Industry Analysis & Industry Trends
The Car Rental and Leasing industry struggled as the UK economy floundered in the two years through 2009-10, but responded with a surge in subsequent years. Revenue reached a trough in 2009-10 after the industry was forced to deal with declining international tourist numbers and weaker corporate leasing demand. These factors contributed to lower vehicle leasing and rental levels and therefore exerted downward pressure on industry revenue and profitability. However, since 2010-11, strong demand from businesses for vehicle leasing and growing demand from tourists have driven revenue back up above pre-recessionary levels, although the industry did struggle once more in 2012-13 as the economy faltered. A more buoyant economy is expected to drive industry revenue growth of 3.9% in 2014-15... purchase to read more
Industry Report - Industry Investment Chapter
Due to the large number of cars and light vehicles required by firms operating in the industry, high capital requirements are a significant factor for the industry's cost structure. For every £1.00 they spend on capital, it is estimated that industry operators spend 22p on labour. This indicates that the industry is heavily reliant on capital, which makes it highly susceptible to adverse economic conditions.
Successful renting and leasing companies need to have a fleet of vehicles that are relatively new and have travelled only a few kilometres. Therefore, vehicles need to be replaced fairly frequently, usually after three years. The residual value of rental cars is relatively low, which hinders industry profitability... purchase to read more