CASE STUDY

dd

SUMMITED TO :
SIR KHAWJA AYAZ
TRANSPORTAION TECHNIQUES
& MANAGEMENT
CASE ANALYSIS #3
SECTION : A

NAME REG#
Abbas Raza Shafqat BBA02153202
M. Zain Aslam BBA02153203

Page 1|4
 CASE STUDY

EQUULEUS CAR SHARING INC REVENUE MANAGEMENT

 The growing role of revenue management in the rental car industry.

 Key constraints in the fleet purchase process.
 Prescriptive analytics can be used to develop a vehicle purchasing plan.
 The dynamic nature of the rental car market.

1. What are the net present values for the two years revenue for each car type?

CAR PRICE 1ST 2ND NET PRESENT VALUES

ST YEAR
TYPE ($) YEAR YEAR (1 /(1+INTREST)1) +(2ND YEAR/(1+INTREST)2)-PRICE
=TOTAL REVENUE
PRICES PRICES
MINIVAN 27000 15,000 28000 (15000/ (1+4%)1) +(28000/ (1+4%)2)-27000
=13,310.63
SUV 22000 10,000 19000 (10000/ (1+4%)1) +(19000/ (1+4%)2)-22000
=5181.10
SEDAN 18000 9,000 21000 (9000/ (1+4%)1) +(21000/ (1+4%)2)-18000
=10068.21
ECONOMY 14000 7,000 15000 (7000/ (1+4%)1) +(15000/ (1+4%)2)-14000
=6598.13

2. What is the payment schedule and interest paid per year?

Minivan
 Down payment (20%) 1ST YEAR 2ND YEAR
= 27000 x 20% = (discount x Remaining Amount) + =1st year + Interest rate
= 5400 (interest rate x Discounted value) = (11232+4%)
 Remaining Amount = 10800 + 432 = 11664
= 27000-5400 = 11232
= 21600

SUV
 Down payment (20%) 1ST YEAR 2ND YEAR
= 22000 x 20% = (discount x Remaining Amount) + =1st year + Interest rate
= 4400 interest rate x Discounted value) = (9152+4%)
 Remaining Amount =8800 + 352 = 9504
= 27000-4400 = 9152
= 17600

Page 2|4
 CASE STUDY

Sedan
 Down payment (20%) 1ST YEAR 2ND YEAR
= 18000 x 20% = (discount x Remaining Amount) + =1st year + Interest rate
= 3600 (interest rate x Discounted value) = (7488+4%)
 Remaining Amount = 7200 + 288 = 7776.04
= 18000-3600 = 7488
= 14400
Economy
 Down payment (20%) 1ST YEAR 2ND YEAR
= 14000 x 20% = (discount x Remaining Amount) + =1st year + Interest rate
= 2800 (interest rate x Discounted value) = (5824+4%)
 Remaining Amount = 5600 + 224 = 6048
= 14000-5400 = 5824
= 11200

3. Why is purchasing the cars on credit a better strategy than purchasing the cars on
cash?
Reasons to Purchase Car Rental
 Provides latest insights into the global car rental market
 Gives a detailed analysis of key competitors in the global automotive rental market
 Analyzing various perspectives of the market with the help of Porter’s five forces analysis
 Detailed analysis on the region that is expected to witness the highest growth
 Identify the latest developments, market shares, and strategies employed by the major market players
 Two-month analyst support, along with the Market Estimate sheet
As per the scenario in this case we must purchase cars in credit for the main reason that if we buy car from
bank so we get insured by the bank so that if any damages accrue the bank must pay the damages but there
will a chance of higher price differentiation on each type of car. Leasing is basically an extended car rental.
When you lease a car, you must return it at the end of the lease or buy it from the dealer at a predetermined
price usually higher than what you’d pay for a similar used car. When you take a loan out to buy a car, you
pay down the loan and then the car is yours, free and clear. The only payments you’ll have to make after that
are for gas, repairs and insurance.

4. What are the future trends in the rental car industry?

The future of the global car rental industry Industry HAVE the benefit of changing the vehicle according to
one’s convenience is a factor influencing the market. In addition to the customized range of vehicles, the rental
services also remove the burden of bearing ownership cost of the vehicles, including insurance, repair and
maintenance, etc. With all these advantages, the vehicle rental market has penetrated in countries like the
United States and is finding popularity in other countries like China, Indonesia etc. Many people benefit by
using car rental services because of the reduced total cost of mobility. An essential reason contributing to the
development of the market is to offer their own the vehicles and users are free from a load of ownership costs.

Consumers also have the flexibility of selecting cars which can meet their daily needs. Rental firms also
require financing similar to other automotive firms. Furthermore, insurance costs incurred while renting
Page 3|4
 CASE STUDY

vehicles are also taken care of users by the rental organizations. Corporate members also have access to a fleet
of cars along with hassle-free maintenance and management systems. Moreover, service agreements with car
rental providers help companies decrease their fleet costs and deliver their employees with easy access to a
range of vehicles.

With consumers increasingly preferring the availability of cars in minimal time, operators are focusing on
streamlining their membership procedures and enhancing service convenience by adopting smart technology.
Moreover, car rental operators are also focusing on introducing enhanced features in their mobile applications
to provide convenience to the customers. Private leasing is receiving impetus from a young population which
favours this form of leasing due to the benefits it offers including easy, hassle-free usage and fixed mobility
costs. So, at the end the on overall global car rental market the business is going to expand and it will provide
many services as well as rental only. One of the reasons of growing this business is that when foreigners or
tourists go to countries for tourism. now they get chance to increase more luxurious and comfortability to rent
a car like: uber and toxify.

 Car Rental Market Key Development:

The latest trend gaining momentum in the market is introduction of value-for-money car rental
services. Players in the car rental industry are focusing on providing low-cost car services, especially
for leisure markets. The small players are preferring online car rental platforms to expand their
geographical presence and reach a wide customer base. Several popular car rental services have
launched their own value brands with moderate and affordable pricing. Such strategies will help
players in the car hire market expand their customer base.

Page 4|4