The Automobile Rental Sector

The automobile rental market is a multi-billion dollar sector of the US economic system. The US phase of the market averages about $18.five billion in profits a yr. Nowadays, there are approximately one.nine million rental automobiles that service the US section of the market. In addition, there are a lot of rental agencies aside from the industry leaders that subdivide the total profits, specifically Greenback Thrifty, Budget and Vanguard. Not like other experienced services industries, the rental vehicle industry is extremely consolidated which naturally puts prospective new comers at a expense-downside since they confront large input costs with reduced chance of economies of scale. Moreover, most of the revenue is generated by a handful of companies like Business, Hertz and Avis. For the fiscal 12 months of 2004, Organization created $seven.four billion in complete income. Hertz came in next placement with about $5.2 billion and Avis with $2.ninety seven in profits.

Level of Integration

The rental vehicle market faces a fully diverse surroundings than it did five years in the past. In accordance to Business Vacation News, vehicles are currently being rented right up until they have accrued 20,000 to 30,000 miles until they are relegated to the employed automobile business whereas the turn-close to mileage was 12,000 to fifteen,000 miles five years ago. car rental chiangmai Simply because of sluggish sector growth and slim profit margin, there is no imminent threat to backward integration inside of the sector. In fact, amongst the market players only Hertz is vertically built-in by means of Ford.

Scope of Competitors

There are a lot of elements that condition the competitive landscape of the car rental sector. Competitors comes from two main sources throughout the chain. On the vacation consumer’s end of the spectrum, competition is intense not only because the industry is saturated and effectively guarded by industry leader Enterprise, but competitors operate at a cost drawback together with smaller market place shares considering that Enterprise has proven a community of dealers over ninety percent the leisure segment. On the corporate section, on the other hand, competition is really robust at the airports because that segment is beneath tight supervision by Hertz. Due to the fact the industry underwent a massive financial downfall in latest many years, it has upgraded the scale of competitiveness within most of the firms that survived. Competitively speaking, the rental car market is a war-zone as most rental companies which includes Business, Hertz and Avis among the significant gamers engage in a fight of the fittest.


Over the past five a long time, most companies have been operating in the direction of improving their fleet measurements and increasing the stage of profitability. Business at present the company with the biggest fleet in the US has extra seventy five,000 vehicles to its fleet considering that 2002 which assist increase its amount of facilities to a hundred and seventy at the airports. Hertz, on the other hand, has included twenty five,000 cars and broadened its intercontinental existence in 150 counties as opposed to 140 in 2002. In addition, Avis has enhanced its fleet from 210,000 in 2002 to 220,000 even with latest economic adversities. Above the many years pursuing the economic downturn, although most companies throughout the industry have been having difficulties, Company amid the industry leaders had been expanding steadily. For illustration, once-a-year product sales attained $6.3 in 2001, $six.five in 2002, $six.9 in 2003 and $7.4 billion in 2004 which translated into a growth charge of seven.two percent a calendar year for the previous four several years. Given that 2002, the industry has began to get back its footing in the sector as overall sales grew from $seventeen.9 billion to $eighteen.two billion in 2003. According to market analysts, the far better times of the rental car market have but to arrive. Above the course of the subsequent several several years, the market is expected to experience accelerated development valued at $twenty.89 billion each and every 12 months adhering to 2008 “which equates to a CAGR of 2.7 % [enhance] in the 2003-2008 period.”


Above the previous few many years the rental vehicle market has produced a wonderful offer of progress to aid it distribution procedures. Right now, there are approximately 19,000 rental locations yielding about one.9 million rental vehicles in the US. Since of the increasingly abundant amount of auto rental spots in the US, strategic and tactical ways are taken into account in purchase to insure appropriate distribution throughout the market. Distribution normally takes spot within two interrelated segments. On the corporate market, the vehicles are dispersed to airports and hotel surroundings. On the leisure section, on the other hand, vehicles are distributed to agency owned facilities that are conveniently positioned in most major roads and metropolitan areas.