advantage car rental toronto airport

Market Overview

The car is a multi-billion dollar sector of the U.S. economy. The U.S. segment of the industry average of about 18.5 billion U.S. dollars sales per year. Today there are around 1.9 million vehicles, rental service of the U.S. segment of the market. Moreover, there are many agencies in addition to the industry leaders, the division of total revenue, namely, Dollar Thrifty, Budget and Vanguard. Unlike other access services, the auto industry is highly consolidated, which naturally makes potential new comers to a cost disadvantage, since the high input costs with reduced possibility of economies of scale. Moreover, most of the profit is determined by a few companies, including companies, Hertz and Avis. For fiscal year 2004, companies with a value of $ 7.4 billion in total revenue. Hertz came in second place with about $ 5.2 billion and Avis with $ 2.97 in revenue.

Degree of integration

The auto industry is faced with a totally different environment than it did five years ago. According to Business Travel News, rented cars, until they have 20,000 to 30,000 miles to become the used car industry with the consideration that the turnaround has been driven 12,000 to 15,000 miles before five years. Because of the slow growth of industry and narrow profit margin, there is no immediate danger to the backward integration in the industry. In fact, the industry players only hertz is a vertically integrated company by Ford

Degree of competition

There are many factors that determine the competitive situation of the car rental industry. Competition comes from two sources in the entire chain. On the holiday consumer end of the spectrum, competition is fierce, not only because the market is saturated and well guarded by the industry's leading companies, but competitors with a cost disadvantage with smaller market shares, as company has a network of dealers for more than 90 percent leisure segment. On the corporate segment, on the other hand, competition is very strong at the airports, as this segment is under strict supervision from Hertz. As the industry has been a massive economic decline in recent years, the extent of competition in most of the companies that survived. Competitively speaking, the auto industry is a war zone, as most agencies, including Enterprise, Hertz and Avis of the major players in a battle of the fittest.

Growth

In the last five years, most companies have in order to strengthen its fleet size and to increase profitability. Currently the company with the largest fleet in the United States has 75,000 vehicles to its fleet since 2002, helping to reduce the number of installations to 170 at the airports. Hertz, on the other hand, 25,000 vehicles and has expanded its international presence in 150 districts in contrast to 140 in 2002. In addition, Avis has its fleet of 210,000 in 2002 to 220,000, despite the recent economic adversity. Over the years, according to the economic downturn, although the majority of companies throughout the industry to fight, Enterprise on the industry leaders has been growing steadily. For example, annual sales reached $ 6.3 in year 2001 $ 6.5 in 2002, $ 6.9 in 2003 and $ 7.4 billion in 2004, in a growth rate of 7.2 percent per year for the last four years. Since 2002, the industry has started its base in the industry as total sales rose from $ 17.9 billion to $ 18.2 billion in 2003. According to industry analysts, the better days of the auto industry is not yet. Over the next few years, the industry is expected to accelerated growth in the value of $ 20.89 billion each year after 2008 ", representing a CAGR of 2.7% [more] in the period 2003-2008. "

Sales

In recent years, the auto industry has made great strides to make it easier for sales processes. Today there are about 19,000 stations is about 1.9 million rental cars in the U.S.. Due to the ever-abundant number of rental cars in the U.S., the strategic and tactical approaches to be taken into account to ensure proper distribution throughout the industry. Distributed within two connected segments. On the corporate market, the cars are at airports and hotels. On the leisure segment, on the other hand, cars are the agencies in possession of equipment, conveniently located in the most important streets and metropolitan regions.

In the past, managing director of car companies used to gut-feelings or intuitive guesses to make decisions, how many cars, that in a particular fleet or the utilization and performance standards for the management of certain vehicles in a fleet. With this method, it was very difficult to give a degree of balance that would be consumer demand and the desired level of profitability. The distribution is fairly simple in the entire industry. First, managers must the number of cars, must be based on inventory on a daily basis. Since a very significant problem arises when too many or not enough vehicles available, most car rental companies including Hertz, Avis and Enterprise, with a "pool", which is a group of independent institutions, which operates a fleet of vehicles . In fact, with the available pool, rental sites work more efficiently, since the risk of low stock, if not eliminate Cars deficiency.

Market Segmentation

Most companies in the entire chain of a profit based on the type of vehicles for hire. The rental vehicles are in the categories of economy, compact, intermediate, premium and luxury. Among the five categories, the business sector is the most profit. For example, the economy segment itself is responsible for 37.7 percent of the total market revenue in 2004. Moreover, the compact segment accounted for 32.3 percent of total sales. The rest of the other categories for the remaining 30 percent for the U.S. segment.

Historic Areas of Profitability

The profitability of the car has improved in recent years, shrinking. In the last five years, the industry has to struggle like the rest of the travel industry. In fact, between 2001 and 2003 the U.S. market has a moderate reduction in the level of profitability. In particular, sales fell from $ 19.4 billion in 2000 to $ 18.2 billion in 2001. Then the total revenue of the industry falls further to $ 17.9 billion in 2002, an amount which is minimally higher than $ 17.7 billion, the revenue for the year 1999. In 2003 the industry had little appreciable gain, which up to $ 18.2 billion. As a result of the slowdown in recent years, some of the smaller suppliers, which is largely dependent on the airline industry have a high degree of strategic realignment as a way of preparing their businesses to cope with potential economic adversity of the surround - industry. For the year 2004, on the other hand, the economic situation of most enterprises have gradually throughout the industry, since most agencies have again much larger gains in relation to the forward years. For example, enterprise realizes a turnover of $ 7.4 billion; Hertz again a turnover of $ 5.2 billion and Avis with $ 2.9 billion in sales for fiscal year 2004. According to industry analysts, the automotive industry is expected continual growth of 2.6 percent in revenue over the next few years, in an increase in profit.

Competitive Rivalry sub-Seller

There are many factors that would distort competition within the car rental industry. In recent years expanded fleet size and increase in profitability has been the focus of most companies in the car rental industry. Enterprise, Hertz and Avis have been among the leaders in both growing revenue and fleet size. In addition, the competition, as companies are constantly striving to offer their current and more for consumers. Company almost doubled its fleet size since 1993 to around 600,000 cars today. As the industry on these narrow profit margins, price competition is not a factor, but most companies are actively involved in the creation of values and a range of amenities from technological gadgets including free rental customers. Hertz, for example, integrated its Never-Lost GPS system in their cars. Companies, on the other hand, uses sophisticated yield management software to manage their fleets.

Finally, Avis is Skynet and its OnStar system to better serve the consumer and offers free weekend rental if a customer rents a car for five consecutive days Moreover, the consumer price index based on the auto industry is relatively low, so as not switching costs. Conversely, agencies with high fixed operating costs including property rentals, insurance and maintenance. Consequently, agencies are sensitive pricing Cars are only to operating costs and appropriately, their customers demanded. Moreover, since the industry experienced slow growth in recent years due to economic stagnation, leading to a massive decline in the two companies in the travel and leisure sector, the majority of companies, including industry leaders are aggressively trying their businesses through the progressive reduction of Depending on the airline industry and return to their base in the leisure competition.

The potential entry of new competitors

Top of the car industry introduces new arrivals at a serious disadvantage. In recent years, according to the economic downturn of 2001, most major rental companies have begun increasing their market share in the holiday sector of the industry as a way of insuring the stability and reduce the level of dependence between the airline and the car rental industry. While this trend has led to long term success for the existing businesses, it has the competitive situation for the new comers. Due to the severity of competition, existing companies such as Enterprise, Hertz and Avis carefully monitor their competitive position to anticipate radars Sharpe retaliation strikes against new entrants. Another barrier to entry, because the saturation level of the industry.

For example, Enterprise has the first mover advantage with the bodies of 6000 saturating the leisure segment, and thus not only high restrictions on the most common distribution channels, but also high demands on a new business. Today, Enterprise has a rental location within 15 miles of 90 percent of the U.S. population. As the network of distributor companies around the nation, has remained relatively stable, more recession proof and above all, much to the airline industry in comparison to its competitors. Hertz, on the other hand, uses the whole spectrum of the 7200 stores to its position on the market. Basically, the emergence of most of the industry leaders in the leisure market rivalry not only drives, but it is also directly related to the degree of complexity of entering the car rental industry.

The Threat of Substitute

There are many replacements for the car rental industry. From a technological point of view, rent a car to the distance for a meeting is a less attractive alternative, as opposed to video conferencing, virtual teams and collaboration with the software a company can immediately set up a meeting with his colleagues from around the world a reasonable price. In addition, there are other alternatives, including a taxi, which is a satisfactory substitute in relation to quality and switching costs, but it is not so attractive price than a car for the course of one day or more. While public transportation is the cheapest of the alternatives, it is more expensive in relation to the process and the time required to reach the goal. Finally, because flies offers comfort, speed and performance, it is very tempting to replace, but it is an unattractive alternative in terms of prices compared to rent a car. In the business segment, Car Rental, more protection against the substitute, as many companies have travel policies that the parameters, when renting a car or an alternative is the best measure.

After Tracy Esch, an advantage of the director of marketing, their company leased cars to a 200-mile journey before an alternative. Basically, the threat of replacement is relatively low in the car rental industry, as the impact of the products do not replace a significant threat to the profit erosion in the entire industry.

The bargaining power of suppliers

Supplier power is in the car rental industry. Due to the availability of substitutes and competition, vendors do not have much influence on the terms and conditions of supply of rental cars. Since the rental car are usually in bulk, car rental agents have a significant influence on the conditions of sale, since they have the ability to create a supplier against another to lower the selling price. Another factor that reduces the power supplier is the absence of switching costs. This means that the buyers are not affected by the purchase of one supplier over another and, above all, consider switching to other suppliers is hardly noticeable and does not affect consumer rental decisions.

The bargaining power of buyers

While leisure has little or no power, the division has a significant amount of influence in the car rental industry. An interesting trend that is currently in the entire car rental industry is forcing companies to adapt to the needs of business travelers. This trend significantly reduces suppliers or rental companies and corporate purchasing power increases as the business segment is agonizing price sensitive, well-informed about the structure of the industry as the price of buying in large quantities, and they use the Internet to lower prices. Holiday buyers, on the other hand, have less influence on the Lease. Because tourists are generally less price, buying in smaller quantities or buy more often, they have weak negotiating position.

Five Forces

Today is the car rental industry is facing a totally different environment than it did five years ago. Competitively speaking, the revolution of the five forces around the car rental industry exercises some strong economic pressure has significantly tarnished, that the attractiveness of the competition in the industry. As a result of the slowdown in recent years, many companies went under that budget and the Vanguard Group, because their business and IT untenability succumbed to the competitive environment. Today, very few companies, including companies, Hertz and Avis are a slightly above average income compared to the rest of the industry. Realistically speaking, the car is not very attractive because the industry the level of competition, the barriers to entry and competitive pressure from companies to replace.

Strategic Group Mapping

As a moderately concentrated industry, there is a clear hierarchy in the car rental industry. From an economic point of view, consist of a number of dimensions, including revenue, fleet size and market each company holds on the market. For example, companies dominated the industry with a fleet of around 600,000 vehicles, with its market and its profitability. Hertz comes in second place with the number of shares and the fleet band. In addition, Avis in third place on the map. Avis is one of the companies that deal with issues that revenue from its margins before the economic downturn. For example, Avis in 2000 again had a turnover of approximately $ 4.23 billion. Over the next few years after 2000, the revenue from Avis is significantly lower than that of 2000. As a means to reduce the uncertainty, most companies are gradually reducing the level of dependence on the airline industry and emerging countries in the leisure market. This trend may not be in the best interest of Hertz since their strategy is closely linked to the airports.

Key Success Factors

There are many factors that are key to the success of profitability in the entire car rental industry. Capacity utilization is one factor that determines success in the industry. Since landlords experience a loss of revenue if it is either too little or too many cars sitting in their lots, it is of utmost importance for the efficient management of fleets. This success is a great strength for the industry, as it reduces, if not totally eliminated, possibly by just over Cars. Efficient distribution is another factor for the industry profitable. Despite the positive relationship between fleet size and the level of profitability, companies are constantly growing their fleet sizes because of the competition in the industry, which they surrounded. In addition, convenience is one of the crucial properties through which the consumer the choice landlord. That is, Car Consumers are more prone to car companies, leasing and convenient drop off locations. Another key factor for success is that among the competing companies is the integration of technology into their business processes. Through the technology, for example, car rental opportunities to consumer demand by renting a car, a very pleasant test, using the convenience of online rental alternatives, among others. In addition, companies with Navigation Roadside Assistance to provide our customers with the work of the Spirit, if the car.

Industry attractiveness

There are many factors that influence the attractiveness of the car rental industry. Since the industry is moderately concentrated, it puts new entrants at a disadvantage. That is, its low concentration is a natural barrier for entry into the industry because it allows existing companies to anticipate sharp Retaliation against new entrants. Because of the risks associated with entering the industry, among other things, it's not a very attractive area of the market. From a competitive point of view of the leisure market is saturated, since 90 percent of the active efforts of companies to dominate in this segment of the market. On the other hand, the airport terminals are heavily guarded by Hertz. Realistically speaking, record in the industry offers low profitability in relation to the costs and risks. For most consumers, the most important factors for selecting a company to another are price and convenience. For this reason, the rental companies are very hesitant about their attitude and usually also the strength of the industry key players in a position to offer the consumer more for less just to stay competitive. Hertz, for example, offers wireless internet for its customers only to greater convenience for their travel plans. Avis, on the other hand, offers free weekend specials, when a customer rents a car for five consecutive days. Based on the effects of the five forces, the rental of vehicles is not very attractive for potential new industry entrants.

Conclusion

The auto industry is in a state of recovery. Although it seems that the industry is financially well, but it is gradually return to its base in proportion to their actual economic situation in the past five years. One possibility for the insurance profitability, next to the search for market share and stability, most companies across the chain have a common goal, which is concerned with reducing the level of dependence on the airline industry and on the road to the leisure segment. This state of the movement has led to some fierce competition among industry competitors, as they try to defend their market shares. From a futuristic perspective, the better days of the car have yet to come. Since the level of profitability increases, I believe that most of the leaders, including Enterprise, Hertz and Avis will be limited by economic and competitive barriers to the mobility of their strategic and new comers have a better chance of success and the infiltration in the realization of the car rental industry.

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Rodrigue Monestime is the author of several articles. He holds a BS in Business Administration with a high concentration in Management Information System (MIS). He is the founder of BizVita.com, a website, for busy professionals with an all-in-one concept for the daily facts of the global business environment.

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