Market Review
The car rental industry is a multi-billion dollar sector of the US economy. The American segment of the industry averages about $ 18.5 billion. US per year. Currently, about 1.9 million rental cars serve the US market segment. In addition, there are many rental agencies with industry leaders who divide total revenue, sometimes the Thrifty dollar, the budget, and Vanguard. Unlike other mature service industries, the rental car industry is highly consolidated, which naturally puts potential new customers at a disadvantage as they face high production costs with a reduced likelihood of economies of scale. Moreover, most of the profits are generated by several firms, including Enterprise, Hertz and Avis. In fiscal year 2004, the company received a total revenue of $ 7.4 billion. USA. Hertz ranked second: about $ 5.2 billion. US, and Avis - $ 2.97.
Integration level
The rental car industry faces a completely different situation than five years ago. According to Business Travel News, cars are rented until they reach from 20,000 to 30,000 miles, until they are assigned to the used car industry, while working mileage was 12,000 to 15,000 miles for five years backwards Due to the slow growth of the industry and the narrow profit margin, there is no immediate threat for backward integration in the industry. In fact, among the industry players, only Hertz is vertically integrated through Ford.
Scope of competition
There are many factors that shape the competitive landscape of the car rental industry. Competition comes from two main sources through the chain. On the final side of the recreation spectrum, competition is fierce, not only because the market is organized and well protected by the industrial leader Enterprise, but competitors are at a disadvantage along with smaller market shares, as Enterprise has created a network of dealers for more than 90 percent of the leisure segment. On the other hand, in the corporate segment, competition is very strong at airports, as this segment is under close surveillance by Hertz. Since the industry has experienced a significant economic downturn in recent years, it has improved the scale of competition in most companies that have survived. Competitively speaking, the rental car industry is a military zone like most rental agencies, including Enterprise, Hertz and Avis, are among the major players in the battle of the fittest.
growth
Over the past five years, most firms have worked to increase the size of their fleets and increase profitability. The company is currently the company with the largest fleet in the US added 75,000 vehicles to its fleet since 2002, which helps to increase its number to 170 at airports. On the other hand, Hertz added 25,000 cars and expanded its international presence in 150 districts, but not in 2002. In 2002, Avis increased its fleet from 210,000 in 2002 to 220,000, despite recent economic difficulties. For many years after the economic downturn, although most companies across the industry struggled, Enterprise among the industry leaders grew steadily. For example, annual sales in 2001 were $ 6.3, $ 6.5 in 2002, $ 6.9 in 2003 and $ 7.4 billion. United States in 2004, which in the past four years is 7.2 percent per year. Since 2002, the industry began to recover its position in this sector, as total sales in 2003 increased from 17.9 billion dollars to 18.2 billion dollars. According to industry analysts, the best days of the rental car industry are still ahead. Over the next few years, it is expected that the industry will experience accelerated growth of $ 20.89 billion. USA in the year after 2008 ", which corresponds to the CAGR level of 2.7% [increase] in the period 2003-2008. "
distribution
Over the past few years, the rental car industry has made significant progress to facilitate its distribution processes. Today, there are about 19,000 rental locations in the United States, which gives about 1.9 million rental cars in the United States. Due to the increasing number of car rental locations in the United States, strategic and tactical approaches are taken into account to ensure proper distribution throughout the industry. Distribution occurs in two interconnected segments. In the corporate market, cars are distributed between airports and hotel surroundings. In the leisure segment, on the other hand, cars are distributed in agency-owned facilities that are conveniently located on most major roads and in urban areas.
Previously, car rental executives relied on gut feelings or intuitive guesses to make decisions about how many cars you need to have in a particular fleet or usage level and performance standards for storing specific cars in one fleet. With this methodology, it was very difficult to maintain a level of equilibrium that would satisfy consumer demand and the desired level of profitability. The distribution process is fairly simple across the industry. To begin with, managers must determine the number of cars that must be in inventory every day. Since there is a very noticeable problem when there are too many or not enough cars available, most car rental companies, including Hertz, Enterprise and Avis, use a “pool”, which is a group of independent rental properties that share a fleet of vehicles. swimming pools are on-site, rental units work more efficiently, because since then they reduce the risk of low stock, if not eliminate the shortage of rental cars.
Market segmentation
Most companies throughout the chain make a profit based on the type of cars that are being leased. Car rental is classified as economical, compact, intermediate, premium and luxurious. In five categories, the largest profit is received by the economy sector. For example, the economic segment itself is responsible for 37.7 percent of total market income in 2004. In addition, the compact segment accounted for 32.3 percent of total revenue. The remaining categories cover the remaining 30% for the US segment.
Historical rates of return
In recent years, the overall profitability of the car rental industry has been declining. Over the past five years, the industry has fought just like the rest of the tourism industry. In fact, in the period from 2001 to 2003, there was a moderate decrease in the level of profitability in the US market. In particular, revenue declined from $ 19.4 billion. United States in 2000 to 18.2 billion dollars. United States in 2001. Subsequently, total revenues in the industry fell to another $ 17.9 billion. The United States in 2002; the minimum amount exceeds $ 17.7 billion, which is the total revenue for 1999. In 2003, the industry experienced a slight increase, which brought a profit of up to $ 18.2 billion. As a result of the economic downturn in recent years, some of the smaller players, who depended heavily on the aviation industry, made many reorganizations of strategies to prepare their companies to combat economic hardships that could surround the industry. On the other hand, in 2004 The economic situation of most firms has gradually improved in the industry, since most rental agencies have returned much higher returns than in previous years. For example, the company sold revenues in the amount of $ 7.4 billion. USA; Hertz returned $ 5.2 billion in revenue. USA and Avis with an income of 2.9 billion dollars. United States for the fiscal year 2004. According to industry analysts, in the rental car industry a steady growth of 2.6 percent is expected over the next few years, which is an increase in profits.
Competitive sellers competition
There are many factors that stimulate competition in the car rental industry. Over the past few years, expanding fleet size and increasing profitability has been the focus of most car rental companies. Enterprise, Hertz and Avis among the leaders are growing both in sales and in the size of the park. In addition, competition is increasing as firms continually try to improve their current conditions and offer more to consumers. The company has nearly doubled the size of its fleet since 1993 to about 600,000 vehicles today. Since the industry operates on such limited profits, price competition is not a factor; However, most companies are actively involved in creating value and providing a range of amenities, from technology gadgets to free rentals to meet customer needs. For example, Hertz integrates its Never-Lost GPS system into its cars. On the other hand, an enterprise uses sophisticated revenue management software to manage its fleets.
Finally, Avis uses its OnStar and Skynet system to better serve the customer base and offers free weekend rentals if the customer rents a car for five consecutive days. In addition, the consumer base of the rental car industry has a relatively low cost without switching. In contrast, rental agencies face high fixed operating expenses, including rental properties, insurance and maintenance. Consequently, rental agencies are sensitively evaluating rental cars only to recover operating costs and adequately meet the needs of their customers. In addition, since the industry has experienced slow growth in recent years due to economic stagnation, which has led to a significant reduction in both corporate travel and leisure, most companies, including industry leaders, are persistently trying to redefine their firms, gradually reducing their dependency on aviation industry and regaining its position in the leisure competitive arena.
Potential entry of new members
Entry into the car rental industry puts new guests at a serious disadvantage. Over the past few years after the 2001 economic downturn, most major rental companies have begun to increase their market share in the vacation sector in the industry as a way to ensure stability and reduce the level of dependence between the airline and the car rental industry. Despite the fact that this trend has caused long-term success for existing companies, it has strengthened the competitive landscape for new visitors. Because of the seriousness of the competition, existing firms, such as Enterprise, Hertz and Avis, carefully monitor their competitive radar to expect Sharpe to respond to new entrants. Another barrier to entry is created because of the level of saturation of the industry.
For example, Enterprise took advantage of the first advantage for its 6,000 facilities, saturating the leisure segment, thereby not only limiting the most common distribution channels, but also the high resource requirements for new firms. Today, the enterprise has a rented space within 15 miles of 90 percent of the US population. Due to the fact that the Enterprise Dealer Network was created around the country, it became reliable stability, a greater recession and, most importantly, less dependent on the airline industry than its competitors. Hertz, on the other hand, uses the full range of its 7200 stores to secure its position in the market. In fact, the emergence of the majority of industry leaders in the leisure market not only stimulates competition, but also directly depends on the level of difficulty entering the car rental industry.
Threat of substitution
There are many substitutes available for car hire. From a technological point of view, renting a car to go the distance for a meeting is a less attractive alternative, rather than video conferencing, virtual teams and collaboration software, with which the company can immediately set up a meeting with its employees from anywhere in the world for less . In addition, there are other alternatives, including the use of a cabin, which is a satisfactory substitute compared to the quality and cost of switching, but it may not be as attractively priced as a rental car for a day or more. While public transport is the most economical of the alternatives, it is more expensive in terms of the process and time needed to reach the goal. Finally, because flying provides convenience, speed and performance, this is a very tempting replacement; however, it is an unattractive alternative in terms of price regarding car rental. In the business segment, car rental agencies have greater protection against substitutes, since many companies have a travel policy that sets options when renting a car or using a replacement is the best way to go.
According to Tracey Ash, director of marketing operations at Advantage, her company rents cars up to a 200-mile journey before considering an alternative. In principle, the threat of substitution is quite low in the car rental industry, since the consequences that substitution products do not pose a significant threat to the erosion of profits in the industry.
Strength suppliers suppliers
In the car rental industry low power supplier. Because of the availability of substitutes and the level of competition, suppliers do not have much influence in the terms of rental cars. Since rental cars are usually bought in bulk, car rental agents have a significant impact on the terms of sale, as they have the ability to play one supplier against another in order to lower the sale price. Another factor that reduces supplier power is the lack of switching cost. That is, buyers will not suffer from buying from one supplier over another, and, most importantly, switching to different products of the supplier is strictly noticeable and does not affect the choice of consumer rent.
The power of customer bargaining
While there is little or no power in the leisure sector, the business segment has significant influence in the car rental industry. An interesting trend that is currently passing through the industry is forcing car rental companies to adapt to the needs of corporate travelers. This trend significantly reduces the power of suppliers or rental companies. power and increases the power of the corporate buyer, as the business segment is painfully price-sensitive, well informed about the price structure of the market, buys in large quantities, and they use the Internet to lower lower prices. Holiday buyers, on the other hand, have less influence on rental conditions. Since vacationers are usually less price-sensitive, buy in smaller quantities or rarely, they have a weak ability to bargain.
Five forces
Today, the car rental industry is facing a completely different situation than five years ago. Competitively speaking, the revolution of the five forces around the car rental industry reflected some strong economic pressure that significantly impaired the competitive attractiveness of the industry. As a result of the economic downturn in recent years, many companies have gone under the nominal budget and the Vanguard Group because their business infrastructure has succumbed to the insolvency of the competitive environment. Today, very few firms, including Enterprise, Hertz and Avis, return slightly higher than average earnings compared to the rest of the industry. Realistically speaking, the car rental sector is not a very attractive industry due to the level of competition, barriers to entry and competitive pressure from substitute firms.
Drawing up strategic groups
As a moderately concentrated sector, there is a clear hierarchy in the car rental industry. From an economic point of view, differences exist in several aspects, including revenue, fleet size and market size, which each firm holds in the market. For example, Enterprise dominates the industry with a fleet size of about 600,000 vehicles, as well as its market size and profitability. Hertz ranks second with the number of shares and fleet size. In addition, Avis ranks third on the map. Avis is one of the companies that has trouble returning profits before the recession. For example, in 2000, Avis returned revenue of about 4.23 billion dollars. Over the next few years following the year 2000, Avis revenue was significantly lower than in 2000. В качестве способа снижения неопределенности большинство компаний постепенно снижают уровень зависимости от отрасли авиаперевозок и появления рынка досуга. Эта тенденция может оказаться не в интересах Герца, поскольку ее бизнес-стратегия неразрывно связана с аэропортами.
Ключевые факторы успеха
Существует много ключевых факторов успеха, которые способствуют повышению рентабельности в отрасли проката автомобилей. Использование мощностей является одним из факторов, определяющих успех в отрасли. Поскольку аренда фирм испытывает потерю дохода, когда в их партиях слишком мало или слишком много автомобилей, крайне важно эффективно управлять флотами. Этот фактор успеха представляет большую силу для отрасли, поскольку он опускается, если не полностью устраняет возможную нехватку прокатных автомобилей. Эффективное распределение - еще один фактор, который делает отрасль прибыльной. Несмотря на положительную взаимосвязь между размерами флота и уровнем рентабельности, фирмы постоянно наращивают свои размеры флота из-за конкурентных сил, которые окружают промышленность. Кроме того, удобство является одним из важнейших атрибутов, по которым потребители выбирают фирмы по аренде. То есть потребители проката автомобилей более склонны к аренде автомобилей у фирм, у которых есть удобная аренда и высадка. Другим ключевым фактором успеха, который является общим среди конкурентных фирм, является интеграция технологий в их бизнес-процессы. С помощью технологий, например, компании по прокату автомобилей создают способы удовлетворения потребительского спроса, делая аренду автомобиля очень приятным порядком, добавляя удобство онлайн-проката среди других альтернатив. Кроме того, фирмы интегрировали навигационные системы вместе с придорожной помощью, чтобы предлагать клиентам кусок ума при аренде автомобилей.
Отраслевая привлекательность
Есть много факторов, которые влияют на привлекательность индустрии проката автомобилей. Поскольку отрасль умеренно сконцентрирована, это ставит новых участников рынка в невыгодное положение. То есть его низкая концентрация представляет собой естественный барьер для входа в отрасль, поскольку она позволяет существующей фирме ожидать резких ответных мер против новых участников. Из-за рисков, связанных с вхождением в отрасль среди других факторов, это не очень привлекательный сектор рынка. С конкурентоспособной точки зрения рынок досуга на 90 процентов запланирован из-за активных усилий Enterprise по доминированию в этом секторе рынка. С другой стороны, терминалы аэропорта серьезно охраняются Герцем. Реально говоря, вход в отрасль обеспечивает низкую рентабельность относительно связанных с этим затрат и рисков. Для большинства потребителей основными определяющими факторами выбора одной компании над другой являются цена и удобство. По этой причине арендные фирмы очень осторожны в отношении установления своих ставок и, как правило, вынуждают даже самых крупных игроков отрасли в том, чтобы предлагать потребителям больше, а не просто оставаться конкурентоспособными. Например, Hertz предлагает своим клиентам беспроводной доступ в Интернет только для того, чтобы добавить больше удобств в свои планы поездок. Avis, с другой стороны, предлагает бесплатные специальные выходные дни, если клиент возвращает автомобиль в течение пяти последовательных будних дней. Основываясь на влиянии пяти сил, сектор аренды автомобилей не является очень привлекательной отраслью для потенциальных новых участников рынка.
Conclusion
Промышленность прокатных автомобилей находится в состоянии восстановления. Хотя может показаться, что индустрия хорошо работает в финансовом отношении, тем не менее постепенно восстанавливает свои позиции по сравнению с фактическим экономическим положением за последние пять лет. В качестве способа обеспечения рентабельности, в том числе для поиска доли рынка и стабильности, большинство компаний по всей цепочке имеют общую цель, которая направлена на снижение уровня зависимости от отрасли авиаперевозок и переход к сегменту досуга. Это состояние движения породило некоторую яростную конкуренцию среди конкурентов в отрасли, поскольку они пытались защитить свои доли на рынке. С футуристической точки зрения, лучшие дни в индустрии проката автомобилей еще впереди. По мере роста уровня рентабельности я считаю, что большинство лидеров отрасли, включая Enterprise, Hertz и Avis, будут ограничены экономическими и конкурентными барьерами мобильности своих стратегических групп, а новые посетители получат больше шансов проникнуть и реализовать успех в прокат автомобилей.
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