This is marketing research on the Automobile Rental and Leasing industry and can include information on the background, market structure, definitions, competitors, trends and developments of Rental Cars and is related to other topics such as leasing, cars, automobiles and vans.

Table of Contents

[edit] Background

The car rental industry has grown steadily in both fleet size and revenue over the past 15 years, reaching 1.6 million vehicles and total revenue of $17.2 billion in 1998. The top three companies control about 60 percent of the daily rental market. Fierce competition, high operating costs, and slim profit margins have forced those companies to control internal costs stringently. Many companies have slashed frequent-flier awards drastically, greatly reducing their payments to the airlines; maximized their use of yield-management systems; and reduced fleet sizes in certain areas to avoid having idle cars on their lots.

Industry revenues increased at rates of 3 to 5 percent across the board in 1998, although by the end of the second quarter of 1999, rates had dropped again. Rates continue to be almost flat, a scenario the industry has struggled with over at least the last 10 years but that has changed at the turn of this century.

[edit] Market Structure

The automobile rental industry has grown solid growth in terms of number of etablishments engaged in the industry. In five years, the number of companies has increased over 13 percent.

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The number of establishments engaged in automobile rental services is matched by the number of workers engaged in the industry. Despite the business contraction after the dot.com bubble, companies kept renting vehicles. There has been a strong hiring of workers in the industry as well as an increase in the number of establishments engaged in car rental. Workers employed has increased even faster and now has a total approaching 200,000.

This is a highly concentrated business and has been so almost since the inception of the industry. The four largest players account for almost 50% of industry revenues while the top 20 alone account for over 3/4ths of all industry revenues. It seems unlikely there will be many new entrants into this industry. As seen below in the table on industy players, profit margins are slim and it requires a high and expensive inventory.

Concentration of Revenue by number of firms in the industry is as follows:

Total Number of firms       Revenue as % of all firms in the industry

4 largest                                47.3%
8 largest                                68.9%
20 largest                               76.3%
50 largest                               80.8%

[edit] Industry Definitions

[edit] Market Metrics

This is essentially a $50 billion annual business in the U.S. As seen below, the industry stumbled somewhat during the business contraction in 2000 and after the events of 9/11. Despite that, the key players kept investing and found solid increases in revenue from 2003 through 2005. Success in this business is highly correlated with the general business cycles and the past few years have been very satisfactory. With a possible looming recession, however, this may be seeing some slippage in 2008 and out years.

[edit] Industry Players

These are major players in this market, but not an exhaustive list of all key firms. Revenues, Net Income and Market Capitalization are expressed in US$ Millions.

Symbol  Company                 Location                    Revenue    Net Income     Profit Margin    Market Cap

HTZ	HERTZ GLOBAL HOLDING	Park Ridge, New Jersey.	      8540       223             2.61%	       5790
R	RYDER SYSTEM 	        Miami, Florida	              6490	 247	         3.82%	       2470
CAR	AVIS BUDGET GROUP	Parsippany, New Jersey        5930	 102	         2.41%	       1400

[edit] Recent Trends and Developments

Ownership of the major companies continues to change hands. HFS (now Cendant) bought Avis in 1996, and the car rental company went public in 1997. Republic Industries (now AutoNation) bought Alamo in 1995 and National in 1997. AutoNation announced in August 1999 that it will sell (or perhaps spin off) both companies. Budget was purchased by a former Budget licensee and then went public in 1997. Thrifty and Dollar had been owned by Chrysler, but also went public under the umbrella corporation Dollar Thrifty Automotive Group in 1997. Ford now owns 80 percent of Hertz.

The bull market and low interest rates have buttressed the industry and allowed it to grow steadily. Increased business and leisure travel and tourism also have contributed to the health of the industry. The prediction is for increased use of yield management systems to keep internal cost down; tight management of fleets, causing some shortages at peak demand times in some areas; continuing proliferation of taxes and fees on rentals, registration, and other components of the business; and small increases in rates to keep pace with rising costs.

[edit] Sources

• Most current US government sources