The Car Rental Industry

The auto rental market is a multi-billion dollar sector of the US economic system. The US section of the industry averages about $eighteen.5 billion in revenue a year. Right now, there are roughly 1.nine million rental automobiles that provider the US segment of the marketplace. In addition, there are numerous rental companies besides the business leaders that subdivide the total profits, particularly Greenback Thrifty, Price range and Vanguard. In contrast to other experienced provider industries, the rental car industry is hugely consolidated which naturally places prospective new comers at a price-downside because they face higher input charges with decreased likelihood of economies of scale. Moreover, most of the profit is generated by a handful of corporations such as Organization, Hertz and Avis. For เช่ารถนครศรีธรรมราช of 2004, Organization generated $seven.four billion in complete earnings. Hertz arrived in 2nd place with about $five.two billion and Avis with $2.97 in income.

Degree of Integration

The rental automobile business faces a totally distinct surroundings than it did five several years back. According to Company Journey Information, vehicles are becoming rented right up until they have gathered 20,000 to thirty,000 miles right up until they are relegated to the utilized car market whereas the turn-all around mileage was 12,000 to 15,000 miles five many years ago. Due to the fact of gradual market growth and narrow earnings margin, there is no imminent menace to backward integration within the market. In truth, among the industry players only Hertz is vertically built-in by way of Ford.

Scope of Competitiveness

There are numerous aspects that condition the aggressive landscape of the car rental business. Competitors arrives from two main sources throughout the chain. On the getaway consumer’s end of the spectrum, competition is fierce not only simply because the marketplace is saturated and well guarded by industry leader Organization, but opponents run at a cost drawback together with smaller market shares since Company has proven a network of dealers in excess of 90 percent the leisure section. On the corporate phase, on the other hand, opposition is extremely sturdy at the airports considering that that phase is underneath limited supervision by Hertz. Because the market underwent a enormous economic downfall in current years, it has upgraded the scale of competition inside most of the businesses that survived. Competitively speaking, the rental car industry is a war-zone as most rental businesses like Organization, Hertz and Avis between the main players engage in a battle of the fittest.


Above the past five a long time, most corporations have been operating towards improving their fleet sizes and rising the degree of profitability. Organization at the moment the company with the biggest fleet in the US has added seventy five,000 vehicles to its fleet because 2002 which help improve its number of facilities to one hundred seventy at the airports. Hertz, on the other hand, has additional twenty five,000 autos and broadened its global presence in a hundred and fifty counties as opposed to a hundred and forty in 2002. In addition, Avis has increased its fleet from 210,000 in 2002 to 220,000 regardless of recent financial adversities. In excess of the many years adhering to the financial downturn, even though most companies throughout the industry had been struggling, Enterprise among the industry leaders had been expanding steadily. For instance, yearly sales reached $6.three in 2001, $6.5 in 2002, $six.9 in 2003 and $seven.4 billion in 2004 which translated into a progress charge of seven.two p.c a 12 months for the earlier four a long time. Since 2002, the market has commenced to regain its footing in the sector as general income grew from $17.nine billion to $eighteen.two billion in 2003. In accordance to sector analysts, the greater days of the rental car industry have however to occur. Above the course of the next several years, the sector is predicted to experience accelerated growth valued at $twenty.89 billion every 12 months pursuing 2008 “which equates to a CAGR of 2.7 % [boost] in the 2003-2008 interval.”


Over the earlier few many years the rental auto business has manufactured a great offer of development to aid it distribution procedures. Today, there are around 19,000 rental spots yielding about 1.9 million rental cars in the US. Because of the ever more abundant quantity of vehicle rental areas in the US, strategic and tactical techniques are taken into account in buy to insure proper distribution through the business. Distribution requires area inside two interrelated segments. On the company market place, the cars are distributed to airports and lodge surroundings. On the leisure segment, on the other hand, vehicles are dispersed to agency owned facilities that are conveniently found inside most major roads and metropolitan locations.