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  • Kaufman Jernigan posted an update 1 week ago

    The automobile rental marketplace is a multi-billion dollar sector of the US economy. The united states segment of the marketplace averages about $18.5 billion in revenue per year. Today, around 1.9 million rental vehicles that service the united states segment with the market. In addition, there are lots of rental agencies apart from the industry leaders that subdivide the entire revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the car rental companies are highly consolidated which naturally puts potential new comers at the cost-disadvantage since they face high input costs with reduced chance of economies of scale. Moreover, most 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 whole revenue. Hertz came in second position with approximately $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 emanates from two main sources throughout the chain. For the vacation consumer’s end of the spectrum, competition is fierce not simply for the reason that marketplace is saturated and well guarded by leader in the industry Enterprise, but competitors operate at a price disadvantage in addition to smaller market shares since Enterprise has produced a network of dealers over 90 percent the leisure segment. On the corporate segment, conversely, levels of competition are quite strong at the airports since that segment is under tight supervision by Hertz. Since the industry underwent a huge economic downfall lately, it’s upgraded the dimensions of competition within most of the companies that survived. Competitively speaking, the rental-car marketplace is a war-zone because so many rental agencies including Enterprise, Hertz and Avis one of many major players participate in a battle of the fittest.

    During the last number of years the rental-car industry has made a great deal of progress to facilitate it distribution processes. Today, around 19,000 rental locations yielding about 1.9 million rental cars in america. Due to the increasingly abundant number of rental-car locations in the usa, strategic and tactical approaches are taken into consideration as a way to insure proper distribution through the industry. Distribution occurs within two interrelated segments. Around the corporate market, the cars are given to airports and hotel surroundings. About the leisure segment, on the other hand, cars are given to agency owned facilities which can be conveniently located within most major roads and metropolitan areas.

    Previously, managers of rental-car companies employed to depend upon gut-feelings or intuitive guesses to make decisions about how exactly many cars to have within a particular fleet or even the utilization level and satisfaction standards of keeping certain cars in a single fleet. With this methodology, it was very difficult to conserve a a higher level balance that would satisfy consumer demand along with the desired level of profitability. The distribution process is fairly simple during the entire industry. To start with, managers must determine the amount of cars that needs to be on inventory on a regular basis. Must be very noticeable problem arises when a lot of or not enough cars can be found, most car hire companies including Hertz, Enterprise and Avis, work with a "pool” that is a number of independent rental facilities that share a number of vehicles. Basically, together with the pools in place, rental locations operate more proficiently since they reduce the risk of low inventory otherwise eliminate car rental shortages.

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