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The car rental industry is a multi-billion dollar sector of the US economy. THE UNITED STATES segment of the averages about $18.5 billion in revenue a year. Today, there are approximately 1.9 million rental vehicles that service the US segment of the market. Furthermore, there are chauffeur service & rolls Royce phantom hire from the industry leaders that subdivide the full total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the rental car industry is highly consolidated which naturally puts potential newbies at a cost-disadvantage given that they face high input costs with minimal chance for economies of scale. Moreover, almost all of the profit is generated by 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 completely different environment than it did five years ago. 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 back. Due to slow industry growth and narrow profit percentage, there is no imminent threat to backward integration within the industry. In fact, on the list of industry players only Hertz is vertically integrated through Ford.

Scope of Competition

There are lots of factors that shape the competitive landscape of the car rental industry. Competition originates from two main sources through the entire chain. On the vacation consumer?s end of the spectrum, competition is fierce not only because 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 recently, it has upgraded the scale of competition within almost all of the companies that survived. 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.

Growth

In the last five years, most firms have already been working towards enhancing their fleet sizes and increasing the level of profitability. Enterprise currently the company with the largest fleet in america has added 75,000 vehicles to its fleet since 2002 that assist increase its amount of facilities to 170 at the airports. Hertz, alternatively, has added 25,000 vehicles and broadened its international presence in 150 counties as opposed to 140 in 2002. In addition, Avis has increased its fleet from 210,000 in 2002 to 220,000 despite recent economic adversities. Over time following the economic depression, although most companies throughout the industry were struggling, Enterprise among the industry leaders have been growing steadily. For instance, 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 days gone by four years. Since 2002, the has started 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 the next several years, the is expected 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 couple of years the rental car industry has made a lot of progress to facilitate it distribution processes. Today, you can find approximately 19,000 rental locations yielding about 1.9 million rental cars in america. Due to the increasingly abundant number of car rental locations in america, strategic and tactical approaches are taken into account to be able to insure proper distribution throughout the industry. Distribution occurs 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 which are conveniently located within most major roads and metropolitan areas.