Optimizing car rental profitability through non-linear modelling: a statistical analysis of the impact of pricing strategies on car rental revenue in Zimbabwe 2015 to 2023
- Author
- Mwariwangu, Hermosa W.
- Title
- Optimizing car rental profitability through non-linear modelling: a statistical analysis of the impact of pricing strategies on car rental revenue in Zimbabwe 2015 to 2023
- Abstract
- This research examines the effects of different prices on car hire revenues in Zimbabwe with the objective of improving profitability through nonlinear modelling techniques. The study is founded on secondary data collected from car rental companies during the period 2023-2024. Some of the most important variables in consideration are rental fees, customer demand, fleet size, operational costs such as fuel and maintenance, as well as overall economic markers such as exchange rates and inflation levels. A two-stage analytical framework was adopted: in the first stage, a time series model of forecasting (ARIMA 1,1,3) was employed to forecast future rental demand; in the second stage, a nonlinear programming model was employed to find the most profitable rental price for each day. The model of forecasting was found to be sufficiently accurate, especially when external factors were factored in, with an R² of 0.62. Optimization results showed that setting the price of the rental at $20 a day would generate the most profits in current conditions. Further analysis revealed that revenue is strongly sensitive to changes in price elasticity and seasonality. These results suggest the advantages of combining forecasting functionality with profit optimization methods for pricing strategically. The study offers practical guidance to car rental companies operating in unpredictable and price-sensitive economies like Zimbabwe and suggests that subsequent studies can draw on real-time data and machine learning for more responsive pricing strategies.
- Date
- June 2025
- Publisher
- BUSE
- Keywords
- Pricing Strategies
- Car Rental Revenue
- Statistical Analysis
- Non-Linear Modelling
- Car Rental Profitability
- Supervisor
- Ms. Pagan’a
