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Competitive Rivalry Among Sellers There are many factors that drive competition within the car rental industry. Over the past few years, broadening fleet sizes and increasing profitability has been the main focus of most companies among the automobile rental industry. Enterprise, Hertz and Avis among the leaders are growing both in sales and fleet sizes. In addition, competition intensifies as firms are constantly making an attempt to enhance their current conditions and supply more to consumers. Enterprise has nearly doubled its fleet size since 1993 to approximately 600,000 cars today. Because the trade operates on such slender profit margins, value competition isn't a issue; but, most corporations are actively concerned in making values and providing a vary of amenities from technological gadgets to even free rental to satisfy customers. Hertz, for example, integrates its Never-Lost GPS system within its cars. Enterprise, on the other hand, uses refined yield management software to manage its fleets. Finally, Avis uses its OnStar and Skynet system to raised serve the buyer base and offers free weekend rental if a client rents a automotive for five consecutive days Moreover, the buyer base of the rental car industry has relatively low to no switching cost. Conversely, rental agencies face high fixed operating prices as well as property rental, insurance and maintenance. Consequently, rental agencies are sensitively pricing there rental cars simply to recover operating costs and adequately meet their customers demands. Furthermore, because the industry experienced slow growth in recent times thanks to economic stagnation that resulted in an exceedingly huge decline in each company travel and additionally the leisure sector, most firms as well as the trade leaders are aggressively making an attempt to reposition their firms by gradually lessening the dependency level on the airline business and regaining their footing within the leisure competitive arena. The Potential Entry of latest Competitors Getting into the automobile rental trade puts new comers at a heavy disadvantage. Over the past few years following the economic downturn of 2001, most major rental firms have started increasing their market shares in the vacation sector of the industry as a means of insuring stability and lowering the amount of dependency between the airline and the automotive rental industry. While this trend has engendered future success for the existing firms, it's heightened the competitive landscape for brand new comers. As a result of of the severity of competition, existing companies like Enterprise, Hertz and Avis fastidiously monitor their competitive radars to anticipate Sharpe retaliatory strikes against new entrants. Another barrier to entry is formed as a result of of the saturation level of the industry. For example, Enterprise has taken the primary mover advantage with its 6000 facilities by saturating the leisure section thereby inserting not solely high restrictions on the foremost common distribution channels, but conjointly high resource requirements for new firms. Nowadays, Enterprise features a rental location within fifteen miles of 90 percent of the US population. Because of the network of dealers Enterprise has established around the state, it has become relatively stable, a lot of recession proof and most importantly, less reliant on the airline business compared to its competitors. Hertz, on the other hand, is utilizing the total spectrum of its 7200 stores to secure its position in the marketplace. Primarily, the emergence of most of the industry leaders into the leisure market not only drives rivalry, but conjointly it varies directly with the amount of complexity of coming into the automotive rental industry.
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