A rise in air travel due to growth in income and corporate budgets will drive demand
Los Angeles, CA (PRWEB) May 03, 2013
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. As such, revenue is forecast to grow at an annualized rate of 2.8% from 2013 to 2018 to $39.9 billion.
Revenue is expected to grow from $32.7 billion in 2008 to $34.7 billion in 2013, reflecting a 1.2% annualized increase. The Car Rental industry's largest decline happened in 2009, when the number of air travelers, per capita disposable income and corporate profitability all decreased. 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. Overall, the Car Rental industry's concentration has increased during the five years to 2013. 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 (though they later divested the brand) and Dollar Thrifty in 2012. This is expected to result in the number of industry firms falling during the five years to 2013.
Demand and revenue are expected to increase as air travel rates continue to grow during the remainder of 2013 and throughout 2014, with Car Rental industry revenue expected to grow in 2014. In addition to the rise in air travel, growth has been underpinned by rising personal income and more generous corporate travel budgets. Some companies will continue to expand into off-airport markets, including insurance replacement and car sharing, while others will continue to make acquisitions to penetrate market segments such as the leisure market, which is viewed by industry insiders as the segment with the most growth potential. The industry has also been boosted by a rise in the number of foreign tourists visiting the United States during the five years to 2013. For more information, visit IBISWorld’s Car Rental in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
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
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.