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Car rental industry

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  1. What are the tools available?
  2. Porter's Five Forces Analysis
    1. The threat of Potential Entrants
    2. The Threat of Substitute
    3. The Bargaining Power of Suppliers
    4. The Bargaining Power of Buyers
    5. Competitive rivalry among sellers
  3. Porter's five forces critical analysis

The history of the car rental industry is almost as old as the history of the car industry. The first car rental was done with the first real mass-produced car: The "Ford T" by a man called Joe Saunders who rented his car for ten cents per mile, using a mileage counter. In 1925, Joe Saunders had car rental agencies in twenty one states in US and after World War II, the car rental industry grew because of the growing success of the airline transport. At the same time, Warren Avis, founder of the Avis Company, focused almost all his business on airports and surrounding areas. The industry met with some troubles when, after September 11, 2001, and the terrorist attacks in New York, the airline industry slowed down. But since the last few years, the market is getting better notably according to the fact that environmental issues are really strong nowadays and rent a car, rather than having one, can be a good way to be an "eco-citizen". For instance in Paris, according to the director of Rent-A-Car France, 50% of the citizens do not own a car.

[...] In the 1980's, internet wasn't available to everybody, and that makes a real difference, because, that fundamentally changes the way that customers can choose the car rental company they want to use. Customers can look for information on different car rental companies and their services, without leaving their room. They can also compare the prices and the car availabilities of every single company. In addition to this, internet fundamentally changes the way that rental car companies market their services. A good advertising campaign on the internet from one company can change the competitive rivalry force for all the others. [...]

[...] We can say that the threat of substitutes to the car rental industry is low from people who travel, but quite high from people who move on with their ?everyday life?. The Bargaining Power of Suppliers Supplier power does not seem to be high in the car rental industry. Because of the availability of substitutes, and the level of competition, suppliers do not have a great influence on the terms and conditions of providing the vehicles. As the rental cars are usually purchased in large quantities by major companies, rental car agents have an important influence on the negotiations and on the terms of the sale because they possess the ability to play one supplier against another to make the sales price lower. [...]

[...] (source tns-sofres) Globally, the Car Rental industry depends heavily on the economy because its customers are mainly working people who travel, or people who use cars for leisure or holidays with both categories being highly related to the economy. That is why the number of customer can easily fall when the economy is not going well. The car rental market is highly concentrated. According to a survey released by ?First Research? in 2007, out of 5,000 companies in the sector of the market is controlled by 50 companies that are big. [...]

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