The Vehicle Rental Industry

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The vehicle rental market is a multi-billion greenback sector of the US economy. The US phase of the industry averages about $18.5 billion in earnings a 12 months. Nowadays, there are around 1.9 million rental autos that services the US phase of the marketplace. In addition, there are a lot of rental companies besides the sector leaders that subdivide the whole earnings, namely Dollar Thrifty, Funds and Vanguard. Not like other experienced service industries, the rental auto market is very consolidated which normally places potential new comers at a cost-downside considering that they experience higher enter charges with lowered possibility of economies of scale. In addition, most of the earnings is produced by a few corporations like Organization, Hertz and Avis. For the fiscal yr of 2004, Company generated $seven.four billion in overall profits. Hertz came in second placement with about $five.2 billion and Avis with $2.97 in revenue.

Stage of Integration

The rental auto sector faces a totally distinct environment than it did 5 many years ago. According to Organization Travel Information, autos are getting rented until finally they have amassed twenty,000 to 30,000 miles until they are relegated to the utilized car market whereas the switch-close to mileage was 12,000 to 15,000 miles five years back. Since of slow sector expansion and slim earnings margin, there is no imminent menace to backward integration in the market. In truth, between the business gamers only Hertz is vertically integrated by way of Ford.

Scope of Competitors

There are many aspects that form the competitive landscape of the vehicle rental sector. Competitors arrives from two main sources through the chain. On ’s conclude of the spectrum, competition is intense not only due to the fact the industry is saturated and properly guarded by sector leader Business, but competition function at a expense disadvantage together with smaller sized market shares given that Company has recognized a community of dealers in excess of 90 p.c the leisure section. On the corporate segment, on the other hand, competitors is very strong at the airports given that that phase is under tight supervision by Hertz. Because the industry underwent a huge financial downfall in modern many years, it has upgraded the scale of competition in most of the businesses that survived. Competitively speaking, the rental vehicle business is a war-zone as most rental agencies such as Company, Hertz and Avis amongst the key gamers interact in a battle of the fittest.


Above the earlier 5 years, most companies have been working in direction of enhancing their fleet dimensions and rising the stage of profitability. Organization at present the company with the largest fleet in the US has included seventy five,000 cars to its fleet given that 2002 which help increase its number of services to a hundred and seventy at the airports. Hertz, on the other hand, has extra twenty five,000 automobiles and broadened its worldwide presence in 150 counties as opposed to a hundred and forty in 2002. In addition, Avis has elevated its fleet from 210,000 in 2002 to 220,000 even with modern financial adversities. In excess of the several years adhering to the economic downturn, despite the fact that most businesses during the industry were struggling, Company among the sector leaders had been growing steadily. For example, once-a-year sales arrived at $six.3 in 2001, $six.five in 2002, $six.9 in 2003 and $seven.four billion in 2004 which translated into a growth charge of seven.2 p.c a 12 months for the previous four several years. Because 2002, the business has began to regain its footing in the sector as all round sales grew from $17.nine billion to $eighteen.2 billion in 2003. According to industry analysts, the far better times of the rental automobile sector have however to appear. In excess of the course of the following many years, the business is envisioned to encounter accelerated development valued at $twenty.89 billion every calendar year adhering to 2008 "which equates to a CAGR of % [increase] in the 2003-2008 period of time.”


Above the earlier number of a long time the rental vehicle sector has created a great offer of progress to aid it distribution processes. These days, there are around 19,000 rental locations yielding about 1.9 million rental cars in the US. Simply because of the more and more abundant quantity of vehicle rental places in the US, strategic and tactical ways are taken into account in purchase to insure correct distribution all through the market. Distribution normally takes area inside two interrelated segments. On the company industry, the autos are dispersed to airports and resort environment. On the leisure segment, on the other hand, vehicles are distributed to agency owned facilities that are conveniently positioned in most key roads and metropolitan regions.