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The Car Rental Industry
  • heronblade05 October 11

    The auto rental marketplace is a multi-billion dollar sector of the usa economy. The US segment of this marketplace averages about $18.5 billion in revenue a year. Today, around 1.9 million rental vehicles that service the usa segment in the market. Moreover, there are numerous rental agencies in addition to the industry leaders that subdivide the total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the car hire marketplace is highly consolidated which naturally puts potential newbees with a cost-disadvantage since they face high input costs with reduced potential for economies of scale. Moreover, a lot of the profit is generated by a few firms including Enterprise, Hertz and Avis. For that fiscal year of 2004, Enterprise generated $7.4 billion in total revenue. Hertz were only available in second position with about $5.2 billion and Avis with $2.97 in revenue.


    There are numerous factors that shape the competitive landscape in the rental-car industry. Competition comes from two main sources during the entire chain. On the vacation consumer’s end with the spectrum, level of competition is fierce not only for the reason that 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 Ninety percent the leisure segment. Around the corporate segment, however, competition is very good in the airports since that segment is under tight supervision by Hertz. Because the industry underwent an enormous economic downfall in recent years, it's upgraded the size and style of competition within almost all of the companies that survived. Competitively speaking, the car hire marketplace is a war-zone as most rental agencies including Enterprise, Hertz and Avis one of the major players take part in a battle in the fittest.

    Over the past few years the rental car industry makes 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. As a result of increasingly abundant amount of rental-car locations in america, strategic and tactical approaches are looked at in order to insure proper distribution through the industry. Distribution occurs within two interrelated segments. About the corporate market, the cars are offered to airports and hotel surroundings. About the leisure segment, alternatively, cars are distributed to agency owned facilities which might be conveniently located within most major roads and metropolitan areas.

    Before, managers of car rental companies utilized to count on gut-feelings or intuitive guesses to produce decisions about how precisely many cars to possess within a particular fleet or utilization level and performance standards of keeping certain cars in a fleet. With this methodology, it had been tough to have a level of balance that might satisfy consumer demand and also the desired degree of profitability. The distribution process is fairly simple through the industry. To start with, managers must determine the amount of cars that needs to be on inventory every day. Because a very noticeable problem arises when way too many or otherwise not enough cars can be found, most car rental companies including Hertz, Enterprise and Avis, use a "pool” the industry number of independent rental facilities that share a fleet of vehicles. Basically, with all the pools in position, rental locations operate more proficiently since they prevent low inventory or else eliminate car hire shortages.
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