Car rental industry

Résumé du document

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.

Extraits

[...] In order to do so, it is really important to understand the situation and to look at each of the forces individually. An analysis of the car rental industry through Porter's Five Forces model may show the important elements about the large number of competitors in this sector and also may shed light on the differences among them. It can also show us the strength and weaknesses that bring competitive advantages for some companies in the industry. Finally Porter's five forces model will allow us to focus on the industry itself and on the analysis of the key elements of competitiveness. [...]

[...] But sometimes, vacation buyers have less influence over the rental terms. This is because vacationers usually purchase in lesser amounts or purchase more infrequently and hence they may have a less important bargaining power. Competitive Rivalry among Sellers In the car rental industry, major companies are almost equal and hence, the competition can be very intense. In the last few years, broadening fleet sizes and increasing profitability has been the main focus of most companies within the car rental industry. [...]

[...] Last but not the least, Avis uses its two software (OnStar and Skynet) that allows it to better serve the consumer base. It also offers free weekend rental if a customer rents a car for five consecutive days. Direct competitive rivalry between the companies of the sector is quite important and difficult, as many of the factors that matter impact the companies in a serious way. Critical Analysis of Porter's Five Forces Porter's five forces model is a really useful model that can be used to analyze the competitive view of an industry. [...]

[...] During the 70's and 80's, a huge change took over the industry. Car rental companies started selling their older cars and this subsequently led to big car rental companies like Hertz, Avis or Budget to become major used cars dealers. The industry choked a little after the terrorist attack in New York on September 11th as the airline industry also saw an important slow down. But the market has slowly begun getting better, notably due to the fact that environmental issues are growing strong. [...]

[...] He feels that the situation now is totally different and hence there must be a different model. Porter's five forces model has been the subject of some critical comments. One of them comes from Larry Downes, who defines three new forces: digitalization, globalization, and deregulation, which overwhelm the traditional five. The New Forces require a new strategic framework and a set of very different analytic and business design tools. Larry Downes' Three Forces Digitalization To quote Larry Downes (Larry Downes, Beyond Porter), computing power and communications bandwidth become cheap enough to treat as disposable, you'll soon have far more information about your competitors, suppliers, and customers. [...]