Disruption of Rental Car Industry

Table of Contents
• Chapter 1: Introduction.......................................................................................................................3
Introduction.............................................................................................................................................3
Statement of the problem.......................................................................................................................4
Purpose...................................................................................................................................................4
Significance of the project.......................................................................................................................4
Research question...................................................................................................................................4
Chapter 2: Background................................................................................................................................4
Definition of terms..................................................................................................................................6
• Chapter 3: Methodolog.......................................................................................................................6
Restate purpose and research question..................................................................................................7
Primary: Population and sampling, Survey..........................................................................................7
Secondary: Sources, reliability of the data..........................................................................................7
Scope and limitations..............................................................................................................................8
References...................................................................................................................................................9
Topic: The disruption of the rental car industry based on the introduction of the ride
sharing services industry.

• Chapter 1: Introduction

Introduction

Car Rental industry is one of the biggest industries in services. The idea is that to provide

consumers cars on rent and provide maintenance and all of the services associated to these cars.

The ease and comfort consumers get are that they don’t have to possess their own cars and

whenever they require a car, they contact a car rental company to get the required car.

Consumers don’t have to care for the maintenance of these cars and on most cases car rental

companies provide the services of a driver as well. Furthermore, consumers get the luxury that

they can change cars frequently. If they purchase their own car, then they will not get such a

luxury (Lee, Park, Kim & Lee, 2017).

Ride sharing services industry has been recently introduced. The concept of such an industry is

unique in which people do not need to get cars on rent but they can get traveling services by

having a ride sharing conception. In this industry both customers and service providers are the

general public and the ride sharing company gets its margins from both the parties involved. This

research report looks to investigate as to how the disruption of the rental car industry took place

based on the introduction of the ride sharing services industry (Jacob & Roet-Green, 2017).

Statement of the problem

The disruption of the rental car industry based on the introduction of the ride sharing services

industry.
Purpose
The purpose of this report is to determine the factors due to which rental car industry has been

disrupted after the introduction of ride sharing services industry. By determining and analyzing

these factors further analysis have been made based on the questions asked from users through a

questionnaire.

Significance of the project

There has been a great significance of the project as the ride sharing services industry has been

getting popularity amongst public and the industry is expanding immensely. On the other hand,

rental car industry has been shrinking and the businesses in the industry are switching to provide

either ride sharing services or different other services.

Research question
Investigating as to how the rental car industry has been disrupted based on the introduction of the

ride sharing services industry.

Chapter 2: Background
Literature review

Lazov (2017) highlighted that ride sharing services industry has influenced other industries and

this industry is regularly disrupting the existing established markets. The revenues of the rental

car industry have been decline to a great extent. The problem with the rental car industry is that

owners of such businesses have to keep these cars in their crews and have to continuously bear

the expenditures associated with them. If rental car companies obtain cars from investors then
they have to pay the certain amount for cars on a weekly or monthly basis. If cars in crew are not

utilized then it will add expenditure for car rental companies. Moreover, car rental companies

have the responsibility to continuously take care of the maintenance for these cars. If the cars in

their crew are utilize then these companies are able to earn a considerable amount of revenue and

profitability and on other hand if these cars are not utilized then rental car companies are not able

to get their target revenues and profitability (Lazov, 2017).

Ride sharing services provide a considerable advantage ride sharing companies and the service

provider who are engaged in providing the required services. The model of this industry is to

share revenues and profitability with other partners and that is a source of motivation for drivers

or car owners. Because of the reason that these people can get a sufficient amount of money

through their efforts and they become familiar with the concept that the more they work the more

they get. Drivers and car owners are not employed with ride sharing companies and they are not

bound to work with having fix schedule in place. They get the flexibility to ride their cars as to

when they want and earn the required money (Zhang, Chen & Raghunathan, 2020).

In employment generally people come across to issues of work-life management and that

becomes a source of demotivation for them. Generally, if they manage their work, their personal

life is at stake and if they manage their personal life then their work or professional life is at

stake. Most of the professionals are not able to develop a balance between them. Furthermore, in

rental car services, the services providers hire drivers on fixed salaries and drivers find no reason

to contribute more to these companies with their efforts and usually they tend to produce less and

gain more. On the other hand, rental car companies have a focus to get more from their drivers

and pay them less (DP, S & K, 2020).

Car rental industry has been losing business regularly and the companies are focused to get

business ride sharing services. Switching their business focus is the way through which they can

survive in the marketplace. Majorly the business is impacted by customers who are more

inclined to avail services through ride sharing. The benefit they get is that they don’t have to

book car for the entire day or a week but they can book a travel from one location to another.

This helps them not to pay for the entire day of services.

Definition of terms
Car rental industry is the industry in which service providers give cars on rent. Generally, there is

contractual arrangement between a service provider and a customer. A service provider has to

keep cars in its crew so as to have availability of the required cars for customers (Koryagin,

2017).

Ride sharing services industry is the one in which a car owner works on the payment terms set

with the service provider. A service provider needs to advertise the services and need to have a

platform available for consumers and a car owner has to provide the actual services by fulfilling

orders of customers (Tran & Chang, 2019).

The disruption is defined as the loss of business and revenue for car rental industry with the

introduction of services through ride sharing.

• Chapter 3: Methodology

Restate purpose and research question

The purpose of this research is to investigate the factors due to which rental car industry has been

disrupted by ride sharing service industry.

Data Collection
Primary: Population and sampling, Survey
For this research primary data has been collected from users who are using car rental services

and ride sharing services. Almost the entire community has been using these services and hence

the population size is big. The researcher obtained data from 22 participants and they will be the

representative of the entire population. The questionnaire was distributed to participants through

emails and further they responded back with their answers.

Secondary: Sources, reliability of the data

The secondary sources for this research are online journal and articles. These secondary sources

provide a thorough understanding to the researcher and mostly these were used in the literature

review section. The obtained data has been highly reliable as the reviewer retrieved it from the

digital library of the university.

Procedure and time frame

The researcher developed a questionnaire and further distributed to the participants through

electronic distribution. It took four weeks for the researcher to obtain the required primary data.

For secondary data the research ran a search on the database by using keywords and obtained the

required data. It took three weeks for the researcher.

Analysis

There were in total 22 participants and out of which 13 were males and 9 were females. The ages

of participants vary from 20-45 years.

From the responses from participants it is evident that they use the services by rental car

companies less frequently and they are more inclined to use services by ride sharing. Price,

customer service, location availability, reward programs, check-in ease and aggregation are the

factors which are taken into consideration while selecting a service. The respondents are found to

be highly satisfied from the ride sharing services provided to them by different service providers.
Assumptions

The trend of ride sharing services will be further increased in the future and rental car industry

will be lessened. Rental car companies need to device strategy to deal with this situation.

Scope and limitations

The data was collected from 22 participants only and such a sample size may not be a true

reflection of the entire population. Moreover, the results of this research cannot be generalized

due to the small sample size.

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Zhang, C., Chen, J., & Raghunathan, S. (2020). When Sharing Economy Meets Traditional

Business: Coopetition between Ride-Sharing Platforms and Car-Rental. SSRN Electronic

Journal. doi: 10.2139/ssrn.3659380

Zhang, C., Chen, J., & Raghunathan, S. (2020). When Sharing Economy Meets Traditional

Business: Coopetition between Ride-Sharing Platforms and Car-Rental. SSRN Electronic

Journal. doi: 10.2139/ssrn.3659380