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The Car Rental Industry





The vehicle rental industry is a multi-billion dollar sector of the US economy. The US segment of the profession averages about $18.5 billion in revenue annually. Today, there are approximately 1.9 million rental vehicles that service the US segment in the market. Furthermore, there are many rental agencies aside from the industry leaders that subdivide the entire revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the rental-car industry is highly consolidated which naturally puts potential new comers at a cost-disadvantage since they face high input costs with reduced chance of economies of scale. Moreover, almost all 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 came in second position with about $5.2 billion and Avis with $2.97 in revenue.

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There are many factors that shape the competitive landscape in the rental-car industry. Competition emanates from two main sources during the entire chain. For the vacation consumer’s end with the spectrum, competition is fierce not just for the reason that information mill saturated and well guarded by leader in the industry Enterprise, but competitors operate at a price disadvantage along with smaller market shares since Enterprise has produced a network of dealers over Ninety percent the leisure segment. For the corporate segment, on the other hand, level of competition is very good in the airports since that segment is under tight supervision by Hertz. Because the industry underwent an enormous economic downfall lately, it's got upgraded the size of competition within almost all of the businesses that survived. Competitively speaking, the car rental marketplace is a war-zone because so many rental agencies including Enterprise, Hertz and Avis one of the major players take part in a battle with the fittest.

Within the last couple of years the car hire industry makes a lot of progress to facilitate it distribution processes. Today, roughly 19,000 rental locations yielding about 1.9 million rental cars in the united states. As a result of increasingly abundant variety of rental car locations in the US, strategic and tactical approaches are taken into consideration so that you can insure proper distribution through the industry. Distribution happens within two interrelated segments. About the corporate market, the cars are offered to airports and hotel surroundings. For the leisure segment, on the other hand, cars are provided to agency owned facilities that are conveniently located within most major roads and locations.

In the past, managers of car rental companies used to depend on gut-feelings or intuitive guesses to make decisions about how precisely many cars to own in the particular fleet or utilization level and satisfaction standards of keeping certain cars in a fleet. Your methodology, it turned out difficult to maintain a amount of balance that would satisfy consumer demand and the desired degree of profitability. The distribution process is rather simple during the entire industry. In the first place, managers must determine the amount of cars that must be on inventory every day. Just because a very noticeable problem arises when too many or otherwise enough cars can be found, most rental car companies including Hertz, Enterprise and Avis, work with a "pool” the group of independent rental facilities that share a fleet of vehicles. Basically, together with the pools in place, rental locations operate better given that they reduce the risk of low inventory if not eliminate rental-car shortages.
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