The US segment of the industry has average annual sales of $18.5 billion. Today there are approximately 1.9 million rental vehicles serving the US market segment. Additionally, alongside the industry leaders, there are many car rental companies that split the total revenue, namely Dollar Thrifty, Budget, and Vanguard. Unlike other mature service industries, the rental car industry is highly consolidated, which naturally puts potential newcomers at a cost disadvantage as they face high input costs with less opportunity for economies of scale. In addition, most of the profit is generated by a few companies, including Enterprise, Hertz and Avis. In fiscal 2004, Enterprise had total revenues of $7.4 billion. Hertz came in second with around $5.2 billion and Avis with $2.97 in revenue.
Level of integration
The rental car industry is facing a very different environment than it was five years ago. According to Business Travel News, vehicles are rented out until they earn 20,000 to 30,000 miles before they are relegated to the used car industry, while five years ago turnaround miles were 12,000 to 15,000 miles. Due to slow industry growth and low profit margin, there is no immediate risk of backward integration within the industry. In fact, among industry players, only Hertz is vertically integrated through Ford.
Scope of the competition
There are many factors affecting the competitive landscape of curaca car hire. The competition comes from two main sources throughout the chain. At the vacation consumer end of the spectrum, not only is competition fierce because the market is saturated and well guarded by industry leader Enterprise, but competitors also have a cost disadvantage and lower market share because Enterprise has built a dealer network of over 90 percent of the leisure segment. In the corporate segment, on the other hand, competition at the airports is very strong, as this segment is closely monitored by Hertz. As the industry has experienced a massive economic decline in recent years, it has increased competition within most surviving businesses. Competitively, the rental car industry is a war zone as most rental companies, including Enterprise, Hertz and Avis, are major players embarking on a battle of the fittest.
Over the past five years, most companies have worked to increase their fleet size and increase profitability. Enterprise, currently the company with the largest fleet in the United States, has added 75,000 vehicles to its fleet since 2002, helping to increase the number of airport facilities to 170. Hertz, on the other hand, added 25,000 vehicles and expanded its international presence to 150 counties from 140 in 2002. In addition, despite recent economic difficulties, Avis has increased its fleet to 220,000 from 210,000 in 2002. In the years following the economic downturn, Enterprise had grown steadily among the industry leaders, even as most companies across the industry struggled. For example, annual sales reached $6.3 billion in 2001, $6.5 billion in 2002, $6.9 billion in 2003 and $7.4 billion in 2004, showing a growth rate of 7.2 percent over the past four years per year corresponded. Since 2002, the industry has begun to regain a foothold in the industry as total sales increased from $17.9 billion to $18.2 billion in 2003. According to industry analysts, the better days of the rental car industry are yet to come. Over the next several years, the industry is expected to experience accelerated growth of $20.89 billion each year after 2008.
In recent years, the rental car industry has made great strides in facilitating their sales processes. Today there are around 19,000 rental locations in the USA with around 1.9 million rental cars. With the increasing number of car rental companies in the US, strategic and tactical approaches are considered to ensure proper distribution across the industry. The distribution takes place in two interconnected segments. In the corporate market, the cars are distributed at airports and hotel environments. On the other hand, cars in the leisure segment are distributed to agency-owned facilities conveniently located on most high streets and metropolitan areas.