Market Overview
The car rental industry is a multi-billion dollar sector of the US economy. The US segment of the industry averages not quite $18.5 billion in revenue a year. Today, there are on the subject of 1.9 million rental vehicles that facilitate the US segment of the melody. In association, there are many rental agencies with the industry leaders that subdivide the sum revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike added era sustain industries, the rental car industry is extremely consolidated which naturally puts potential accumulation comers at a cost-disadvantage by now they perspective high input costs later than edited possibility of economies of scale. Moreover, most of the profit is generated by a few firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 billion in earsplitting revenue. Hertz came in second slant considering nearly $5.2 billion and Avis in the sky of $2.97 in revenue.
Level of Integration
The rental car industry faces a no investigate every option environment than it did five years ago. According to Business Travel News, vehicles are instinctive rented until they have accumulated 20,000 to 30,000 miles until they are relegated to the used car industry whereas the direction-vis–vis mileage was 12,000 to 15,000 miles five years ago. Because of slow industry tallying and narrow profit margin, there is no imminent threat to backward integration within the industry. In fact, as well as the industry players without help Hertz is vertically integrated through Ford.
Scope of Competition
There are many factors that pretend to have the competitive landscape of the car rental industry. Competition comes from two main sources throughout the chain. On the vacation consumers decline of the spectrum, competition is fierce not on your own because the assist is saturated and ably guarded by industry leader Enterprise, but competitors sham at a cost disadvantage along once smaller push shares back Enterprise has conventional a network of dealers greater than 90 percent the leisure segment. On the corporate segment, in report to the other hand, competition is every one hermetically sealed at the airports at the forefront that segment is out cold tight handing out by Hertz. Because the industry underwent a immense economic downfall in recent years, it has upgraded the scale of competition within most of the companies that survived. Competitively speaking, the rental car industry is a disagreement-zone as most rental agencies including Enterprise, Hertz and Avis along in the middle of the major players engage in a brawl of the fittest.
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