The Car Rental Industry


Market Overview

The auto rental market is an multi-billion dollar industry of the US market. The US segment of this industry averages roughly $18.5 billion in sales per year. Now, there are approximately 1.9 million leasing cars that support the US segment of this marketplace. Unlike other adult service businesses, the lease vehicle business is highly merged which naturally sets potential new-comers in a cost-disadvantage simply because they face high yield prices with reduced chance for economies of scale. More over, the majority of the benefit is generated with some businesses such as Enterprise, Hertz and Avis Rent A Car in Toronto.

Amount of Integration

As stated by Business Travel News, vehicles have been leased till they’ve accumulated 20,000 to 30,000 kilometers until they’re relegated into the car or truck industry where as the turn around mileage has been 12,000 to 15,000 kilometers five decades ago. As a result of slow industry development and narrow profit margin, there’s not any impending threat to backward integration over the business. Actually, on the list of industry players just Hertz is vertically integrated through Ford.

Range of Competition

Competition originates in two chief sources across this series. To the vacation consumer’s end of this spectrum, the rivalry is ferocious not merely as the current market is saturated and well shielded from industry pioneer Enterprise, but competitions operate in a high price disadvantage combined with smaller market stocks since Enterprise has created a network of traders over 90 per cent the leisure segment. On the organization department, on the flip side, competition is very good at the airports because this segment is under tight oversight by Hertz. As a experienced a gigantic financial downturn in late decades, it’s updated the scale of rivalry within the majority of the organizations which lived. Competitively speaking, the lease vehicle market is a warzone as many rental bureaus including Enterprise, Hertz and Avis on the list of significant players take part in a struggle of the fittest.


Enterprise now the business with the greatest fleet within the US has introduced 75,000 vehicles into the fleet since 2002 that greatly help increase its quantity of centers to 170 at the airports. Additionally, Avis has raised its fleet from 210,000 from 2002 into 220,000 despite recent financial adversities. Through recent years after the financial recession, even though most businesses across the industry were fighting, Enterprise on the list of industry leaders were growing steadily. As stated by industry analysts, the the better days of this rental automobile industry have yet in the future. During the period of the upcoming few decades, the business is anticipated to undergo rapid growth appreciated at $20.89 billion per year after 2008 “that means a CAGR of 2.7 percent [growth] at the 2003-2008 period.”


On the last couple of years that the rental vehicle market has made a lot of advancement to ease it supply procedures. Now, there are approximately 19,000 rental locations affording about 1.9 million leasing cars inside the US. On account of the increasingly abundant quantity of car rental locations inside the US, tactical and strategic approaches are considered so as to guarantee appropriate supply across the business. Distribution occurs within two inter related segments. In the company market, the cars have been spread to hotel and airports environments. To the leisure department, alternatively, cars are spread to bureau possessed centers which are conveniently located within all major streets and metropolitan locations.

Before, directors of rental vehicle companies used to count on gut feelings or instinctive guesses to get conclusions concerning the number of cars to get at a specific fleet or perhaps the usage level and operation standards of keeping certain cars in 1 fleet. With this methodology, it had been rather tough to keep up an amount of balance that could fulfill customer demand and also the desirable amount of adulthood. The supply procedure is quite easy all through the business. To start with, managers must ascertain the range of cars that really must definitely be on inventory on an everyday basis. Ostensibly, with all the pools inplace, leasing locations operate more economically simply because they reduce the possibility of low inventory or even expel leasing car deficits.

Market Segmentation

Most organizations across the series create a profit predicated of the form of cars which can be leased. The lease cars are categorized in to economy, compact, intermediate, superior and lavish. On the list of five types, the market industry yields the maximum profit. As an example, the market segment on it’s own is accountable for 37.7 per cent of their entire

revenue in 2004. Furthermore, the streamlined segment accounted for 32.3 per cent of overall sales. The remainder of the different types covers the rest of the 30 per cent for the US segment.

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