A rise in air travel due to growth in income and corporate budgets will drive demand
Los Angeles, CA (PRWEB) December 01, 2012
The global recession put the brakes on the Car Rental industry, but rental agencies have slowly gotten back into gear as travel demand increased. Air travelers, the industry's primary revenue source, were staying put amid the economic uncertainty, poor income growth, rising unemployment and tighter corporate travel budgets in recent years. In response, operators cut expenses and searched for revenue separate from airports. Air travel only began to recover from 2010 onward, and the industry's future looks brighter than its immediate past, though rising gas prices may slow the industry's recovery, according to IBISWorld industry analyst Nima Samadi. As such, revenue is forecast to grow from 2012 to 2017 to $38.6 billion.
Revenue is expected to grow from $31.6 billion in 2007 to $33.7 billion in 2012, reflecting a 1.3% annualized rise. The industry's largest decline happened in 2009, when the number of air travelers, per capita disposable income and corporate profitability all decreased, Samadi says. Car rental companies adapted to the difficult economic environment by aggressively cutting expenses and searching for new markets. 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 as the leisure market, which is viewed by industry insiders as the segment with the most growth potential. For example, Hertz purchased Advantage Rent-A-Car and has agreed to purchase Dollar Thrifty to gain better access to the price-oriented leisure travel market. This is expected to result in the number of Car Rental industry firms falling at an annualized rate of 2.4% during the five years to 2012.
Demand and revenue are expected to increase as air travel rates continue to grow during the remainder of 2012 and throughout 2013, with Car Rental industry revenue expected to grow 5.6% in 2012 and 3.0% in 2013. In addition to the rise in air travel, growth has been underpinned by rising personal income and more generous corporate travel budgets. The industry has also been boosted by a 3.4% annualized rise in the number of foreign tourists visiting the United States during the five years to 2012, with forecast jumps of 6.1% and 5.1% in 2012 and 2013, respectively. The Car Rental industry's concentration has increased during the five years to 2012. This 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. In 2012, the four largest companies generate more than three-quarters of industry revenue. For more information, visit IBISWorld’s Car Rental in the US industry report 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.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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