Increasing competition affects industry revenue growth
Melbourne, Australia (PRWEB) April 02, 2014
The Car Rental industry has cruised along at a slow speed over the past five years as it has recovered following the global financial crisis. The economic downturn drove demand from businesses and households away from the industry. According to IBISWorld industry analyst David Whytcross, “Poor business confidence and consumer sentiment due to economic uncertainty resulted in severe cost cutting across the economy, limiting expenditure on non-essential rental cars”. While the industry was negatively affected by these poor conditions in 2008-09, a recovery has occurred over the past five years as economic conditions have improved. Consequently, industry revenue is forecast to grow by 1.1% annualised over the five years through 2013-14, to reach $1.2 billion.
The recovery over the past five years has been limited by a strong Australian dollar, which has discouraged some international travel to Australia and prompted domestic tourists to go on holiday overseas. Although international travel to Australia has increased over the past five years, the composition of tourists has changed. Tourists are increasingly coming from Asia rather than Western countries, and this trend has proven less lucrative for the Car Rental industry. “On top of this, profit margins have been tightened by consumers' ability to compare prices through car rental aggregator websites”, says Whytcross. Consumers have become more adept at using the internet to book rental cars, causing increasing price competition within the industry.
Car sharing programs present a threat to the industry. While car sharing has only provided minor competition for the industry over the past five years, it is expected to expand rapidly over the next five years. Domestic tourists are expected to enjoy the flexibility of car sharing arrangements, particularly with multiple inner-city pick-up points and renting by the hour. Competition within the industry due to aggregator websites and competition from car sharing are expected to limit industry revenue growth over the next five years. Economic conditions are expected to improve, ensuring slight growth. Higher consumer sentiment and business confidence will buoy demand from the domestic market, while a depreciating Australian dollar will bring more tourists to the country and encourage local residents to take on interstate rather than overseas travel.
For more information, visit IBISWorld’s Car Rental report in Australia industry page.
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IBISWorld Industry Report Key Topics
Companies in this industry are involved in renting out cars. The industry includes car rental companies that also rent out trucks, vans and buses. The industry excludes commercial and fleet leasing.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
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