U.S Car Rental Industry

Industry. An in depth overview of the market in the United States will be reported; Including an analysis of the macro and micro environment using Porter’s Five Forces and PESTLE Analysis. The report will also analyses current and future trends or challenges that are affecting the united States Car Rental Industry. Introduction Car rental In the 21 SST century forms an Integral part of the global travel and transportation market worldwide. Following a three year slide In revenues and growth the car rental Industry In parts Is going through a recovery period.

The scope thin the car rental market industry consists of the leisure, business and insurance replacement and furthermore, looks upon the short term aspect of car rentals. The main integral aspect of the downfall within the market was due to the impact rental industry as it opposed a negative impact on car rental sales as consumers started cutting down travel cost and looking for cheaper alternatives (Remuneration International, 2011). Current Overview of Industry The car rental industry is a multi-billion dollar sector of the US economy.

Alone the US segment of the car rental industry market makes on average $18. Billion in revenues per year. Today, there is an expanding growth of approximately 1. 9 million rental vehicles that service the US segment (Moonstone, 2006). There are three large major leading companies in the United States car rental market which have established high returns of revenue; Enterprising Holding, Hertz and Avis Budget Group. In 2010, Enterprise Holding leads the market in value shares at 51. 5%; Hertz currently in second with 17. 5% and third Avis hold 15. % (Remuneration International, 2011). All three market share leaders recorded declining sales due to the financial crisis in 009, but are steadily making grounds in their abilities to further increase revenues and market share. Appendix 1 illustrates the amount of revenue earned by the leading companies in the US car rental market. Appendix 2 Analysis of car rental market share in USA from 2006-2010. Political, Economical, Social-cultural, Technological, Legal and Environmental (PESTLE Analysis) Political United States has a Federal Government system.

The current political status of the United States is stable though is still faced with specific challenges that consist of; health care, education, war in Iraq and Afghanistan. The Obama administration ever since being in government, have outlined the health care issue their main objective, though as the next election is approaching both the Obama administration and the Supreme Court have been torn apart between the health care law, as they find this current law unconstitutional. With the possibility of dropping the health care law there could be consequences with the Medicare Payment System (Register Citizen, 2012).

Even if the health care law was to be overturned the government would still have the rights under previous laws to pay insurance plans, doctors, hospitals and there providers. Economical as of the ending of 2011 they had an economic growth of 1. 8% (Trading Economics, 2012). In many cases the economy endured many setbacks for instance the rise of gasoline prices, the closures of factories post earthquake in Japan, and Rupee’s debit crisis had influences on this specific figure analysis. Unemployment rate was on the downfall which was a major improvement, though it has risen to 8. % (U. S Bureau of Labor Statistics, 2012). This current trend within the market could face many challenges for the foreseeable future with unstable employment rates and the outing back of spending within households as interest rates and will intensify and will surely increase in the future. Appendix 5: United States GAP Growth Rate 2011 Appendix 6: Unemployment Rate post Financial Crisis Social -Cultural The United States as it stands has an estimated population size of 312,789,968 (U. S Census Bureau, 2012).

The United States median age bracket in total is 36. 9 years. Ethnic groups play a significant role as it stands white people is 79. 96%, African Americans 12. 85% and Asians 4. 43% (Central Intelligence Agency, 2012). The average working hours in United States for full timers are 35 hours a week. America’s urban population is 82% as of 2010 (Central Intelligence Agency, 2012). Migration patterns within America has seen a reversal from 1 million in domestic migrants from 2000-2007 to a net loss of 50,000 from 2007 to 2009 (Jacobsen ; Matter, 2010).

This is clearly identified as individuals seek to move where Jobs are available, but when Job loss mounts, they are bound to stay put. Religion and other forms of prejudice is inflicting challenges to which is ripping America, through the lack of unity. Technological Technological advances in the U. S market have seen the rise of electric vehicles as a sustainable transportation solution. With the introduction of Hybrid vehicles the market for electrical vehicles are beginning to gain a foothold in the American market.

This technological transition will impose awareness to provide further insights towards consumer understanding and to which will increase the acceptance of new technology (Brought, 2011). Hybrid vehicles comparable to conventional motorists rental cars offer the ability to reduce fuel efficiencies. This current trend within the U. S market will be instrumental, as it will significantly shift towards fuel efficient vehicles and impose a sign that car rental markets are taking an approach and looking beyond gas vehicles (Goat, 2011).

Legal All companies within the U. S car rental market needs to abide to the current car rental agreement administered by the Defense Travel Management Office which governs the rental of vehicles (DEMO, 2011). This form of regulation agreement by companies within the market must ensure the safety and well being of past and future consumers. In this specific aspect of legislation, companies who agree to this legislation must report to the DEMO on regular basis to ensure they are meeting their current agreements.

Failure to meet these specific procedures could lead to major penalties, which could lead to termination, suspension or disqualification of the agreement (DEMO, 2011) Environmental The United States is regarded as the world’s largest energy consumer. The main focus is the ability to reduce the users of carbon dioxide. In the past years, the United States consumed 24% energy consumption. Many sources of energy have lead to climate changes, therefore new standards have been put in place through the use of gas mileage standards. Fuel prices are on the rise, therefore in recent months, the

United States are trying to separate themselves beyond oil with the introduction of befouls (Brought, 2011). With the lackluster rise of fuels, many individuals have become more aware of this current issue and have brought on board the use of more fuel efficient vehicles. In conjunction the United States car rental market will see significant offering of more technological vehicles to consumers, as they attempt to decrease the high usage of fuel vehicles to maintain environmental standards and to lower emissions that will affect pollution. Porters 5 Forces Model Threat of Substitutes

There are many alternatives available within the car rental industry, as corporations tighten their expenditures on business travels. Take for instance from a technological standpoint, in general renting a vehicle to travel the distance for a business meeting, will impose a less striking option to which is disparate to video conferencing (Moonstone, 2006). With the adoption of video conferencing, companies attempt to broaden and shorten travel budgets to maximize employee collaboration, and will continue to challenge U. S car rental markets (Power, 2011). Bargaining Power of Suppliers

Supplier power is low in the car rental industry, as automobile dealerships and that; suppliers don’t have potential influences in regards to the conditions of supplying the suppliers is of switching cost. This means that, buyers from leading companies won’t be affected upon the purchase of vehicles form a specific brand, but have the accessibility to switch from one supplier to another at anytime of interest. Competitive Rivalry The competitive rivalry within the car rental market has substantial influences and impacts. Well developed companies will fight amongst another for market share, Roth, expansion and to gain access to more revenues.

Most companies within the market intend to create further value amongst consumers, by taking the approach in providing technological gadgets and also free rental vehicles to increase customer satisfaction (Like, 2011). Most companies are dependent on the airline industry and therefore will take a further approach to offer car rental with flight packages (Moonstone, 2006) Bargaining Power of Buyers The bargaining power of buyers can be seen as low and high. The power of buyers will be dependent upon the amount of financial resources available. A current trend within companies is the adoption to the needs of travelers.

Therefore it is also the influence of insurers to provide policy options available to consumers in case of accidents or damages and to ensure safety repairs on recalled vehicles can be promptly fixed Nonsense, 2011). The emergence of booking packages linked with accommodation has brought a new focus amongst the competitive landscape, as consumers wish to find the lowest possible rates for car rentals. (Emcee, 2011). New Entrants To start a car rental company from the bottom up, will consist of substantial amounts f financial resources and would be a disadvantage to new comers.

The prospect gain profitability while competing in such a well developed and intense market will serve as a barrier for new entrants. Conclusion Many issues have been raised in regards to micro and macro environments that’ll have significant impacts towards the future of the car rental industry in the United States. The main challenge as of today is that consumers are taking into consideration the environmental issues that relate to fossil fuels and turning to different alternatives.