Global Car Rental Revenues to Exceed US$53 Billion in 2015, According to New Report by Global Industry Analysts, Inc.
GIA announces the release of a comprehensive global report on Car Rental Business market. Following a 3-year slide in revenues, growth in the world car rental market is expected to recover poise in the short to medium term period to reach US$53 billion by the year 2015. Growth will be largely driven by resurgence in fundamental growth drivers, such as, recovery in GDP growth, employment rates, income levels, discretionary incomes, rise in consumer/business confidence, superior service enhancements in terms of increased comfort, better networks, improved reservation efficiencies, and most importantly restoration of health of the tourism industry.
San Jose, CA (Vocus/PRWEB) January 20, 2011
Car rental forms a vital part of the global travel and transportation market worldwide and hence business opportunities in this market is largely tied to the fortunes of air travel industry, as a significant chunk of the market’s revenues are derived through rentals at airports. Demand responses to economic ups and downs are typically amplified in this industry highlighting the level of sensitivity to the broader economy. Therefore, the slowdown in tourism as a result of the financial crisis led world economic recession has had a negative impact on market prospects for car rentals. Tourism industry, which is largely upheld by the level of consumer confidence, took a hurting blow as consumer confidence and sentiments weakened across the globe. Rising levels of unemployment, reduction in household wealth, loss of corporate travel coverage/allowances, falling disposable incomes have together led to a sharp decline in travel and tourism across the world. Global air travel, especially, took the deepest dive as reflected by the reductions in air passenger traffic, large-scale cancellation of flights and reduced number of flight trips, thus impacting airport car rental business. Since about 50% of the revenue of the car rental industry is generated from airport locations, the business suffered in line with the air travel decline. Volatile fuel prices have also resulted in consumers renting cars for shorter period of time and this coupled with the reduced average number of vehicle miles traveled, and overall decline in per capita automobile travel, made the going tough for non-airport car rental business.
Additionally, tight corporate budgets and liquidity concerns have resulted in companies halving expenditures on business travels. As a result of cost rationalization and green IT initiatives, companies resorted to videoconferencing and other such forms of business meetings to reduce expenses incurred on business trips. The emergence of Green IT as an efficient and natural solution to reduce energy costs and improve corporate environmental credibility has resulted in enterprises implementing energy efficient logistics through virtual and flexible communications, such as videoconferencing. Adoption of video conferencing has led to slimmer and leaner corporate travel budgets. Growing popularity of video conferencing, as companies search for the most cost-effective way to increase employee collaboration across time zones and geographies, will continue to challenge the car rental industry even in the post recession period.
Widespread employee layoffs undertaken by businesses to tackle rising costs stemming from redundant staff has made available pool cars for existing staff use thus eliminating the need for renting cars for ad-hoc business travels. The lull in business resulted in idling of auto rental fleets. And fleet downsizing to achieve higher utilization rates, carried out by fleet owners stranded with large auto fleet bases, resulted in flooding the used car market since one of the major suppliers of used cars is the car rental companies. This in turn brought about a sharp decline in used car prices and the ensuing increase in used car purchases created a less urgent need for renting or hiring cars. The financial hardships faced by automakers reduced the popularity of repurchase programs, forcing fleet owners to dispose used cars in the used car market, making new fleet acquisition a costlier affair. With fleet financing hard to come by, new vehicle additions and replacements in existing fleets took a blow as fleet owners focused squarely on surviving the crisis by reducing costs, rationalizing fleet sizes, shutting down non-critical location points and by increasing rental prices for leisure travel.
However, with the recession now at its tail end, the market is exhibiting early signs of recovery with Asia-Pacific leading the way, as stated by the new market research report on Car Rental Business. The rise of recession tourism, a direct fallout of the economic crisis, which encouraged a shift in preference for holiday hotspots away from popular generic retreats to low-cost countries/regions, has resulted in major car rental players’ focusing on developing markets such as China, India, Australia, and the Middle East. Cheap low cost tourism in developing countries like India, Indonesia, and Malaysia, among others, witnessed growth over the last two years. The United States, which pioneered the car rental business, is the largest regional market in terms of revenues generated. Faced with stagnating opportunities in the car rentals space, fleet operators in the domestic market are foraying into the car sharing market. Companies are also toying with the idea of introducing “no-show” fees in the country, a concept that is already widely popular in the European market. The upcoming years will witness steady recovery in growth patterns in line with the recovery in the airline industry. The US market for airport car rental is forecast to cross US$10 billion mark in the next few years.
Europe, the second largest market, also witnessed decline in revenues during the recession, leading to market players curtailing their fleet size. However, tourist declines did not decrease in proportion to the decrease in fleet sizes, leading to shortage of rental fleet at many popular tourist sites, particularly in countries such as Spain and Portugal. This resulted in almost doubling up of spot prices for rentals, a positive development for the beleaguered players. European market for leisure car rental is projected to reach US$6.9 billion by 2013.
Major players in the market include Avis Budget Group, Dollar Thrifty Automotive Group, Enterprise Holdings, Europcar, Payless Car Rental, Rent-A-Wreck of America, Sixt Aktiengesellschaft and The Hertz Corporation.
The research report titled “Car Rental Business: A Global Strategic Business Report” announced by Global Industry Analysts, Inc., provides a comprehensive review of market trends, issues, drivers, company profiles, mergers, acquisitions and other strategic industry activities. The report provides market estimates and projections in US$ Million for major geographic markets including the US, Canada, Japan, France, Germany, the UK, Italy, Spain, Russia, Asia-Pacific, Latin America and the Middle East. Segments analyzed include by rental locations (airport and non-airport), and by sectors (Leisure, Business and Insurance Replacement).
For more details about this comprehensive market research report, please visit – http://www. strategyr. com/Car_Rental_Business_Market_Report. asp
About Global Industry Analysts, Inc.
Global Industry Analysts, Inc., (GIA) is a reputed publisher of off-the-shelf market research. Founded in 1987, the company is globally recognized as one of the world’s largest market research publishers. The company employs over 800 people worldwide and publishes more than 1200 full-scale research reports each year. Additionally, the company also offers thousands of smaller research products including company reports, market trend reports, and industry reports encompassing all major industries worldwide.
Global Industry Analysts, Inc.
Web Site http://www. StrategyR. com/
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