The Car Rental Industry
The car rental market is a multi-billion dollar sector of america economy. America segment of the industry averages about $18.5 billion in revenue annually. Today, around 1.9 million rental vehicles that service america segment from the market. In addition, there are many rental agencies besides the industry leaders that subdivide the entire revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the car hire companies are highly consolidated which naturally puts potential newbees in 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 number of firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 billion as a whole revenue. Hertz arrived second position approximately $5.2 billion and Avis with $2.97 in revenue.
There are many factors that shape the competitive landscape with the car hire industry. Competition originates from two main sources during the entire chain. Around the vacation consumer’s end in the spectrum, competition is fierce not just because the information mill saturated and well guarded by leader in the industry Enterprise, but competitors operate at a cost disadvantage together with smaller market shares since Enterprise has produced a network of dealers over 90 % the leisure segment. On the corporate segment, alternatively, competition is strong at the airports since that segment is under tight supervision by Hertz. Because the industry underwent a massive economic downfall recently, they have upgraded the scale of competition within the majority of the companies that survived. Competitively speaking, the rental-car marketplace is a war-zone since several rental agencies including Enterprise, Hertz and Avis one of many major players take part in a battle of the fittest.
Within the last few years the rental-car industry makes quite a lot of progress to facilitate it distribution processes. Today, there are approximately 19,000 rental locations yielding about 1.9 million rental cars in the united states. Due to increasingly abundant number of car rental locations in america, strategic and tactical approaches are considered to be able to insure proper distribution through the entire industry. Distribution occurs within two interrelated segments. About the corporate market, the cars are given to airports and hotel surroundings. About the leisure segment, however, cars are offered to agency owned facilities which can be conveniently located within most major roads and urban centers.
Previously, managers of rental-car companies employed to depend upon gut-feelings or intuitive guesses to create decisions about how precisely many cars to have within a particular fleet or the utilization level and gratification standards of keeping certain cars in a single fleet. With that methodology, it had been tough to maintain a level of balance that might satisfy consumer demand and the desired level of profitability. The distribution process is fairly simple throughout the industry. Firstly, managers must determine the quantity of cars that really must be on inventory on a regular basis. Because a very noticeable problem arises when too many or not enough cars can be found, most car rental companies including Hertz, Enterprise and Avis, work with a "pool” which is a group of independent rental facilities that share a quantity of vehicles. Basically, with the pools available, rental locations operate better since they prevent low inventory otherwise eliminate rental-car shortages.
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