“CAR RENTAL INDUSTRY ANALYSIS”

MASTER OF BUSINESS ADMINISTRATION

OF
CMR UNIVERSITY

Submitted By
MAHANTH K R
Reg. No: 18CMBAD022
SANGEETHA D C
Reg. No: 18CMBAD044

Submitted To
Dr. P. ARANGANATHAN
ASSOCIATE PROFESSOR
School of Management

CMR UNIVERSITY
2018-2020
INDUSTRY PROFILE

Introduction: A car rental (car hair) agency is company that rents automobile for
short term period, generally ranging from a few hours, few weeks, and few
months. It often organized with numerous local branches and primarily located
near airports and busy city areas. Often complemented by a website allowing
online reservations, Car rental agencies primarily serves people who requires a
temporary vehicle, for those who do not have their own car, travellers who are out
of town, or owners of damaged or destroyed vehicles who are awaiting repair or
insurance compensation. Car rental agencies may also serve the self-motivating
industry needs, by renting vans or trucks and certain markets, other type of
vehicles such as motorcycle or scooter may also be offered. Along the basic rental
of vehicle, car rental agencies typically also offer extra products such as
insurance, global positioning system (GPS) navigation systems, entertainment
system, phones, and portable Wi-Fi and child safety seats.

History: The earliest cars being offered for rent dates back to 1960. The Germany
company SIXT was established in 1912 under name SixtAutofahrten und
Selbstfahrer (SIXT Cars Cruises and Self Drivers). Joe Saunders of Omaha,
Nebraska first started with only one borrowed Model-T Ford in 1916, but by
1917, his Ford Livery Company was renting out 18 Model Ts at 10cents per mile.
The company name became Saunders Drive-It-Yourself system and then Saunders
system. By 1926, Saunders had expanded to 56 cities. Saunders Company was
bought by Avis in 1955. An early competitor to Saunders was Walter L Jacobs,
who’s Chicago based Rental-Car opened in 1918 with twelve Ford Model T. The
company was bought in 1923 by John Hertz.

In Britain, car rental started with Godfrey Davis, established in 1920, and bought
by Europcar in 1981. The Sector expanded rapidly in the US; in 1926, the
American Drive yourself Association assembled over 1200 delegated in Chicago.
The growth in travel after World War II led to the establishment of several well-
known international companies, including National Car Rental (1947), Europcar
(1949), Enterprise Rent-A-Car (1957), Thrifty Rent a Car (1958), and Budget
Rent A Car (1958). Until 2010 and 2011 the car rental business in India was
totally unregulated and unorganized. People relied on hyper local taxi and cab
aggregators for going outstation trips. Ola started intra-city cab service in 2010
and become the first major player in the car rental business in India. However,
there was still a gap in inter-city transportation services. Companies like Avis,
Carzonrent, etc. Were already in India for quite some time but were not widely
recognized as self-drive car rental companies. Types of vehicles: Most car rental
offices offer a range of vehicle sizes to suit a variety of budgets and space
requirements and some additionally offer specialized vehicles to suit its location
such as convertibles, prestige models, Hybrid / electrical vehicles, or SUVs and
passenger vans. At major airports or in larger cities, some independent car rental
agencies offer high-end vehicles for rent. Some specialized companies offer older
vehicles at reduced prices.

Rental conditions: Car rentals are subject to many conditions which vary from
one country to another and from one company to another. Generally, the vehicle
must be returned in the same condition it was rented in, and often must not exceed
mileage restrictions; otherwise, extra fees may be incurred. For insurance reasons,
some companies stipulate a minimum and/or maximum rental age. In some cases,
the minimum age for rental can be as 25 years. In India minimum legal age is 18
years. In all cases, a valid driver’s license is required in order to rent a vehicle
and some countries require an International Driving Permit (IDP).

GOALS

 Optimum utilization of fleet

 Provide quality service to customers at least equal to highest standard.
 Maintain reliability with customers least 99%.
 Attract, develop and retain able and loyal customers and employees.

OBJECTIVES
 To check the requirement of customers while renting cars.
 To check the customer expectation while availing of renting car service.
 To check customer awareness at the time of availing the renting car
service.
 To continue innovation and pursue new ideas and opportunities to
accelerate profitability.
  To measure goals that archives the vision.
 To raise awareness of the brand to audience.
 To store all vehicles information.

PESTEL ANALYSIS

Among the numerous car rental facilities, there are some which offer superb
services and hence grab more market share relative to other. The
numerous factors that affect the market sharing in Car Rental in India include
customers, political factor, economic factor, social factor, technological factor,
Environmental factor and legal factor

1. Political Factor:

Political factors play an important role and have a direct impact on the
profitability of the car rental industry. Governments around the world
are favouring low emission vehicles. Government rules and regulations heavily
affect the revenues of the companies. The political factors that may support or
affect the market are the rules and regulation that anchor the market. These
include any rule or limitation regarding movement timings in the city or restricting
any area for security reasons.

2. Economic Factor:

Country's stable economic condition always boasts the business. The fluctuating
prices of fuel or the unavailability of CNG affects the rates as well as the vehicle
availability. The unstable fuel prices and CNG eventually affects the rental
price or the terms and conditions of returning the full fuel tank a bit unrealistic.
This sector was hit hard by the recent economic crisis. When the economic
conditions are not good, the sales of vehicles fall. The demand for luxury or high
priced vehicles is also affected poorly during poor economic conditions.
3. Social Factor:

The society makes the demands and hence regulates the business. In India, one
always wants to have classy and latest model car or vehicle for rent. The obsolete
models would not help the company to make business in the city where latest
trends are always followed and cared.

Companies need to keep themselves updated according to the changing dynamics

of the region and surroundings. It always helps them to maximize their
business, forecast the future threats and cater them beforehand.

For this purpose the companies based on car rental India looks for the most
economical and trendy vehicle and appropriate time to offer featured prices and
hit the market with discounted rates when there is equal opportunity for all
the competitors.

In the world of technology where trends are changing swiftly, companies have to
keep themselves in energy wheel with constant generation of modern trends. It
could only be possible with updated fleet, easily booking plans and efficient and
cooperative services. Customers once experienced the ease always come to avail
the services and the loyalty badge could make them stick to the company in all
circumstances. It also generates business with value addition highlight the
customer care of car rental companies.

4. Technological Factor:

The availability of hybrid technology cars not only provide the efficient fuel
consumption but are also environment friendly. With the advancement of
technology, the cars demanded for rental are also modern having latest
technology. The companies need to keep their fleet updated according to the
requirement failure to which would lead to minimum market share of companies.

5. Environmental Factor:

The laws related to environment friendliness and carbon emissions are growing
stiffer around the globe. Given that all the major players in the car rental industry
had to focus upon low emission vehicles. The vehicles which are low on
emissions and fuel consumption receive tax subsidies and are favoured by the
government and law. The pollution tests have grown stricter and the vehicles
passing these tests only are allowed. Environment friendliness has become an
important test for the vehicle makers in the 21st century as governments have
started focusing heavily on pollution control.

6. Legal Factor:

Law is another important factor that gets to affect the profitability and
performance of companies. The pollution law have grown stricter; vehicles used
for providing service have to pass strict emotion control. Next are the laws related
to product safety that has important impact on sales of product. The product
should be passenger (customer) safety. Apart from this there are environmental
laws, tax laws, and several other laws the companies have to deal with while
operating in market.

SWOT ANALYSIS

Strengths:

 Provides peer-to-peer car sharing business model.

 Keeps them self updated with the latest market trends.
 Provide environment friendly transportation solutions.
 Customer friendly and provides high rate of accessibility to customers.
 Gives the customers the flexibility to use their cars whenever required.
 Allows a more convenient, easier and less costly way to reach a location.
 Latest technological skills that make customers for renting a car easily.
 There is vast growth for car rental companies in countries like India.
 Diversified investment in a portfolio of various assets that earns the high
return for the least risk.
 Vehicles are new and periodically maintained.

Weakness:

 Service inconvenience caused to customers due to long waiting period.

Opportunities:

 Rising fuel prices can compel the customers to use car rental service,
instead of buying new car.
 Electric cars and CNG based cars can be used which will prove to be
cheaper and hence, it will help to increase the profit margins.
 Setup a service for customers looking for long term rental and leasing.
 Ecological issues are making ethanol cars valuable.

Threats:

 Google cars will soon replace car rental service industry.

 As new markets are joining the business, there are more threats like
scandals and frauds.
 Most of people use public transportation instead of renting car.

Conclusion:

While every sector of business, although a new emerging sector has its
competitors along all the stages of business.

Thanks to the technology of mobile apps, the elastic market of transport, the price
sensitive customers, multiple car manufacturers that give us a wide pool of choice,
existing expensive transport system in new cities – all as a culmination have
helped us open new gates for an entirely new business venture that was non-
existent 10 years back.