The global car rental industry is undergoing a radical transformation. Leading this transformation has been the $16 billion US car rental industry. Four years ago, virtually all of the major US car rental companies were owned by automobile manufacturers. Today only Hertz (80% owned by Ford) remains in auto manufacturer control. Savvy entrepreneurs like Henry Silverman (whose Cendant owns Avis), Wayne Huizenga (whose Republic Industries has purchased National, Alamo, and CarTemps), and Sandy Miller (the former franchisee who now owns Budget, Ryder, and a variety of other transportation-related companies) have substantially impacted the car rental industry. These new owners have brought additional standards to the management of the leading car rental companies.

The key difference is that the new owners are interested in maximizing profits as opposed to smoothing out the new car sales cycle. This ownership shift has driven most of the leading car rental companies to evaluate how they can thrive in this new, highly competitive environment.

Car Rental companies realize it is imperative to reinvent the way they operate. Although each of the leading car rental companies has their own strategy to fuel growth, Perot Systems has identified four key drivers which are common to most of industry leaders. Technology is a significant component of each of these key drivers.

1. Profitability - This is the key focus of the new breed of publicly-held car rental company - and they are focusing on both containing costs and increasing revenues. Integration of disparate systems, an enterprise view of technology investments, and systems designed to reduce fleet costs (the typical firm's largest cost category) by optimizing their use can drive down their cost structure. Revenue management systems can help increase revenue by optimizing revenue-per-rental.

2. Customer-service - Car rental companies have attempted to improve their customer service, an area which was largely neglected when the major players were owned by the auto manufacturers. Express Service for frequent renters, a larger selection of automobiles (including sports cars and sport utility vehicles), in-car amenities such as mobile phones, and self-booking through the internet are all examples of the industry trying to better serve their customers. More refined customer and corporate information management and easy-to-use internet booking applications are two of the ways that technology is helping car rental companies deliver leading-edge service to their most valued customers.

3. Branding - The top 7 US brands - Alamo, Avis, Budget, Dollar, Enterprise, Hertz, National - generate 80% of the revenue in the US car rental market. A well-defined brand is very valuable in this industry. Enhancing existing brands and expanding brand portfolios have both been a key focus for many of the new breed of car rental owners. Many of the leading companies are attempting to enhance their brands by expanding globally and pushing into markets where they have traditionally had little presence. In addition, the new breed of "superowner" like Republic Industries and Budget Rental Group are developing a portfolio of rental companies in various segments - such as corporate, leisure, replacement, and truck rental. This expanded brand portfolio allows them to share fleet, integrate systems, and smooth out the cyclicality of their businesses.

4. Globalization - The last 10 years have seen a significant increase in global travel. Global travelers increasingly want high quality, reliable, and familiar travel services when they travel the world. Many of the leading car rental companies are attempting to take advantage of this trend by expanding their brands globally. An integrated, global car rental system can enable these companies to manage their geographically dispersed operations.

These four key industry drivers can all be impacted by information technology. The leaders that emerge from this period of industry transformation will be those companies that view information technology in a non-traditional fashion.