travel News, vehicles are increasingly being rented until they will have accumulated 20,000 to 30,000 miles until they’re relegated to the car or truck industry whereas the turn-around mileage was 12,000 to 15,000 miles five years ago. Because of 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 many 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 very strong at the airports since that segment is under tight supervision by Hertz. รถเช่าสนามบินนครศรีธรรมราช Because the industry underwent a massive economic downfall recently, it has upgraded the scale of competition within almost all of the companies that survived. Competitively speaking, the rental car industry is a war-zone because so many rental agencies including Enterprise, Hertz and Avis on the list of major players take part in a battle of the fittest.

Growth

Over the past five years, most firms have already been working towards enhancing their fleet sizes and increasing the amount 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 amount 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 instead of 140 in 2002. Furthermore, Avis has increased its fleet from 210,000 in 2002 to 220,000 despite recent economic adversities. Over the years following the economic depression, although most companies through the entire industry were struggling, Enterprise on the list of 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 per 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 ahead. 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 compatible a CAGR of 2.7 % [increase] in the 2003-2008 period.?

Distribution

Over the past couple of years the rental car industry has made a lot 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. Due to increasingly abundant amount of car rental locations in the US, strategic and tactical approaches are taken into account so that you can insure proper distribution throughout the industry. Distribution takes place within two interrelated segments. On the organization market, the cars are distributed to airports and hotel surroundings. On the leisure segment, on the other hand, cars are distributed to agency owned facilities which are conveniently located within most major roads and urban centers.