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Custom Business Plan
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7 Day Turnaround

All Purchased Plans
Are Updated for 2017

Car Rental Agency SWOT Analysis

 

Strengths

 

Whenever people travel, they are going to need to rent an automobile. As such, these businesses are able to always generate business from business travelers. The barriers to entry for a car rental agency are high. There are substantial upfront starting costs that need to be incurred before a car rental agency can start its operations. The revenues of a car rental agency are considered high margin revenues. Generally, the startup costs for this type of business range from $75,000 to $400,000 depending on the location and whether or not the vehicles are acquired versus leased. As people demand new cars when renting, it is imperative that a car rental agency maintain a fleet of modern vehicles in order to retain a competitive advantage. Once established, it is difficult for other car rental agencies to enter the market.

 

Weaknesses

 

The operating costs of a car rental agency are high. A highly visible retail location coupled with a large amount of vehicle storage space are required to operate this type of business. Additionally, the costs of maintaining a fleet of vehicles is also very high. Larger scale car rental agencies generally have a mechanic on staff in order to service company owned vehicles. The other weakness associated with this business is that it takes a tremendous amount of marketing effort in order to deal with ongoing competition from independent and nationally franchised locations.

 

Opportunities

 

One of the best ways to rapidly expand operations is to develop a franchisee relationship with a nationally recognized brand. This ensures continual usage of vehicles provided by a care rental agency. It should be noted that franchisees of these companies can easily expand operations by opening/acquiring secondary or tertiary locations. Some car rental agencies expand their fleets by acquiring high end vehicles for people to use for a day or week. This further provides a differentiation for these businesses. 

 

Threats

 

Unlike most businesses, car rental agencies face very few threats. The risks related to automation are not present. The primary risk faced by these businesses is that in major cities - people may opt to use ride sharing companies (like Uber or Lyft) rather than rent a vehicle. However, for business travelers - renting a car is a must. In more suburban or rural areas, business travelers almost always rent a vehicle.


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