Monday, October 25, 2010

Will Car Rentals Be In The Future Of Automaker - 24/7 Wall St.

Business model and industry disruption does not always come from upstarts. Sometimes it can come from established players in the legacy system.

Consider how the world of car driving would change a great deal if vehicle manufacturers began to compete against rental companies, which are the auto companies’ largest customers.

BMW will begin to rent cars in Germany. The luxury manufacturer knows that not everyone can afford an expensive car and that other people do not need to own a car because they drive too infrequently.

Detroit will be tempted to follow BMW’s lead. Car sales in the US have barely recovered from last year, which means that they are at terribly depressed levels compared to 2005 and 2006. American manufactures have slashed their employees and factory operations, but the US market is crowded and new competitors such as Hyundai occasionally are successful at their expense.

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