The Car Rental Industry

The auto rental industry is a multi-billion dollar sector of america economy. The US segment of this marketplace averages about $18.5 billion in revenue 12 months. Today, around 1.9 million rental vehicles that service the united states segment in the market. Moreover, there are numerous rental agencies aside from the industry leaders that subdivide the whole revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the car hire marketplace is highly consolidated which naturally puts potential newbees in a cost-disadvantage because they face high input costs with reduced chance of economies of scale. Moreover, most of the profit is generated by a few firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 billion altogether revenue. Hertz started in second position approximately $5.2 billion and Avis with $2.97 in revenue.


There are several factors that shape the competitive landscape from the car rental industry. Competition emanates from two main sources through the entire chain. For the vacation consumer’s end from the spectrum, levels of competition are fierce not simply as the market is saturated and well guarded by leader in the industry Enterprise, but competitors operate at a price disadvantage in addition to smaller market shares since Enterprise has built a network of dealers over 90 % the leisure segment. Around the corporate segment, on the other hand, level of competition is quite strong with the airports since that segment is under tight supervision by Hertz. For the reason that industry underwent a huge economic downfall recently, it's got upgraded the scale of competition within almost all of the firms that survived. Competitively speaking, the car rental market is a war-zone since many rental agencies including Enterprise, Hertz and Avis on the list of major players participate in a battle from the fittest.

During the last couple of years the car hire industry has created 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 america. Because of the increasingly abundant variety of car hire locations in the US, strategic and tactical approaches are looked at as a way to insure proper distribution throughout the industry. Distribution takes place within two interrelated segments. For the corporate market, the cars are provided to airports and hotel surroundings. For the leisure segment, alternatively, cars are provided to agency owned facilities that are conveniently located within most major roads and towns.

Before, managers of car hire companies accustomed to depend upon gut-feelings or intuitive guesses to make decisions about how many cars to own inside a particular fleet or the utilization level and satisfaction standards of keeping certain cars in a single fleet. With that methodology, it had been difficult to maintain a degree of balance that might satisfy consumer demand as well as the desired a higher level profitability. The distribution process is pretty simple through the entire industry. Firstly, managers must determine the number of cars that must be on inventory every day. Must be very noticeable problem arises when too many or otherwise enough cars are available, most rental-car companies including Hertz, Enterprise and Avis, utilize a "pool” which is a number of independent rental facilities that share a variety of vehicles. Basically, with the pools set up, rental locations operate more effectively because they prevent low inventory or even eliminate car rental shortages.
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