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Car Rental - US - May 2010

This report explores the car rental market in the US. It provides insight into the external and internal factors affecting rentals, consumption and trends (and what they mean for future sales), promotional campaigns and industry innovations. Specific questions that are answered in this report include, but are not limited to, the following:

  • How have economic conditions affected consumer travel and rental demands?
  • How has the slowdown in corporate spending and leisure travel affected car rentals?
  • How has industry consolidation affected car rental rates?
  • What actions have car rental companies taken in order to respond to new economic conditions?
  • What affect does the growth of car sharing have on the car rental industry?
  • What segments of the car rental industry are merging, growing or stagnating?
  • What affect does the Toyota recall have on the car rental industry?
  • How have car rental companies used the "green" movement to increase rentals?
  • What media are industry leaders using to deliver effective marketing campaigns, and what actions need to be taken to improve visibility?
  • What are companies doing to meet the rising consumer demands for outstanding service?

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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 revenues declined in 2009 for the first time in six years
                        • Business travel declines with corporate spending cuts, affluent still renting
                          • Leisure travel drops as families cut travel budgets, affecting rental market
                            • Car rental companies cut costs by reducing fleet size, staff
                              • Car sharing threatens car rental industry; rental companies adopt model
                                • Car rental industry becoming increasingly consolidated; rates rising
                                  • Enterprise holds one half of industry’s market share, popular with young
                                    • Avis passes Hertz in fleet size, number of locations
                                      • Toyota recall affects nearly 10% of rental industry fleet
                                        • Car rental Industry goes green, younger respondents answer
                                          • More affluent consumers participate in car rental loyalty programs
                                            • More consumers renting cars online
                                              • Mobile smart phone apps entering the car rental landscape
                                              • Insights and Opportunities

                                                • Develop social networking presence
                                                  • Car sharing presents prime opportunity for social networking
                                                    • Social media efforts should target young audience for long-term impact
                                                      • Car sharing gains popularity, car rental companies can pursue further
                                                        • Car sharing on campuses and with corporations presents opportunity to build loyalty
                                                          • Car rental companies can increase efforts to sell used fleets online
                                                          • Inspire Insights

                                                              • Trend: Tracking Our Location
                                                                • The geo-spatial web is changing our relationship to our space
                                                                  • GPS can help car rental/car sharing companies locate vehicles
                                                                  • Market Size and Forecast

                                                                    • Key points
                                                                      • Recession, decreased corporate and leisure spending hurts revenue
                                                                        • Figure 1: Total car rental revenues, at current prices, 2004-09
                                                                        • Figure 2: Total car rental revenues, at inflation-adjusted prices, 2004-09
                                                                      • Fleet sizes reduced as companies respond to weakened demand
                                                                        • Figure 3: Total number of rental cars in service, 2004-09.
                                                                      • 2010 shows signs of possible recovery due to increased rates, cost cutting
                                                                      • Competitive Context

                                                                        • Car sharing threatens car rentals through accessibility, low cost
                                                                          • Car rental companies entering car sharing market
                                                                            • Car sharing taps markets in campuses and corporations
                                                                              • Dealership rental operations still on the fringe
                                                                              • Brand Performance

                                                                                • Key points
                                                                                  • Enterprise, post-merger, leads 52% of total U.S. rental market in 2009
                                                                                      • Figure 4: Number of rental cars in service, by company, 2007 and 2009
                                                                                    • Number of Enterprise locations unchanged, still industry leader
                                                                                      • Figure 5: Number of car rental locations by company, 2007 and 2009
                                                                                  • Brand Performance—Enterprise Holdings

                                                                                    • Key points
                                                                                      • Enterprise expands with purchase of Alamo, National Car Rental
                                                                                        • Figure 6: U.S. revenues for Enterprise Holdings, 2004-09
                                                                                      • With local rental focus, Enterprise picks consumers up
                                                                                        • Enterprise focuses on consumer satisfaction through survey system
                                                                                        • Brand Performance—Avis Budget Group

                                                                                          • Key points
                                                                                            • Avis now second in industry in revenue, fleet size and number of locations
                                                                                              • Facing recession, Avis implements cost-reduction plan
                                                                                                  • Figure 7: U.S. revenues for Avis Budget Group, 2004-09
                                                                                                • Avis first in industry to save costs through charging no-show fee
                                                                                                • Brand Performance—Hertz

                                                                                                  • Key points
                                                                                                    • Hit by recession, Hertz cuts fleet size, number of locations, staff
                                                                                                      • Figure 8: U.S. revenues for Hertz Holdings, 2004-09
                                                                                                    • Hertz buys Dollar Thrifty for $1.2 billion
                                                                                                      • Hertz equipment rental suffers with housing market
                                                                                                      • Brand Performance—Dollar Thrifty Automotive Group

                                                                                                        • Key points
                                                                                                          • Dollar Thrifty defines itself as value brand
                                                                                                            • Figure 9: U.S. revenues for Dollar Thrifty Automotive Group, 2004-09
                                                                                                          • Hertz’s purchase of Dollar Thrifty may not necessarily slow growth
                                                                                                          • Brand Performance—Other

                                                                                                            • Key points
                                                                                                              • Fox Rent A Car one of few growing small companies
                                                                                                                • Figure 10: Revenues for other car rental companies, 2007 and 2009
                                                                                                              • Overall revenue of independents declined due to consolidation
                                                                                                              • Market Drivers

                                                                                                                • Business travel declines with corporate spending cuts, affecting car rentals
                                                                                                                    • Figure 11: Total U.S. travel spending revenues, at current prices, 2004-10
                                                                                                                  • Leisure travel declines as families cut budgets
                                                                                                                    • Figure 12: Number of summer (June, July, August) leisure travel trips, 2004-09
                                                                                                                  • Industry consolidation resulting in smaller fleets, higher prices
                                                                                                                    • Toyota 2009-10 recalls affect nearly 10% of rental car industry fleet
                                                                                                                      • Greening of rental car industry
                                                                                                                        • Municipalities target car rental companies for levying higher sales tax
                                                                                                                          • Major car rental companies inaugurate car sharing programs
                                                                                                                          • Brand Qualities

                                                                                                                            • Enterprise tracks customer satisfaction through survey system
                                                                                                                              • Hertz leads industry in customer loyalty programs
                                                                                                                                • Rent A Ride USA leverages auto repair shop for referrals
                                                                                                                                • Innovation and Innovators

                                                                                                                                  • Hertz enters online used-car sales market, launches Hertz Rent2Buy
                                                                                                                                    • Avis innovates iPhone app, allows users to reserve, locate cars
                                                                                                                                      • Hertz “NeverLost” campaign allows consumers to transfer plans to GPS
                                                                                                                                      • Advertising and Promotion

                                                                                                                                        • Overview
                                                                                                                                          • Digital Media
                                                                                                                                            • Hertz’s use of Twitter, Facebook makes it an industry leader in social networking
                                                                                                                                              • Other car rental companies slow to fully embrace social networking
                                                                                                                                                • Avis leader in mobile apps
                                                                                                                                                  • Partnerships and product placement
                                                                                                                                                    • Hertz engages in brand makeover
                                                                                                                                                      • Enterprise goes green
                                                                                                                                                        • Broadcast media
                                                                                                                                                          • Hertz plays hitmaker with new campaign
                                                                                                                                                            • Figure 13: Hertz ad, 2010
                                                                                                                                                            • Figure 14: Hertz ad, 2010
                                                                                                                                                          • Enterprise promotes partnership with NHL
                                                                                                                                                            • Figure 15: Enterprise ad, 2009
                                                                                                                                                            • Figure 16: Enterprise ad, 2010
                                                                                                                                                          • National Car Rental campaign touts company’s changes
                                                                                                                                                            • Figure 17: National Car Rental ad, 2010
                                                                                                                                                            • Figure 18: National Car Rental ad, 2010
                                                                                                                                                          • Avis suggests consumers take “rental health day”
                                                                                                                                                            • Figure 19: Avis ad, 2009
                                                                                                                                                        • Reasons for Renting Cars

                                                                                                                                                          • Key points
                                                                                                                                                            • Car rental operators need to expand appeal of rentals to everyday usage
                                                                                                                                                              • Figure 20: Frequency of car rentals, for personal business and any reasons, April 2008-June 2009
                                                                                                                                                          • Car Rental Participation

                                                                                                                                                            • Key points
                                                                                                                                                              • One third of total respondents rent cars
                                                                                                                                                                • Figure 21: Car rental participation, by gender, February 2010
                                                                                                                                                              • Youngest respondents aged 18-24 least likely to rent cars
                                                                                                                                                                • Figure 22: Car rental participation, by age group, February 2010
                                                                                                                                                              • Household income is a leading demographic driver of car rentals
                                                                                                                                                                • Figure 23: Car rental participation, by household income, February 2010
                                                                                                                                                            • Reasons for Not Renting a Car

                                                                                                                                                              • Key points
                                                                                                                                                                • Personal car use dominates reasons why consumers don’t rent cars
                                                                                                                                                                  • Figure 24: Reasons for not renting a car, by gender, February 2010
                                                                                                                                                                • Household income level drives travel, car rentals
                                                                                                                                                                  • Figure 25: Car rental participation, by household income group, February 2010
                                                                                                                                                              • Preferred Method to Book Rental Car

                                                                                                                                                                • Key points
                                                                                                                                                                  • Majority of respondents book rental cars online
                                                                                                                                                                    • Figure 26: Preferred method to book rental car, by gender, February 2010
                                                                                                                                                                  • Young respondents rent less online, present opportunity
                                                                                                                                                                    • Figure 27: Preferred method to book rental car, by age group, February 2010
                                                                                                                                                                  • More affluent households more likely to rent online
                                                                                                                                                                    • Figure 28: Preferred method to book rental car, by household income, February 2010
                                                                                                                                                                • Preferred Booking Time Use of Rental Car

                                                                                                                                                                  • Key points
                                                                                                                                                                    • Majority of respondents book rental cars for one week
                                                                                                                                                                        • Figure 29: Preferred booking time use of rental car, by gender, February 2010
                                                                                                                                                                      • Young respondents take short trips, older respondents take long
                                                                                                                                                                        • Figure 30: Preferred booking time use of rental car by, age group, February 2010
                                                                                                                                                                      • Middle-income respondents most likely to rent for one week
                                                                                                                                                                        • Figure 31: Preferred booking time use of rental car, by household income, February 2010
                                                                                                                                                                    • Preferred Car Rental Company

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Enterprise is most preferred car rental company among respondents
                                                                                                                                                                          • Figure 32: Preferred car rental company, by gender, February 2010
                                                                                                                                                                        • Enterprise preferred most among respondents aged 18-24
                                                                                                                                                                            • Figure 33: Preferred car rental company, by age group, February 2010
                                                                                                                                                                          • Less affluent households prefer Enterprise
                                                                                                                                                                            • Figure 34: Preferred car rental company, by household income, February 2010
                                                                                                                                                                        • Preferred Vehicle Class of Rental Car

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Most respondents rent basic classes of rental car, price concern likely
                                                                                                                                                                              • Figure 35: Preferred vehicle class of rental car, by gender, February 2010
                                                                                                                                                                            • Young respondents prefer compact, potentially hybrid vehicles
                                                                                                                                                                                • Figure 36: Preferred vehicle class of rental car, by age group, February 2010
                                                                                                                                                                              • Higher-income households prefer larger class of vehicle
                                                                                                                                                                                • Figure 37: Preferred vehicle class of rental car, by household income, February 2010
                                                                                                                                                                            • Options Purchased At Time of Booking

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Gas fill-up upon return is the most popular rental option purchased
                                                                                                                                                                                  • Figure 38: Options purchased at the time of booking, by gender, February 2010
                                                                                                                                                                                • Respondents aged 25-34 more likely to buy insurance
                                                                                                                                                                                  • Figure 39: Options purchased at the time of booking, by age group, February 2010
                                                                                                                                                                                • Less affluent households most likely to pay for gasoline services
                                                                                                                                                                                  • Figure 40: Options purchased at the time of booking, by household income, February 2010
                                                                                                                                                                              • Incentives Influencing Car Rental Booking

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • Respondents use AAA memberships more than company loyalty clubs
                                                                                                                                                                                      • Figure 41: Incentive influencing car rental booking, by gender, February 2010
                                                                                                                                                                                    • Elderly respondents use senior discounts, not surprisingly
                                                                                                                                                                                        • Figure 42: Incentive influencing car rental booking, by age group, February 2010
                                                                                                                                                                                      • More affluent households most likely to use loyalty clubs, AAA
                                                                                                                                                                                          • Figure 43: Incentive influencing car rental booking, by household income, February 2010
                                                                                                                                                                                      • Race and Hispanic Origin

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Hispanic respondents least likely to have rented car
                                                                                                                                                                                            • Figure 44: Car rental participation, by race, April 2008-June 2009
                                                                                                                                                                                          • Hispanic respondents not renting because they are traveling less
                                                                                                                                                                                            • Figure 45: Reasons for not renting a car, by race, February 2010
                                                                                                                                                                                          • Hispanic respondents renting online use third party sites
                                                                                                                                                                                            • Figure 46: Preferred method to book rental car, by race, February 2010
                                                                                                                                                                                          • Budget leads among Hispanic respondents
                                                                                                                                                                                            • Figure 47: Preferred car rental company, by race, February 2010
                                                                                                                                                                                          • Hispanic respondents using coupons at double rate than blacks
                                                                                                                                                                                            • Figure 48: Incentive influencing car rental booking, by race, February 2010
                                                                                                                                                                                        • Cluster Analysis

                                                                                                                                                                                            • No-Frills Enterprisers
                                                                                                                                                                                              • Characteristics
                                                                                                                                                                                                • Opportunity
                                                                                                                                                                                                  • Incentivized Onliners
                                                                                                                                                                                                    • Characteristics
                                                                                                                                                                                                      • Opportunity
                                                                                                                                                                                                        • Extra Weekenders
                                                                                                                                                                                                          • Characteristics
                                                                                                                                                                                                            • Opportunity
                                                                                                                                                                                                              • Characteristic tables
                                                                                                                                                                                                                • Figure 49: Car rental clusters, February 2010
                                                                                                                                                                                                                • Figure 50: How consumers make car rental reservations, by car rental clusters, February 2010
                                                                                                                                                                                                                • Figure 51: How long consumers rent cars, by car rental clusters, February 2010
                                                                                                                                                                                                                • Figure 52: Rental agency preference, by car rental clusters, February 2010
                                                                                                                                                                                                                • Figure 53: Car rental model preference, by car rental clusters, February 2010
                                                                                                                                                                                                                • Figure 54: Car rental options purchased, by car rental clusters, February 2010
                                                                                                                                                                                                                • Figure 55: Car rental incentives utilized, by car rental clusters, February 2010
                                                                                                                                                                                                              • Demographic tables
                                                                                                                                                                                                                • Figure 56: Car rental clusters, by gender, February 2010
                                                                                                                                                                                                                • Figure 57: Car rental clusters, by age, February 2010
                                                                                                                                                                                                                • Figure 58: Car rental clusters, by household income, February 2010
                                                                                                                                                                                                                • Figure 59: Car rental clusters, by race, February 2010
                                                                                                                                                                                                                • Figure 60: Car rental clusters, by Hispanic origin, February 2010
                                                                                                                                                                                                              • Cluster methodology
                                                                                                                                                                                                              • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                                • Reasons for not renting and age
                                                                                                                                                                                                                  • Figure 61: Reasons for not renting a car, by age group, February 2010
                                                                                                                                                                                                                • Preferred booking time and race
                                                                                                                                                                                                                  • Figure 62: Preferred booking time use of rental car, by race, February 2010
                                                                                                                                                                                                                • Preferred vehicle class and race
                                                                                                                                                                                                                  • Figure 63: Preferred vehicle class of rental car, by race, February 2010
                                                                                                                                                                                                                • Options purchased and race
                                                                                                                                                                                                                  • Figure 64: Options purchased at the time of booking, by race, February 2010
                                                                                                                                                                                                              • Appendix: Trade Associations

                                                                                                                                                                                                                Companies Covered

                                                                                                                                                                                                                • Alamo Rent a Car LLC
                                                                                                                                                                                                                • Alliance Of Automobile Manufacturers, Inc.
                                                                                                                                                                                                                • Ally Financial Inc.
                                                                                                                                                                                                                • American Automobile Association (AAA)
                                                                                                                                                                                                                • Automotive Aftermarket Industry Association
                                                                                                                                                                                                                • Automotive Industry Action Group (AIAG)
                                                                                                                                                                                                                • Automotive Oil Change Association (AOCA)
                                                                                                                                                                                                                • Automotive Trade Association Executives (ATAE)
                                                                                                                                                                                                                • Avis Group Holdings Inc.
                                                                                                                                                                                                                • Chrysler LLC
                                                                                                                                                                                                                • Connected Vehicle Trade Association (CVA)
                                                                                                                                                                                                                • Dollar Thrifty Automotive Group, Inc.,
                                                                                                                                                                                                                • Facebook, Inc.
                                                                                                                                                                                                                • Ford Motor Company (USA)
                                                                                                                                                                                                                • Google, Inc.
                                                                                                                                                                                                                • Greenfield Online
                                                                                                                                                                                                                • Land Rover North America, Inc.
                                                                                                                                                                                                                • Mazda Motor Corporation
                                                                                                                                                                                                                • Mercedes-Benz USA
                                                                                                                                                                                                                • Mitsubishi Motors North America, Inc.
                                                                                                                                                                                                                • National Automobile Dealers Association (NADA)
                                                                                                                                                                                                                • National Independent Automobile Dealership Association (NIADA)
                                                                                                                                                                                                                • Nissan North America, Inc.
                                                                                                                                                                                                                • Porsche Cars North America, Inc.
                                                                                                                                                                                                                • Professional Golfers Association
                                                                                                                                                                                                                • The Hertz Corporation
                                                                                                                                                                                                                • Toyota Motor Corporation USA
                                                                                                                                                                                                                • Twitter, Inc.
                                                                                                                                                                                                                • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                • Volkswagen of America, Inc.

                                                                                                                                                                                                                Car Rental - US - May 2010

                                                                                                                                                                                                                £3,199.84 (Excl.Tax)