CAR RENTAL INDUSTRY

Car Rental Industry

Car Rental Industry

Introduction

The industry of car rental business is contributing as a leading industry in the global economy. It has become a multi-billion dollar industry of the economy of the United States. The global car rental industry plays an efficient role in developing the economy of the world. The industry's U.S. segment amounts almost $18.5 billion per year in revenue. In this day and age there are almost 1.9 millions of rental cars that were contributing to the services of the market's global segment (Datamonitor, 2004, Pp.7-8).

The leading industry and sector which has been contributing in the improvement of the economy of the globe is the car rental industry. As the financial situation and condition is improving and as people in today's world are capable of affording higher spend on overseas travel and leisure activities, a stream of the demand for the services of car rental has been observed since the period of past few years (Datamonitor, 2004, Pp.7-8).

Car rental business organizations are offering vehicles and cars on rent for the period of few months, weeks and hours, for a charge. These organizations normally cater to such customer or traveler needs who are willing to travel out of city or overseas and also for such people whose cars or vehicles have been damaged and insurance/repair is awaited (Datamonitor, 2004, Pp.7-8). These car rental agencies are situated normally in the city's busy areas all around the globe. Fleet renal and Rent-a-Car are the two segments through which car rental industries operate their business. The approach of Rent-a-Car depends on the fluctuations in world financial and economic conditions (Datamonitor, 2004, Pp.7-8).

Discussion

Market Overview

The car rental business is contributing as a multi-billion dollar segment of the global economy. There are several rental organizations in addition to the industry leaders that are contributing in increment in the total revenues namely Budget, Vanguard and Dollar Thrifty (May, 2009, p.51). Unlike other developed service sectors, the sector of car leasing is extremely united which helps in putting potential to new comers at a cost disadvantage because the confront with high input costs along with the decreased possibility of scale's economies. According to the research, it has been found that for the financial year of 2011, the car rental leading enterprise produced around $7.4 billion in total revenue (May, 2009, p.51).

Integration Level

The car rental industry is facing an entirely different environment as compared to the environment of five years back. According to the research of Business Travel News, it has been observed that vehicles and cars in the car rental industry are being rented until the industry accumulates 20000 to 30000 miles (May, 2009, p.51). Moreover, the vehicles are rented until they are transferred or demoted to the used car industry where the turn-around mileage becomes 12000 to 15000 miles. There is not the presence of any imminent risk to backward integration in the car rental industry because of narrow profit margin and slow industry growth (May, 2009, ...