The global recession put the brakes on the industry, but a revival in demand for air travel will stimulate growth again. Rising personal incomes and more generous corporate travel budgets will underpin growth from this market; however, rising fuel prices and the corresponding increase in ticket prices threaten that forecast. Still, the industry's future will be brighter, as firms implement new strategies and look to focus on ride sharing, a growing service segment in the industry. For these reasons, industry research firm IBISWorld has added a report on the Car Rental industry to its growing industry report collection.
Los Angeles, CA (PRWEB) February 18, 2012
Revenue is expected to fall from its peak of $31.0 billion in 2007 at a rate of 0.3% over the five years to 2012. Most of this decline happened in 2009, when the industry's key external drivers (the number of air travelers, per capita disposable income and corporate profitability) all weakened. Reflecting the Car Rental industry’s struggles, operator concentration has increased over the past five years. This increase is attributable to merger and acquisition activity by the industry's major companies. For example, Enterprise Rent-A-Car acquired Vanguard Car Rental (which operated National and Alamo) in mid-2007, and Hertz acquired Advantage Rent a Car in April 2009. Other major companies in the industry include Avis Budget Group and Dollar Thrifty Automotive Group.
These large companies enjoy significant marketing budgets and market power that grant national brand recognition, relationships with airlines and hotels and other advantages smaller companies cannot match. However, even these major players were forced to change in the face of the recession. “Car rental companies adapted to the difficult economic environment by aggressively cutting expenses and searching for new markets,” says Samadi. Operators reduced head counts, closed unprofitable locations, decreased the size of their rental fleets and purchased fewer new cars in 2009. Some companies expanded into off-airport markets, including insurance replacement and car sharing, while others turned to acquisitions to penetrate market segments such the leisure market, which is viewed by industry insiders as the segment with the most growth potential.
Demand and revenue are expected to increase as air travel rates continue to grow in 2012. This growth is attributable to a rise in air travel, underpinned by rising personal income and more generous corporate travel budgets. However, rising fuel prices and the corresponding increase in airfares threaten this forecast. For more information, visit IBISWorld’s Car Rental report in the US industry page.
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IBISWorld industry Report Key Topics
Companies in this industry rent or lease passenger cars to customers. Car rentals typically last a short time (30 days or fewer) while leasing agreements are for longer (12 months or more). The industry excludes the rental or leasing of cars with drivers.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios
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Gavin Smith
IBISWorld
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