US Car Rental Industry Outlook, Trends That Are Changing The Game
Car rental industry took a plunge in 2009 due to the economic recession wave. The primary reason to this is the hit in airline industry which affected the airport pickup/drop centric car business. Car rental companies were forced to think outside airport pickup/drop business. In 2011, car rental industry slowly emerged out from recession and the years 2012 and 2013 are looking very positive for the industry.
Let us look at a quick summary of car rental industry in the last three years.
- 52% of the global market – Individual travellers, 40% – Corporate travellers, 8% – Insurance / Replacement business
- 65% of the industry’s revenue came from airport rentals
- 1.1 million vehicles was employed, representing a decline of 2.3% compared with 2009
- US car rental revenue was $24 billion (comparatively, Europe car rental revenue was €8.0 billion)
In 2011, (Global)
- Overall spending on car rentals increased 6%
- Small and large businesses increased their overall spend by 3% and 5% respectively
- Business travel picks up with improved economy
- Leisure travel increases as consumer confidence returns
- Over half booked cars online; nearly half booked via company website
- 126,000+ employed in the US
- Revenue is expected to grow from $31.6 billion in 2007 to $33.7 billion in 2012, reflecting a 1.3% annualised rise
- 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
- Revenue expected to grow 5.6% in 2012 and 3.0% in 2013
- Number of foreign tourists visiting the US increased by 3.4% during the five years to 2012, with forecast jumps of 6.1% and 5.1% in 2012 and 2013, respectively
- Four largest companies generate more than three-quarters of industry revenue: Avis Budget Group, Enterprise Rent A Car, Hertz Global Holdings and Dollar Thrifty Automotive Group
The trend that is picking up in the market is ‘car sharing/pooling’, especially in campuses and corporations. Car owners want to make money when their cars are not used. This business model makes sense. With the advent of social media and mobile, peer-to-peer car rental industry has taken a storm. Few car sharing companies that operate out of the US:
- Winner of TechCrunch’s Disrupt 2011 contest – GetAround, a car sharing company funded by General Catalyst Partners, Barney Pell and others
- Wheelz.com, originally launched in early 2011 in the university market (UC Berkeley, USC, Stanford and other colleges). Recently in October this year Wheelz announced operation in San Francisco. The company received funding for $13.7 million by Zipcar.
Author: Karthick Prabu