Economically slow times will often see a drop in people needing travel related services. Car rental companies, upon seeing the turn in the economy made some very smart financial decisions. This good quick sound financial decisions put these companies in a very solid position and emerge as leaders in the travel industry. Their proactive steps allowed to them to safely maneuver through and around the decline that soon followed, giving them a safe position ahead of the curve. This is an excellent of good business sense and planning for any business to examine and learn from.
First, they decided to sell down their fleets, reducing them down to just the most in demand vehicles and those that they were sure they could rent. This put them in a better financial standing providing them with more capital but it also accomplished something else, it gave them leverage with the public allowing the demand on their vehicles to go up which in turn allowed them to charge more per rental. With fewer vehicles sitting idol they were able to increase their overall profit per vehicle and this helped improve their overall business.
Secondly, they also opted to close rental locations that were not producing much in the way of profits again, creating a leaner market and increasing demand. This adds up to a higher demand on vehicles and drives the price of a rental up. The more demand there is in the industry the better able they are to maintain a competitive price per rental. And this good business sense has potentially saved the entire industry.
It was also a wise decision to hang onto vehicles longer, especially those that show or about to show 30,000 miles. Increasing the effectiveness on servicing these vehicles are less expensive than replacing them too soon. Maintaining a well serviced vehicle fleet will drastically reduce the overall overhead operating expenses.
It is easy to now see the overall effectiveness of these decisions, especially in the travel industry, where many companies in this industry are cutting prices or going out of business. The rental companies and the competitive prices are standing on solid ground. Wouldn’t it be wonderful if government leaders would implement such measures for the country! If only these very insightful business leaders would be allowed to make important business decisions for the country, or the current politicians would adapt the business models and decisions used to keep the rental companies healthy in any state of the economy.