Tourism is growing rapidly. So does air travel. Car rentals cannot but catch up in pace. Companies such as Enterprise car rental engage coupon code, holiday sales, and special deals to make car rentals even more tantalizing. Constantly increasing population and pollution are further pushing the car rental segment towards major shifts. The segment is taking up the position among the most profitable industries in transportation.
Once upon time car rentals were much less appealing to customers. A customer had to fill out too many forms and verify his or her ID every time they rented a car. The major shifts we’ve just mentioned have brought major changes. All it takes is to verify ID once. The only thing a customer may need to apply every time they rent a car is discount codes. These tools are proven efficient for making car rental more cost-efficient.
Car rentals are on the rise
What earns more trust than its Majesty Data? Let’s engage some statistics to gain a general overview of cart rentals. The car rental segment is expected to cross the bar of $81.32 billion by the end of 2022. We can go even farther in projection. The long-range forecast for the car rental market suggests a market volume of around $116.40 billion by 2026. The annual growth is projected to level at 9.38% between 2022 and 2026. Such a considerable leap forward points out an ice-cold fact. Car rentals are growing rapidly.
There are many driving forces for car rentals to demonstrate a growing trend in. The set of factors depends on a specific country or a region. But we can define the essential ones. Tourism is the crucial driving force. The tourist industry is substantially growing. For many sea countries (Spain, Italy, Greece, Turkey, etc.) the tourism industry is vital for their economies. Even the countries with a bulky budget that isn’t affected by the contribution of the tourist industry (the United States is among them) actively engage in tourist promotion. They try to catch the wave. Because the number of tourists is growing, the demand for rental cars catches up as well.
Car rentals on the rise explained
We live in a fast-paced world. Demanding jobs, build-up of urgent errands, and just plain routine instigate us to pack the travel bag and set off on an adventure. For beach-hotel kinds of people renting a car doesn’t sound like a viable idea. But most travelers would love to see as many sights as possible within those few troublefree weeks they can spare once a year. The only way to go many places in a limited time is by a tourist’s own means of transportation. Hauling a car overseas isn’t a cost-efficient option. But renting a car rental is.
Though being the main driving force, the tourism industry shares the roof with the other two factors.
- Corporate travelers are growing in numbers. They make the demand for luxury executive car rentals. Many car rental companies focus on executive car rentals only thanks to the lucrative benefits this marker is delivering nowadays.
- The rate of car ownership among millennials is low. Car maintenance is getting costly. The awareness of human-driven climate change is growing. Millennials gravitate towards minor electric means of transportation (e-bikes, e-scooters), public transportation, car rental, and car-sharing.
The proper pricing of car rental business
The pricing of car rental depends on many factors, starting from the target market, the amount of prime investment, rate of return, employee wages, fleet insurance, maintenance costs, etc. Whether a car rental business takes off or not also depends on the market conditions, force majeure, and some industry-specific nuances you cannot control. Let’s apply statistical data once more time and see what it shows.
A car rental company holds a car for 2 years before replacing it with a newer model. If a car has been used for at least 72% of the time within the given time span, the car pays off. And the business is considered profitable. A brief overview of the factors affecting a car rental pricing policy will help to gain an insight into the premise of the proper pricing in car rentals.
1. Target market
It could be budget cars for tourists or luxury executive cars for corporate travelers. The target market defines the prime investment. The economic car segment gets by an initial investment of $50,000. For the premium car market, a prime investment of $500,000 is highly expected. Besides, the life shelf of a premium car is much shorter than an economic one. Holidaymakers are likely to be content with a 10–15-year-old SUV or a small hatchback. Executives may need a brand-new car or one not older than 1-2 years. The car rental rate for a premium car is much higher than for a budget one.
2. Maintenance costs and car lease
Purchasing a fleet isn’t necessary. Striking a deal with a car lease company is a viable alternative to a bulky initial investment. But the cost of leasing vehicles will determine the minimum rate of return. Maintenance costs vary depending on the target market. Economic cars require much less maintenance and repair than premium ones. The latter must be replaced much more often than the former.
3. Fleet insurance
It doesn’t matter whether rented cars cruise wide traffic-empty highways or highly dense urban settings. Fleet insurance is a must-have feature of the car rental business to protect the cars from accidents, theft, damage, etc.
4. Marketing
Not until customers have become fully aware of a car rental brand will the business begin to make smooth progress. Social media campaigns, directed advertising, SEO optimization, etc. are worth a lucrative investment. Growthink has conducted car vendor SEO research into keyword ranking and backlink efficiently. In the list of 10 top Google SEO and SEM, Enterprise takes the lead.
5. Discount policy
The discount policy is an integral part of the broader marketing policy. Personalized discounts play a decisive role in premium car retail since the target market is mostly based on regular customers. Budget car rental benefits from holiday deals and sales discounts for selected cars. Models that aren’t popular among the customers may offer tantalizing discounts.
Final words
The car rental industry is making swift progress nowadays thanks to an increase in the number of tourists and commercial travelers. The reduction of the car ownership rate among millenniums also boosts demand for cars offered for rent. The pricing policy of a car rental company depends on many factors. The essential ones include target market (budget or luxury cars), marking strategy, maintenance costs and car lease, insurance, and discount policy. Enterprise car rental takes up a leading position in terms of the efficiency of a marketing strategy.
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