The car rental industry is a multi-billion dollar sector of the US economy.
The rental car industry faces a completely different environment than it did five years ago.
There are many factors that shape the competitive landscape of the car rental industry. Competitively speaking, the rental car industry is a war-zone as most rental agencies including Enterprise, Hertz and Avis among the major players engage in a battle of the fittest.
Over the years following the economic downturn, although most companies throughout the industry were struggling, Enterprise among the industry leaders had been growing steadily. According to industry analysts, the better days of the rental car industry have yet to come.
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. The distribution process is fairly simple throughout the industry.
The overall profitability of the car rental industry has been shrinking in recent years. According to industry analysts, the rental car industry is expected to experience steady growth of 2.6 percent in revenue over the next several years which translates into an increase in profit.
There are many factors that drive competition within the car rental industry. Over the past few years, broadening fleet sizes and increasing profitability has been the focus of most companies within the car rental industry. Conversely, rental agencies face high fixed operating costs including property rental, insurance and maintenance.
Entering the car rental industry puts new comers at a serious disadvantage. Over the past few years following the economic downturn of 2001, most major rental companies have started increasing their market shares in the vacation sector of the industry as a way of insuring stability and lowering the level of dependency between the airline and the car rental industry. Basically, the emergence of most of the industry leaders into the leisure market not only drives rivalry, but also it varies directly with the level of complexity of entering the car rental industry.
There are many substitutes available for the car rental industry. Basically, the threat of substitute is reasonably low in the car rental industry since the effects the substitute products have do not pose a significant threat of profit erosion throughout the industry.
Supplier power is low in the car rental industry.
While the leisure sector has little or no power, the business segment possesses a significant amount of influence in the car rental industry. An interesting trend that is currently underway throughout the industry is forcing car rental companies to adapt to the needs of corporate travelers.
Today the car rental industry is facing a completely different environment than it did five years ago. Competitively speaking, the revolution of the five forces around the car rental industry exerts some strong economic pressure that has significantly tarnished the competitive attractiveness of the industry. Today, very few firms including Enterprise, Hertz and Avis return a slightly above-average revenue compared to the rest of the industry. Realistically speaking, the car rental sector is not a very attractive industry because of the level of competition, the barriers to entry and the competitive pressure from the substitute firms.
As a moderately concentrated sector, there is a clear hierarchy in the car rental industry. For instance, Enterprise dominates the industry with a fleet size of approximately 600,000 vehicles along with its market size and its level of profitability.
There are many key success factors that drive profitability throughout the car rental industry.
Industry Attractiveness
There are many factors that impact the attractiveness of the car rental industry. Based on the impact of the five forces, the car rental sector is not a very attractive industry to potential new market entrants.
The rental car industry is in a state of recovery. From a futuristic perspective, the better days of the car rental industry have yet to come.
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The Car Rental Industry
Most Americans buy car on car loan scheme.
