The Car Rental Industry

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The auto rental companies are a multi-billion dollar sector of the US economy. The united states segment of the industry averages about $18.5 billion in revenue per year. Today, roughly 1.9 million rental vehicles that service the US segment of the market. Moreover, there are several rental agencies apart from the industry leaders that subdivide the total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the rental-car companies are highly consolidated which naturally puts potential new comers in a cost-disadvantage since they face high input costs with reduced possibility of economies of scale. Moreover, most of the profit is generated by a number of firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 billion as a whole revenue. Hertz arrived second position approximately $5.2 billion and Avis with $2.97 in revenue.

There are numerous factors that shape the competitive landscape of the car rental industry. Competition arises from two main sources through the entire chain. About the vacation consumer’s end from the spectrum, levels of competition are fierce not merely for the reason that market is saturated and well guarded by leader in the industry Enterprise, but competitors operate at a price disadvantage together with smaller market shares since Enterprise has produced a network of dealers over Ninety percent the leisure segment. About the corporate segment, however, level of competition is quite strong in the airports since that segment is under tight supervision by Hertz. Since the industry underwent a massive economic downfall lately, they have upgraded the scale of competition within most of the firms that survived. Competitively speaking, the rental car market is a war-zone since several rental agencies including Enterprise, Hertz and Avis on the list of major players engage in a battle with the fittest.

Within the last few years the rental car industry has made quite 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 united states. Due to increasingly abundant variety of car hire locations in the usa, strategic and tactical approaches are looked at so that you can insure proper distribution through the industry. Distribution occurs within two interrelated segments. On the corporate market, the cars are provided to airports and hotel surroundings. Around the leisure segment, however, cars are given to agency owned facilities that are conveniently located within most major roads and locations.

During the past, managers of car rental companies utilized to depend upon gut-feelings or intuitive guesses to generate decisions about how exactly many cars to get inside a particular fleet or perhaps the utilization level and gratifaction standards of keeping certain cars in one fleet. With this methodology, it turned out hard to maintain a degree of balance that would satisfy consumer demand along with the desired degree of profitability. The distribution process is rather simple during the entire industry. Firstly, managers must determine the volume of cars that must definitely be on inventory on a regular basis. Must be very noticeable problem arises when a lot of you aren't enough cars can be purchased, most car hire companies including Hertz, Enterprise and Avis, make use of a "pool” the number of independent rental facilities that share a number of vehicles. Basically, with all the pools in place, rental locations operate more effectively since they prevent low inventory or else eliminate rental car shortages.
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