weeding car hire is a multi-billion dollar sector of the united states 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 united states segment of the market. Furthermore, there are lots of rental agencies aside from the industry leaders that subdivide the 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 given that they face high input costs with reduced chance for economies of scale. Moreover, most of the profit is generated by way of 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 position with about $5.2 billion and Avis with $2.97 in revenue.

Level of Integration

The rental car industry faces a totally different environment than it did five years back. In accordance with Business Travel News, vehicles are being rented until they 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 ago. Because of slow industry growth and narrow profit percentage, 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 several factors that shape the competitive landscape of the automobile rental industry. Competition comes from two main sources throughout the 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 cost disadvantage alongside smaller market shares since Enterprise has generated a network of dealers over 90 percent the leisure segment. On the organization segment, on the other hand, competition is very strong at the airports since that segment is under tight supervision by Hertz. Because the industry underwent a massive economic downfall in recent years, it has upgraded the scale of competition within most of the companies that survived. Competitively speaking, the rental car industry is really 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

In the last five years, most firms have already been working towards enhancing their fleet sizes and increasing the amount of profitability. Enterprise currently the company with the biggest fleet in the US 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. Furthermore, Avis has increased its fleet from 210,000 in 2002 to 220,000 despite recent economic adversities. Through the years following the economic downturn, although most companies throughout the industry were struggling, Enterprise among the industry leaders have 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 the past 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. In accordance with industry analysts, the better days of the rental car industry have yet ahead. Over the course of another several years, the industry is likely to experience accelerated growth valued at $20.89 billion every year following 2008 “which compatible a CAGR of 2.7 % [increase] in the 2003-2008 period.?

Distribution

Over the past few years the rental car industry has made a great deal of progress to facilitate it distribution processes. Today, there are approximately 19,000 rental locations yielding about 1.9 million rental cars in the US. Due to increasingly abundant number of car rental locations in america, strategic and tactical approaches are considered in order to insure proper distribution throughout the industry. Distribution takes place within two interrelated segments. On the organization market, the cars are distributed to airports and hotel surroundings. On the leisure segment, however, cars are distributed to agency owned facilities that are conveniently located within most major roads and metropolitan areas.

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