Some might compare car rental in Latin America to the U.S. market 30 years ago, when the major brands, through franchised and corporate stores, competed for airport business alongside strong independent companies. The local market was still a vast, undiscovered country.

In Latin America today, some airports have as many as 17 companies, representing not only the three major U.S.-based brands but every international one as well. They compete predominantly as franchises, along with many regional players.

Local markets in many Latin American countries are still dominated by mom-and-pop shops with 30-car fleets. The business of insurance replacement is almost nonexistent in many markets.

It would appear, on the face of it, that Latin America is ripe for consolidation. How far along is this process?
Latin America seems in a perpetual state of “potential.” In an area covering 8.3 million square miles — that’s home to more than 600 million inhabitants — it’s safe to say that most have never rented a car.

Combine that with strong projections for airline growth and travel growth in general, and you’d think car rental companies would be in a land rush to secure territory.

There is some corporate activity. Enterprise Holdings opened franchises in Central America this year, as did Sixt. Avis took over its licensee in Brazil this year in a high-profile buyback.

Overall, however, the pace of change is nowhere near Europe’s path to consolidation.

“I don’t see consolidation — the way we’ve seen in the U.S. or the way we’re looking at it in Europe — in Latin America for a long time,” says Tom Kelley of PurCo Fleet Services, who was previously responsible for global franchising for Dollar Thrifty Automotive Group.

In contrast to the U.S., “The biggest difference [in Latin America] is the number of competitors market to market,” Kelley says. “It makes it more difficult to be profitable.”

International airports serving Panama City, Panama, San Jose, Costa Rica and Cancun and Cabo San Lucas in Mexico are overflowing with companies; a-dollar-a-day rates are not uncommon.

Markets with drastically low rates make up the difference through selling ancillary insurance-type products such as LDW. Companies will fully admit they wouldn’t be in business without it, though hard sales tactics are hurting the image of car rental.

Economic volatility plagues markets such as Argentina, Venezuela and particularly Brazil, whose currency has lost 70% of its value against the U.S. dollar in less than a year. Political unrest and violence are endemic in some regions. A full one-third of global homicides occur in Latin America, even though the region has just 8% of the world's population, according to data from the United Nations.

Cuba is on the verge of an economic glasnost with the U.S., which will likely produce a doubling of American tourists next year. Only local brands operate in Cuba, seemingly an opening for the major players. But they’d enter a market controlled by the government, one that owns the Cuban car rental companies and also controls prices.

Still, the potential in Latin America is there, as a growing middle class discovers car rental in more developed countries such as Brazil, Mexico, Argentina, Panama and Chile.

Inbound demand continues to grow, outpacing new infrastructure. “Bogota’s international airport is brand-new and it’s already under-capacity,” says Francesco Pileggi, a Budget licensee in Colombia and Venezuela. “There is a huge opportunity for retail rentals if Colombia can be viewed as a more secure location.”

An expanded Panama Canal will open in 2016, and its international airport is under expansion, as well, which will include a consolidated rental facility — a first for Latin America.

Mexico City’s public transit system moves 12 million people daily, but it’s straining. Bogota has similar issues. In both cities, governments desperate to solve transportation nightmares are turning to carsharing as a mobility alternative.

Corporate consolidation remains a Catch-22 — there are too many companies, but that’s precisely the problem. In Mexico, “The profit margins are about the same [as in the U.S.], but the ability to generate revenue is not enough,” says Omar Garcia of Europcar Mexico. “It’s not that appealing for the corporate brands.”

At this point, car rental business in Latin America is left in the hands of operators adept at micro-managing their local markets. For the majors, Latin America remains full of “potential.”