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Car Rental - US - March 2011

This Market Research Report on The US Car Rental and Car Hire Market provides an overview of the factors shaping the rentals, demand and trends within the vehicle rental industry and what these market trends mean for future sales. It also addresses current car rental industry innovations and promotional campaigns.

This car hire market research report examines how consumer travel and rental demand has been affected by the recent economic climate in addition to how the corporate spending and leisure travel have slowed and what affect this has had on the car rental market. Other factors discussed include:

  • How will Avis' imminent procurement of Dollar Thrifty have on the car rental market?
  • To what extent has the car hire industry been shaped by smart phones and the power to book online and use wireless vehicle tracking? What will this mean for the future?
  • Which groups are renting cars for leisure or business and why is it popular with these demographics?
  • Which demographics are using what vehicle classes, reservation methods or add-ons? Why are these favoured by these groups?
  • What divisions of the car rental industry are growing, stagnating or merging? How is the vehicle rental industry affected by the increase in car sharing?
  • How can the “green” movement be used to increase rentals and what car rental companies have been utilising this?
  • What can be done to improve visibility and what media channels have car rental industry leaders been utilising in their marketing campaigns?
  • Consumer demand for exceptional service is growing - what are car rental companies doing to address this? How have car rental companies responded to new economic circumstances?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Car rental revenue recovers from significant drop in 2009
                        • Enterprise leads rental market in fleet size, locations
                          • Hertz increases revenue for second straight year as business travel rebounds
                            • Avis aims to buy Dollar Thrifty despite declining revenue
                              • Avis–Dollar Thrifty merger signals further industry consolidation
                                • Fox Rent A Car one of a few growing small operators
                                  • Business travel picks up with improved economy
                                    • Leisure travel increases as consumer confidence returns
                                      • Push for electric and hybrid vehicles as high gas prices return
                                        • Car sharing threatens car rental market…
                                          • …although car rental companies investing more in car sharing
                                            • Over half book cars online; nearly half do so via company website
                                              • Less affluent and Hispanic consumers more likely to rent on-site
                                                • Compact most preferred class for personal and business use
                                                  • Those aged 25-34, Hispanics more likely to purchase options
                                                    • Nearly half of respondents use social media, suggesting opportunity
                                                    • Insights and Opportunities

                                                      • Wireless technology can let consumers rent cars anywhere they desire
                                                        • Educated, empowered consumers can be won by proactive rental brands
                                                          • Social networking: Consumer empowerment has raised the stakes in customer service
                                                            • Consumer education: A way to build trust
                                                              • Car rental companies can get personal with luggage tag advertising
                                                              • Inspire Insights

                                                                  • Trend: Life Hacking
                                                                  • Market Size

                                                                    • Key points
                                                                      • Car rental revenue recovers from significant drop in 2009
                                                                        • Figure 1: Total car rental revenues, at current prices, 2005-10
                                                                        • Figure 2: Total car rental revenues, at inflation-adjusted prices, 2005-10
                                                                      • Fleet sizes stable following sharp decline in 2009
                                                                        • Figure 3: Total number of rental cars in service, 2005-10
                                                                    • Market Drivers

                                                                      • Business travel picks up with improved economy
                                                                          • Figure 4: Number of U.S. business travel trips,* 2006-11
                                                                        • Leisure travel increases as consumer confidence returns
                                                                          • Figure 5: Number of U.S. leisure travel trips,* 2006-11
                                                                        • Avis—Dollar Thrifty merger signals further industry consolidation
                                                                          • Push for electric and hybrid vehicles as high gas prices return
                                                                            • Auxiliary revenue sources vanish as smart phones become standard
                                                                              • Major car rental companies investing in car sharing initiatives
                                                                              • Competitive Context

                                                                                • Car sharing threatens car rentals through accessibility, low cost
                                                                                  • Car rental companies entering car sharing market
                                                                                    • Car sharing taps markets on campuses and in corporations
                                                                                      • Daimler AG first car manufacturer to enter car sharing arena
                                                                                        • RelayRides creates online car rental auctions between individuals
                                                                                        • Supply Structure

                                                                                          • Key points
                                                                                            • Enterprise leads rental market by far
                                                                                                • Figure 6: Number of rental cars in service by company, 2008 and 2010
                                                                                              • More than one third of nation’s locations owned by Enterprise
                                                                                                • Figure 7: Number of car rental locations by company, 2008 and 2010
                                                                                            • Supplier Profiles

                                                                                              • Key points
                                                                                                • Enterprise Holdings
                                                                                                  • Key points
                                                                                                    • Enterprise expands with purchase of Alamo, National Car Rental
                                                                                                      • Figure 8: U.S. revenues for Enterprise Holdings, 2005-10
                                                                                                    • With local rental focus, Enterprise picks up consumers
                                                                                                      • Enterprise named top brand in satisfaction survey for seventh consecutive year
                                                                                                      • Hertz

                                                                                                        • Key points
                                                                                                          • Hertz increases revenue second straight year as business travel rebounds
                                                                                                            • Figure 9: U.S. revenues for Hertz Holdings, 2005-10
                                                                                                          • Outbid for Dollar Thrifty, Hertz looks to expand Advantage brand
                                                                                                            • Hertz Rent2Buy lets consumers buy former rental cars
                                                                                                              • Hertz major provider of customer loyalty programs
                                                                                                                • Avis Budget Group
                                                                                                                  • Key points
                                                                                                                    • Avis revenue declines for second straight year, though fleet growing
                                                                                                                      • Figure 10: U.S. revenues for Avis Budget Group, 2005-10
                                                                                                                    • Avis discontinues no-show fee
                                                                                                                      • Avis outbids Hertz for Dollar Thrifty, making Avis second largest company
                                                                                                                        • Dollar Thrifty Automotive Group
                                                                                                                          • Key points
                                                                                                                            • Dollar Thrifty rebounds after steep decline
                                                                                                                              • Figure 11: U.S. revenues for Dollar Thrifty Automotive Group, 2005-10
                                                                                                                            • Despite pending merger, business as usual for Dollar Thrifty
                                                                                                                              • Other
                                                                                                                                • Key points
                                                                                                                                  • Fox Rent A Car one of a few growing small companies
                                                                                                                                    • Figure 12: Revenues for other car rental companies, 2008 and 2010
                                                                                                                                  • Overall revenue of independents declined
                                                                                                                                  • Brand Qualities

                                                                                                                                    • Hertz makes its green energy initiatives known
                                                                                                                                      • Fox Rent A Car goes blogging
                                                                                                                                        • National focuses on business travelers
                                                                                                                                        • Innovations and Innovators

                                                                                                                                          • Rent Centric links hotels and independent rental companies online
                                                                                                                                            • E-Z Rent-A-Car launches radio frequency tracking
                                                                                                                                              • Avis’ Early Access Program lets dealers buy used cars direct from lots
                                                                                                                                              • Marketing Strategies

                                                                                                                                                • Marketing strategy: Using social media promotions to gain followers
                                                                                                                                                  • Marketing strategy: Avis becomes leader in mobile apps
                                                                                                                                                    • CarRentals.com lets users compare on the go
                                                                                                                                                      • Marketing strategy: Provide interactive content with local flavor
                                                                                                                                                        • Strategy: Marketing partnership with travel destinations
                                                                                                                                                          • Figure 13: Alamo Rent a Car ad, 2010
                                                                                                                                                        • Strategy: Marketing the weekend trip as simple and affordable
                                                                                                                                                          • Figure 14: Enterprise Rent A Car ad, 2010
                                                                                                                                                        • Strategy: Marketing to the consumer’s desire for the vehicle
                                                                                                                                                          • Figure 15: Thrifty Car Rental ad, 2010
                                                                                                                                                        • Strategy: Praise the seasoned business travelers and offer them priority
                                                                                                                                                          • Figure 16: National Car Rental ad, 2010
                                                                                                                                                      • Car Rental Participation

                                                                                                                                                        • Key points
                                                                                                                                                          • Less than one third of respondents rent cars
                                                                                                                                                            • Figure 17: Vehicle rental, by gender, October 2009–June 2010
                                                                                                                                                          • Middle-aged and older respondents most likely to rent cars
                                                                                                                                                            • Figure 18: Vehicle rental, by age, October 2009–June 2010
                                                                                                                                                          • Likelihood of car rental increases with household income
                                                                                                                                                            • Figure 19: Vehicle rental, by household income, October 2009–June 2010
                                                                                                                                                        • Car Rental Brand Preference—Personal Use

                                                                                                                                                          • Key points
                                                                                                                                                            • Enterprise most common rental choice for respondents
                                                                                                                                                                • Figure 20: Car rental brand preference for personal use, by gender, March 2011
                                                                                                                                                              • Enterprise leads across all age groups; 25-34s most likely to rent
                                                                                                                                                                  • Figure 21: Car rental brand preference for personal use, by age, March 2011
                                                                                                                                                                • More affluent households choose Hertz, Avis, National over Enterprise
                                                                                                                                                                    • Figure 22: Car rental brand preference for personal use, by household income, March 2011
                                                                                                                                                                • Car Rental Brand Preference—Business Use

                                                                                                                                                                  • Key points
                                                                                                                                                                    • For business use, much less disparity among brands
                                                                                                                                                                      • Figure 23: Car rental brand preference for business use, by gender, March 2011
                                                                                                                                                                    • Hertz’s customer base skews to older business travelers
                                                                                                                                                                      • Figure 24: Car rental brand preference for business use, by age, March 2011
                                                                                                                                                                    • Enterprise, Hertz lead among respondents from most affluent households
                                                                                                                                                                      • Figure 25: Car rental brand preference for business use, by household income, March 2011
                                                                                                                                                                  • How Rental Cars are Booked—Personal Use

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Nearly half of respondents rent cars via operator websites
                                                                                                                                                                        • Figure 26: Car rental method for personal use, by age, March 2011
                                                                                                                                                                      • Online booking via website most common among most affluent
                                                                                                                                                                        • Figure 27: Car rental method for personal use, by household income, March 2011
                                                                                                                                                                    • How Consumers Book Rental Cars—Business Use

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Majority of business use car rentals reserved online
                                                                                                                                                                            • Figure 28: Car rental method for business use, by age, March 2011
                                                                                                                                                                          • More affluent respondents rent from company websites
                                                                                                                                                                              • Figure 29: Car rental method for business use, by household income, March 2011
                                                                                                                                                                          • Length of Booking for Rental Cars—Personal Use

                                                                                                                                                                            • Key points
                                                                                                                                                                              • Personal use rentals average 5.75 days among respondents
                                                                                                                                                                                • Figure 30: Length of car rental for personal use, by gender, March 2011
                                                                                                                                                                              • Length of rental for personal use increased with age
                                                                                                                                                                                • Figure 31: Length of car rental for personal use, by age, March 2011
                                                                                                                                                                              • Respondents from highest-earning households rent cars longest
                                                                                                                                                                                  • Figure 32: Length of car rental for personal use, by household income, March 2011
                                                                                                                                                                              • Length of Booking for Rental Cars—Business Use

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • Respondents most likely to rent for business use for one day
                                                                                                                                                                                    • Figure 33: Length of car rental for business use, by gender, March 2011
                                                                                                                                                                                • Which Vehicle Class Consumers Rent

                                                                                                                                                                                  • Key points
                                                                                                                                                                                    • Compact is most preferred class for personal and business use
                                                                                                                                                                                        • Figure 34: Rental car class chosen for personal or business use, by gender, March 2011
                                                                                                                                                                                      • Key points
                                                                                                                                                                                        • One quarter of respondents rent compact cars for personal use
                                                                                                                                                                                            • Figure 35: Rental car class chosen for personal use, by gender, March 2011
                                                                                                                                                                                          • Younger respondents more likely to rent SUVs for personal use
                                                                                                                                                                                              • Figure 36: Rental car class chosen for personal use, by age, March 2011
                                                                                                                                                                                          • Which Vehicle Class Consumers Rent—Business Use

                                                                                                                                                                                            • Key points
                                                                                                                                                                                              • Respondents traveling for business most likely to book compact cars
                                                                                                                                                                                                  • Figure 37: Rental car class chosen for business use, by gender, March 2011
                                                                                                                                                                                              • Options Consumers Pay for When Booking Rental Cars

                                                                                                                                                                                                • Key points
                                                                                                                                                                                                  • Respondents’ option choices indicate consumer education lacking
                                                                                                                                                                                                      • Figure 38: Chosen personal use rental car options, by gender, March 2011
                                                                                                                                                                                                    • Respondents aged 25-34 more likely to purchase options
                                                                                                                                                                                                        • Figure 39: Chosen personal use rental car options, by age, March 2011
                                                                                                                                                                                                      • Respondents from most affluent households less likely to purchase add-ons
                                                                                                                                                                                                          • Figure 40: Chosen personal use rental car options, by household income, March 2011
                                                                                                                                                                                                      • Vacation Rental, Social Media Usage, Smart Phone Ownership, and Familiarity with Car Sharing Programs Among Car Renters

                                                                                                                                                                                                        • Key points
                                                                                                                                                                                                          • Nearly half of respondents who rented a car visit social network sites
                                                                                                                                                                                                              • Figure 41: Vacation rental, social media usage, smart phone ownership, and familiarity with car sharing programs among car renters, by gender, March 2011
                                                                                                                                                                                                            • Nearly half of respondents aged 25-34 who rented a car own smart phones
                                                                                                                                                                                                              • Figure 42: Vacation rental, social media usage, smart phone ownership, and familiarity with car sharing programs among car renters, by age, March 2011
                                                                                                                                                                                                          • Rental Car Loyalty Club Participation

                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                              • Hertz is industry leader in loyalty club participation
                                                                                                                                                                                                                • Figure 43: Rental car loyalty club participation, by gender, March 2011
                                                                                                                                                                                                              • Age as an indicator of membership varies among industry clubs
                                                                                                                                                                                                                  • Figure 44: Rental car club participation, by age, March 2011
                                                                                                                                                                                                                • Club participation highest among most affluent households
                                                                                                                                                                                                                  • Figure 45: Rental car loyalty club participation, by household income, March 2011
                                                                                                                                                                                                              • Impact of Race and Hispanic Origin

                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                  • Asian respondents most likely to have rented a car
                                                                                                                                                                                                                    • Figure 46: Vehicle rental, by race/Hispanic origin, October 2009–June 2010
                                                                                                                                                                                                                  • Hispanic respondents more likely to rent from Enterprise and Hertz
                                                                                                                                                                                                                    • Figure 47: Car rental brand chosen for personal use, by race/Hispanic origin, March 2011
                                                                                                                                                                                                                  • Hispanic respondents renting for business use choose Enterprise
                                                                                                                                                                                                                    • Figure 48: Car rental brand chosen for business use, by race/Hispanic origin, March 2011
                                                                                                                                                                                                                  • Hispanics surveyed more likely to rent on-site
                                                                                                                                                                                                                    • Figure 49: Car rental method for personal use, by race/Hispanic origin, March 2011
                                                                                                                                                                                                                  • Black respondents twice as likely to rent in-person for business use
                                                                                                                                                                                                                    • Figure 50: Car rental method for business use, by race/Hispanic origin, March 2011
                                                                                                                                                                                                                  • Black respondents more likely to upgrade when renting for personal use
                                                                                                                                                                                                                    • Figure 51: Rental car class chosen for personal use, by race/Hispanic origin, March 2011
                                                                                                                                                                                                                  • Hispanic respondents more likely to purchase add-ons
                                                                                                                                                                                                                    • Figure 52: Chosen personal use rental car options, by race/Hispanic origin, March 2011
                                                                                                                                                                                                                  • Hispanics more likely to use social media and own smart phones
                                                                                                                                                                                                                    • Figure 53: Vacation rental, social media usage, smart phone ownership, and familiarity with car sharing programs among car renters, by race/Hispanic origin, March 2011
                                                                                                                                                                                                                • Cluster Analysis

                                                                                                                                                                                                                    • Navigators
                                                                                                                                                                                                                      • Demographics
                                                                                                                                                                                                                        • Characteristics
                                                                                                                                                                                                                          • Opportunity
                                                                                                                                                                                                                            • Savers
                                                                                                                                                                                                                              • Demographics
                                                                                                                                                                                                                                • Characteristics
                                                                                                                                                                                                                                  • Opportunity
                                                                                                                                                                                                                                    • Minimalists
                                                                                                                                                                                                                                      • Demographics
                                                                                                                                                                                                                                        • Characteristics
                                                                                                                                                                                                                                          • Opportunity
                                                                                                                                                                                                                                            • Cluster characteristics
                                                                                                                                                                                                                                              • Figure 54: Car rental clusters, December 2010
                                                                                                                                                                                                                                              • Figure 55: Length of time rental cars are booked, by car rental clusters, December 2010
                                                                                                                                                                                                                                              • Figure 56: Vehicle class chosen, by car rental clusters, December 2010
                                                                                                                                                                                                                                              • Figure 57: Options consumers pay for when renting cars, by car rental clusters, December 2010
                                                                                                                                                                                                                                            • Cluster demographics
                                                                                                                                                                                                                                              • Figure 58: Car rental clusters, by gender, December 2010
                                                                                                                                                                                                                                              • Figure 59: Car rental clusters, by age group, December 2010
                                                                                                                                                                                                                                              • Figure 60: Car rental clusters, by household income, December 2010
                                                                                                                                                                                                                                              • Figure 61: Car rental clusters, by race, December 2010
                                                                                                                                                                                                                                              • Figure 62: Car rental clusters, by Hispanic origin, December 2010
                                                                                                                                                                                                                                            • Cluster methodology
                                                                                                                                                                                                                                            • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                                                              • Length of car rental and race/Hispanic origin
                                                                                                                                                                                                                                                • Figure 63: Length of car rental for personal use, by race/Hispanic origin, March 2011
                                                                                                                                                                                                                                              • Chosen class for rental for personal use by household income
                                                                                                                                                                                                                                                • Figure 64: Rental car class chosen for personal use, by household income, March 2011
                                                                                                                                                                                                                                              • Vacation rental, social media usage, smart phone ownership, and familiarity with car sharing programs among car renters and household income
                                                                                                                                                                                                                                                • Figure 65: Vacation rental, social media usage, smart phone ownership, and familiarity with car sharing programs among car renters, by household income, March 2011
                                                                                                                                                                                                                                            • Appendix: Trade Associations

                                                                                                                                                                                                                                              Companies Covered

                                                                                                                                                                                                                                              • Alamo Rent a Car LLC
                                                                                                                                                                                                                                              • Alliance Of Automobile Manufacturers, Inc.
                                                                                                                                                                                                                                              • Automotive Aftermarket Industry Association
                                                                                                                                                                                                                                              • Automotive Industry Action Group (AIAG)
                                                                                                                                                                                                                                              • Automotive Oil Change Association (AOCA)
                                                                                                                                                                                                                                              • Automotive Trade Association Executives (ATAE)
                                                                                                                                                                                                                                              • Connected Vehicle Trade Association (CVA)
                                                                                                                                                                                                                                              • Dollar Thrifty Automotive Group, Inc.,
                                                                                                                                                                                                                                              • Federal Trade Commission
                                                                                                                                                                                                                                              • Ford Motor Company (USA)
                                                                                                                                                                                                                                              • Mercedes-Benz USA
                                                                                                                                                                                                                                              • Mitsubishi Motors North America, Inc.
                                                                                                                                                                                                                                              • National Automobile Dealers Association (NADA)
                                                                                                                                                                                                                                              • National Car Rental
                                                                                                                                                                                                                                              • National Football League Inc.
                                                                                                                                                                                                                                              • National Independent Automobile Dealership Association (NIADA)
                                                                                                                                                                                                                                              • The Hertz Corporation
                                                                                                                                                                                                                                              • U.S. Bureau of Labor Statistics

                                                                                                                                                                                                                                              Car Rental - US - March 2011

                                                                                                                                                                                                                                              £3,199.84 (Excl.Tax)