Kaufman Rosenthal posted an update 2 months, 1 week ago
The vehicle rental market is a multi-billion dollar sector of the US economy. America segment of this marketplace averages about $18.5 billion in revenue a year. Today, around 1.9 million rental vehicles that service the usa segment in the market. In addition, there are many rental agencies apart from the industry leaders that subdivide the whole revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the rental-car marketplace is highly consolidated which naturally puts potential new comers at the cost-disadvantage because they face high input costs with reduced possibility of economies of scale. Moreover, most of the profit is generated by a few firms including Enterprise, Hertz and Avis. To the fiscal year of 2004, Enterprise generated $7.4 billion as a whole revenue. Hertz started in second position about $5.2 billion and Avis with $2.97 in revenue.
There are many factors that shape the competitive landscape with the rental car industry. Competition arises from two main sources through the chain. On the vacation consumer’s end in the spectrum, level of competition is fierce not simply as the market is saturated and well guarded by industry leader Enterprise, but competitors operate at a price disadvantage together with smaller market shares since Enterprise has built a network of dealers over 90 % the leisure segment. Around the corporate segment, however, competitors are very strong at the airports since that segment is under tight supervision by Hertz. Because the industry underwent an enormous economic downfall lately, they have upgraded the size of competition within almost all of the firms that survived. Competitively speaking, the car hire marketplace is a war-zone since several rental agencies including Enterprise, Hertz and Avis one of the major players take part in a battle from the fittest.
Over the past couple of years the rental-car industry has created quite a lot of progress to facilitate it distribution processes. Today, around 19,000 rental locations yielding about 1.9 million car rentals in the united states. Because of the increasingly abundant variety of rental car locations in the US, strategic and tactical approaches are taken into consideration to be able to insure proper distribution during the entire industry. Distribution takes place within two interrelated segments. About the corporate market, the cars are offered to airports and hotel surroundings. On the leisure segment, alternatively, cars are offered to agency owned facilities which are conveniently located within most major roads and towns.
Previously, managers of car hire companies utilized to depend on gut-feelings or intuitive guesses to make decisions about how many cars to own within a particular fleet or perhaps the utilization level and gratification standards of keeping certain cars in a fleet. With that methodology, it was difficult to conserve a a higher level balance that will satisfy consumer demand along with the desired degree of profitability. The distribution process is pretty simple during the entire industry. Firstly, managers must determine the number of cars that needs to be on inventory each day. Because a very noticeable problem arises when way too many or not enough cars can be found, most car rental companies including Hertz, Enterprise and Avis, make use of a "pool” which is a band of independent rental facilities that share a fleet of vehicles. Basically, with the pools set up, rental locations operate more effectively simply because they prevent low inventory or else eliminate rental car shortages.
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