The car rental industry is a multi-billion dollar sector of the US economy. THE UNITED STATES segment of the averages about $18.5 billion in revenue a year. Today, you can find approximately 1.9 million rental vehicles that service the US segment of the market. In addition, there are many rental agencies aside from the industry leaders that subdivide the full total 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 possibility of economies of scale. Moreover, the majority 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 total revenue. Hertz came in second El Paso car rentals position with about $5.2 billion and Avis with $2.97 in revenue.
Level of Integration
The rental car industry faces a completely different environment than it did five years back. In accordance with Business Travel News, vehicles are being rented until they will have accumulated 20,000 to 30,000 miles until they are relegated to the car or truck industry whereas the turn-around mileage was 12,000 to 15,000 miles five years back. Because of slow industry growth and narrow profit margin, there is no imminent threat to backward integration within the. In fact, on the list of industry players only Hertz is vertically integrated through Ford.
Scope of Competition
There are many factors that shape the competitive landscape of the automobile rental industry. Competition originates from two main sources through the entire chain. On the vacation consumer?s end of the spectrum, competition is fierce not only as the market is saturated and well guarded by industry leader Enterprise, but competitors operate at a price disadvantage alongside smaller market shares since Enterprise has generated a network of dealers over 90 percent the leisure segment. On the organization segment, however, competition is quite strong at the airports since that segment is under tight supervision by Hertz. As the industry underwent a massive economic downfall recently, it has upgraded the scale of competition within the majority of the companies that survived. Competitively speaking, the rental car industry is a war-zone because so many rental agencies including Enterprise, Hertz and Avis on the list of major players take part in a battle of the fittest.
Growth
Over the past five years, most firms have already been working towards enhancing their fleet sizes and increasing the amount of profitability. Enterprise the company with the largest fleet in america has added 75,000 vehicles to its fleet since 2002 that assist increase its number of facilities to 170 at the airports. Hertz, alternatively, has added 25,000 vehicles and broadened its international presence in 150 counties instead of 140 in 2002. In addition, Avis has increased its fleet from 210,000 in 2002 to 220,000 despite recent economic adversities. Over time following the economic depression, although most companies throughout the industry were struggling, Enterprise among the industry leaders had been growing steadily. For example, annual sales reached $6.3 in 2001, $6.5 in 2002, $6.9 in 2003 and $7.4 billion in 2004 which translated into a growth rate of 7.2 percent per year for days gone by four years. Since 2002, the industry has began to regain its footing in the sector as overall sales grew from $17.9 billion to $18.2 billion in 2003. According to industry analysts, the higher days of the rental car industry have yet ahead. Over the course of the next several years, the is likely to experience accelerated growth valued at $20.89 billion each year following 2008 "which equates to a CAGR of 2.7 % [increase] in the 2003-2008 period.
Business Name: KGSW Assets Car Rentals
Address: 5710 Trowbridge Dr.
El Paso, Tx 79925 USA
website: kgswcarrentals.com
Phone Number: 713-259-4906
Email: Kgswassets@gmail.com
No comments:
Post a Comment