The car rental industry
Market Overview
The rental car industry is a multi-billion dollar sector of the U.S. economy. The segment of the U.S. industry average of about $ 18500000000 in revenue a year. Today there are about 1.9 million vehicles in rental service that segment of the U.S. market. In addition, there are many owners in addition to industry leaders that share the revenue among all that Dollar Thrifty, Budget and Vanguard. Unlike other service sectors mature, therental car industry is highly consolidated, which leads, of course, potential new entrants at a disadvantage in costs, since they scale with high input costs with reduced capacity of the economy. Moreover, much of the profit of a few firms such as Enterprise, Hertz and Avis is generated. For fiscal year 2004, Enterprise has raised 7.4 billion U.S. dollars in total sales. Hertz came in second place with around $ 5200000000 with Avis and $ 2.97 in sales.
Degree of integration
L 'rental car industry is facing a totally different events, and five years. According to Business Travel News, the vehicles will be rented until they have collected up to 20,000 miles and prohibited them from years of automotive industry uses 30,000, while the turn-around mileage was 12,000 to 15,000 Meilen five. Due to the slow growth of the narrow profit margin, there is no immediate threat to the integration of the upstream sector. In fact, under theThe business operator is vertically integrated only Hertz from Ford.
Scope of competition law
There are many factors that shape the competitive environment in the sector of car rental. Competition is mainly from two sources in the entire chain. On the consumer end of the holiday spectrum is the competition is tough, not only because the market is saturated and supervised by leading companies in the sector, but at a cost disadvantage competitors operate with smaller marketShares, which was established for Enterprise has a network of dealers for more than 90 percent of the leisure segment. On the corporate sector, on the other hand, the competition is very strong at the airports by this segment is under close surveillance by Hertz. Because the industry has undergone a massive economic decline in recent years has upgraded the level of competition in most of the companies that have survived. competitive speaking, rental car industry is a war zone, as most landownerscommit to Enterprise, Hertz and Avis, among key players in a battle of the fittest.
Growth
Over the past five years, many companies have worked to improve the fleet and increase profitability. Enterprise is currently the company with the largest fleet in the United States took 75,000 vehicles to its fleet since 2002, increasing the number of facilities to help up to 170 airports. Hertz, on the other hand, 25,000 vehicles are added and expandedits international presence in 150 districts to 140 in 2002 compared to. In addition, Avis fleet has increased 210,000 in 2002 to 220,000, despite the recent economic hardships. In the following years of economic crisis, although most companies had to struggle across the industry, the company had grown steadily from industry leaders. For example, annual sales reached $ 6.3 2001 $ 6.5 2002 $ 6.9 in 2003 and 7.4 billion U.S. dollars in 2004, which translates into a growth rate7.2 per cent annually over the last four years. Since 2002, the industry has started its base in the sector grew faster than total revenues of 17.9 billion U.S. dollars 18.2 billion U.S. dollars by 2003. According to analysts, the industry's best days rental cars are coming. Over the next few years, the industry expects rapid growth to $ 20890000000 year estimated post-2008 experience, "which corresponds to an annual growth rate of 2.7% to [] to increase in 2003-2008Period. "
Distribution
In recent years, the rental car industry has progressed a lot easier from there distribution processes. Today there are about 19,000 points to rent a car, producing approximately 1.9 million in the United States. Because of the increasingly abundant rental in the United States, strategic and tactical approaches taken in account number to ensure proper distribution in the area at all. Distributionwithin two segments together. On the corporate market, the cars at the airports and the surrounding area will be distributed. In the leisure segment, on the other hand, cars are distributed to agencies owned facilities that are conveniently located in most of the highways and metropolitan regions.
In the past the rental car manager used assumptions based on gut-feelings or intuitive decision making, how many cars to use in a particular park orto maintain the level and standards of some sports cars in a fleet. With this method, it was very difficult to balance the level of consumer demand and meet the level of profitability would be maintained. The deployment process is fairly simple in the industry. First, managers must determine the number of cars to be on an inventory on a daily basis. Since a significant problem arises when not enough or too many cars available for carRent a car as Hertz, Avis and Enterprise, use a "pool", an independent group of car hire services that share a fleet of vehicles. Reason with swimming pools available to work more efficiently hire, because a low inventory to reduce the risk, if not eliminate the shortcomings of rental cars.
Market segmentation
Most of the supply chain a profit on the type of cars that are rented related. The vehicles are classified as economic rent,Compact, intermediate, high and luxury. Among the five categories, there is the economic sector will benefit the most. For example, the economy segment is solely responsible for 37.7 percent of total market turnover in 2004. In addition, the compact segment accounted for 32.3 percent of total sales. The rest of the categories that make up the remaining 30 percent for the segment of the United States.
historic levels of profitability
The profitability of car rentalhas declined in recent years. Over the past five years the industry has to fight, just like the rest of the travel industry. In fact, experienced between 2001 and 2003, the U.S. market, a moderate reduction in profitability. In particular, sales fell to $ 19400000000 2000-18200000000 dollars in 2001. Then erodes the entire industry with sales proceeds to 17900000000 dollars in 2002, an amount that is just over 17.7 billion U.S. dollars, the generalRevenue for the year 1999. In 2003 the sector has undergone a barely perceptible profit to 18.2 billion U.S. dollars to be connected. As a result of economic recession in recent years some of the younger players that were very much on the airlines make a lot of strategy of reorganization as a way to prepare their businesses to cope with any economic hardships that may surround the industry. For the year 2004, on the other hand, the economic situation of most companiesgradual improvement in the industry, because most owners profits far higher than in previous years ago. For example, generated sales of $ 7400000000 Enterprise, sales Hertz and Avis order $ 5200000000 $ 2900000000 with revenues for fiscal year 2004. According to analysts, rental car industry is the expected period of steady growth experienced by 2.6 per cent in revenue over the next which has resulted in aIncrease in profit.
competitive rivalry between the seller
There are many factors that affect competition within the car. In recent years, the fleet and increase profitability, size, industry expansion in the center of most companies in the rental car. Enterprise, Hertz and Avis are among the leaders is growing both in revenue and fleet size . In addition, increasing competition, as companies are constantly trying to improve their currentConditions and offer more to consumers. Enterprise has nearly the size of the fleet since 1993 doubled to about 600,000 cars a day. Since the industry is working on such tight profit margins, price competition is not a factor, but most companies are active in the creation of values and offers a range of technological gadgets to satisfy even the free distribution customers involved. Hertz, for example, integrated its Never-Lost GPS system in his car. Enterprise, on the otherHand, uses a sophisticated yield management software to manage their fleets.
Finally, the OnStar system uses Skynet and Avis, for customers and on weekends, holiday, free when a customer rents a car for five consecutive days of the rental car industry's customer base even better in the relatively low cost no switching. On the contrary, the owners face high fixed operating costs, including housing, insurance and maintenance. As a result, ownersprice sensitive, there are rental car only to recover operating costs and tailored to their customers demands. Also, because the slow growth of the sector in recent years, with experience as a result of economic stagnation caused a massive drop in business travel and leisure sector, many companies including industry leaders seek aggressively, its activities through the gradual reduction of dependence level to reposition the aviation sector and the recovery of baseArts Competition.
The potential entry of new competitors
Car rental is the beginning of the new arrivals is a serious disadvantage. In recent years the economic downturn of 2001, the largest rental companies have begun to increase their market share in the travel industry such as political stability of insurance and a reduction in the degree of dependence between the airline and car rental. Although this trend has producedlong-term success for existing businesses has increased the competitive environment for newcomers. monitor due to the severity of competition, the existing companies as Enterprise, Hertz and Avis carefully to anticipate their competitive position, radar Sharpe retaliation against new entrants. Another barrier to entry is created due to saturation of the sector.
For example, the company has taken first mover advantage with its 6,000 institutions of free timeSegment that is not only a high limit on the resource requirements of the channels, but also high for start-ups. Today, in a position of Enterprise rental within 15 miles of 90 percent of the U.S. population. Through its network of resellers Enterprise was established across the nation, has remained relatively stable, recession-proof, and more particularly, less dependent on air transport than its competitors. Hertz, on the other hand usesto ensure the full range of its 7,200 stores to its position in the market. Basically, the source of most of the industry leaders in a residential unit not only rivalry but varies directly with the degree of complexity into the car.
The threat of substitute products
There are many replacements for the rental car industry. From a technological point of view, rent a car to go away for a meeting is a minoran attractive alternative to video conferencing, virtual teams and collaboration software that allows a company to install an immediate meeting with colleagues from around the world at a cheaper price. In addition, there are other alternatives, including a taxi, the cost of a replacement satisfactory based on the quality and communication, but can not be, as more attractively priced as a rental car for the course of a day o. While public transport is thecost of alternatives is more expensive in terms of process and how long it takes to achieve his goal. Finally, flies because it offers comfort, speed and performance, this is a very attractive compensation, however, is an attractive alternative in terms of price compared to rent a car. The car rental business have increased protection against damage, as Many companies have implemented travel policies that the institutionThe parameter for a rental car or a replacement is the best way to proceed.
After Tracy Esch, director of marketing operations is an advantage, hiring his company car up to a trip of 200 miles before you consider an alternative. Basically, the threat of substitution is relatively low in the car, since the effects are not substitutes for profits represent a significant risk of erosion in the area.
The bargaining power ofRelated Searches
Supplier power is low in the rental car industry. Due to the availability of substitutes and the level of competition provider is not a lot of influence on the conditions of supply of rental cars. Since most rental cars are generally purchased, car rental agencies have a significant influence on the conditions of sale, because they have the capacity, suppliers of prizes to play against a sale following the child. Another factorThis reduces the power supplier is the absence of switching costs. That is, buyers to purchase from the supplier concerned of others and, above all, a shift to other supplier's products barely noticeable and will not affect the selection of rental consumers.
Bargaining power of buyers
During the leisure sector has little or no power, the turnover has a significant influence in the rental car. An interesting trendwhich is currently in the field, forcing travelers rent a car to suit the needs of business customers. This trend has significantly reduced the demand for electricity power supplier, or the leasing company and increase business performance because the company is the unbearable price sensitive, well informed on the price structure of the sector by buying in large quantities and using the Internet to force prices lower. Holiday shoppers are on the other hand, lessImpact on the conditions of hire. Because most travelers are less price sensitive, often in small amounts to buy or sell more, have weak negotiating position.
Five Forces
Today, the rental car industry is facing a totally different environment than he does, five years. competitive speaking, the revolution of the five forces for the rental car industry carries some strong economic pressure to cancel the competition blurredAttractiveness of the sector. As a result of economic recession in recent years, many companies went under budget and this is the vanguard group, because the environment given the unsustainability of the infrastructure company competitiveness. Today, only a few companies, including Enterprise, Hertz and Avis is a slightly above-average income compared to the rest of the industry. Realistically, the rental car industry is not very attractive because ofLevel of competition, the entry and the competitive pressure from the company for replacement.
Strategic Group Mapping
So moderate concentrated area, there is a clear hierarchy in the rental car. From an economic standpoint, there are differences on a number of dimensions, including the revenue, fleet size and market size of each company holds in the market. Sun Enterprise dominates the sector with a fleet of 600,000 vehiclescorrelated with the market size and profitability. Hertz is the second highest number with its market share and volume of the fleet. In addition, Avis has a third card. Avis is one of the companies that is having trouble recovering margins by the state on the economic crisis. For example, Avis in 2000 sales came to about $ 4,230,000,000 th Over the next few years, after 2000 sales of Avis significantly lowerthan in 2000. As a kind of uncertainty reduces the majority of enterprises are gradually reducing the level of dependence on aviation and the emerging markets of the leisure market. This trend is not in the best interest of Hertz, its business strategy is closely linked with the airports.
Success factors
There are many important factors to increase profitability during the rental agency. Capacity utilization is one factor that determines success inIndustry. Since creditors experience a loss of revenue, or if too few or too many cars sitting in their lot, it is of utmost importance for the efficient management of the fleet. This success factor is an important force for the industry as it reduces, if not eliminate, perhaps short of renting a car. Efficient distribution is another factor that keeps the industry profitable. Despite the positive relationship between the fleet and the level ofProfitability, companies are increasing the size of the fleet because of the competitive forces surrounding the area. Moreover, the convenience of one of the key features that consumers choose the creditors. That is, consumers are more prone to car rental companies to rent and convenient drop-off locations. Another important success factor that is common among rival firms to integrate technology into their business processes. Technology,as car rental companies to provide opportunities, consumer demand for alternative, renting a car, a nice but very spoiled by the convenience of online lending, among other things. In addition, companies have integrated GPS with roadside assistance, the customer piece of mind for the rental.
Industry attractiveness
There are many factors that influence the attractiveness of the rental car industry. As the industrymoderately concentrated, brings new entrants at a disadvantage. That is, its low concentration is a natural barrier for entry into the sector because they can not expect existing businesses to retaliate strongly against new entrants. Because of the risks associated with entry into the sector, among other factors, there is a very interesting market. From the competitive point of view, the leisure market saturated with 90 per cent, due to the active efforts of the 'Enterprisedominate this market sector. On the other side of the terminal facilities are heavily guarded by Hertz. Realistically entry provides low profitability of the sector in terms of costs and risks. For the majority of consumers are the most important factors in choosing a company rather than another price and convenience. For this reason, lenders are very important for attention in setting rates and in general also applies to operators in the state ofoffers consumers more for less just to stay competitive. Hertz offers, such as WLAN, customers simply add more convenience to their travel plans. Avis has a specialty on the other side of the weekend free when a customer rents a car for five consecutive weekdays. On the basis of the effects of the five forces, rental car industry is not this a very attractive area for potential new entrants.
Conclusion
The car is in the fielda state of relaxation. Although it is as well-funded industry implementation may seem, however, is gradually regaining its feet compared to their real economic situation over the past five years. As the profitability of insurance, next to the search market share and stability, most companies throughout the supply chain is a common objective, which is responsible for reducing dependence on air transport and to the leisure market . This product has been some movement strong competition among the competitors in the industry when they try to defend their market shares. From a futuristic perspective, better days of the rental car industry have come. Because increases in profitability, I think, most industry leaders such as Enterprise, Hertz and Avis of trade barriers and competition for the mobility of their strategic groups, and newcomers will be limited to infiltrate a better chance of succeed and to achieve> Car rental industry.
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