Manual to Car Rental Businesses in Costa Rica

Market Overview

The vehicle rental market is a multi-billion buck segment of the US economy. The US portion of the averages about $18.5 thousand in revenue a year. Today, there are around 1.9 million rental vehicles that company the US portion of the market. In addition, there are numerous rental agencies besides the leaders that subdivide the full total revenue, specifically Buck Thrifty, Budget and Vanguard. Unlike other mature company industries, the rental car market is extremely consolidated which normally places possible new comers at a cost-disadvantage since they experience high input expenses with decreased likelihood of economies of scale. More over, most of the gain is generated with a several firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 thousand as a whole revenue. Hertz got in second position with about $5.2 thousand and Avis with $2.97 in revenue.

Amount of Integration

The rental car market faces a different environment than it did five decades ago. In accordance with Organization Vacation Media, vehicles are increasingly being rented till they've accumulated 20,000 to 30,000 miles till they're directed to the used car market while the turn-around mileage was 12,000 to 15,000 miles five decades ago. Because of slow market growth and thin gain margin, there is number certain threat to backward integration within the industry. Actually, among the participants only Hertz is vertically integrated through Ford.

Scope of Competition

There are lots of factors that shape the aggressive landscape of the vehicle rental industry. Competition arises from two principal places throughout the chain. On the vacation consumer's conclusion of the range, opposition is tough not only because industry is soaked and properly guarded by market chief Enterprise, but opponents operate at a high price problem along side smaller market shares because Enterprise has recognized a network of merchants over 90 per cent the discretion segment. On the corporate portion, on another hand, opposition is very good at the airports because that portion is under restricted guidance by Hertz. Because the underwent a massive financial downfall lately, it has upgraded the degree of opposition within most of the companies that survived. Well speaking, the rental car market is a war-zone because so many rental agencies including Enterprise, Hertz and Avis among the significant participants participate in a battle of the fittest.

Growth

Over the past five decades, most firms have now been functioning towards increasing their fleet sizes and increasing the degree of profitability. Enterprise currently the business with the largest fleet in the US has added 75,000 vehicles to its fleet because 2002 which help improve its quantity of features to 170 at the airports. Hertz, on another hand, has added 25,000 vehicles and broadened its international existence in 150 counties instead of 140 in 2002. In addition, Avis has increased its fleet from 210,000 in 2002 to 220,000 despite recent financial adversities. Over time after the financial downturn, while most companies all through the were striving, Enterprise among the leaders have been growing steadily. For example, annual revenue reached $6.3 in 2001, $6.5 in 2002, $6.9 in 2003 and $7.4 thousand in 2004 which translated into a growth rate of 7.2 per cent a year for the past four years. Because 2002, the has started to regain its ground in the segment as over all revenue became from $17.9 thousand to $18.2 thousand in 2003. In accordance with market analysts, the greater times of the rental car market have however to come. Within the span of another a long period, the is expected to have accelerated growth respected at $20.89 thousand every year subsequent 2008 "which equates to a CAGR of 2.7 % [increase] in the 2003-2008 period.”

Circulation

Over the past few years the rental car market has built a lot of development to help it distribution processes. Today, there are around 19,000 rental locations yielding about 1.9 million rental vehicles in the US. Due to the significantly considerable quantity of car rental locations in the US, strategic and tactical strategies are taken into consideration in order to ensure proper distribution throughout the industry. Circulation happens within two interrelated segments. On the corporate market, the vehicles are spread to airports and resort surroundings. On the discretion portion เช่ารถเชียงใหม่, on another hand, vehicles are spread to agency held features that are easily positioned within most significant roads and metropolitan areas.

Previously, managers of rental car companies used to count on gut-feelings or spontaneous guesses to produce choices about exactly how many vehicles to possess in a certain fleet or the utilization stage and performance criteria of maintaining specific vehicles in one fleet. With that technique, it absolutely was very hard to maintain a level of stability that could satisfy customer demand and the required degree of profitability. The distribution method is fairly easy throughout the industry. To start with, managers should determine how many vehicles that must definitely be on catalog on an everyday basis. Because a really obvious issue arises when too many or inadequate vehicles can be found, most car rental companies including Hertz, Enterprise and Avis, make use of a "pool” which really is a group of separate rental features that reveal a fleet of vehicles. Basically, with the pools in position, rental locations operate more proficiently since they reduce the risk of low catalog if not eliminate rental car shortages.

Market Segmentation

Most companies throughout the cycle produce a profit based of the kind of vehicles that are rented. The rental vehicles are categorized into economy, compact, intermediate, premium and luxury. On the list of five types, the economy segment produces the absolute most profit. For instance, the economy portion on it's own is responsible for 37.7 per cent of the full total market revenue in 2004. In addition, the compact portion accounted for 32.3 per cent of over all revenue. The remaining portion of the other types covers the remaining 30 per cent for the US segment.