Gaurav Aggarwal, Savaari: Car rental services in 53 cities across India
YourStory in conversation with entrepreneur Gaurav Aggarwal about the business idea behind his venture Savaari, a cab rental service that is available in 53 cities across India.
Gaurav, what is Savaari all about?
There is a huge gap in Indian car rental market where on one hand you have quality services offered by franchises of US/Europe-based car rental companies which are highly priced and thus, affordable only to a select few while on the other you have almost all of the remaining car rental market consisting of local players which compete on prices but whose quality is always a suspect.
Savaari was founded in 2006 to fill this gap where you can get quality car rental services at nominal rates irrespective of which city in India you want to hire car rental services, thus ensuring that you get the best value for your money at all times. In the past 5 years, we have been able to prove our business and service model and currently, we are providing quality car rental services at nominal rates in 53 cities across India.
How is Savaari different from other online cab rental aggregators? What are your flagship differentiators?
Due to the unorganized nature of the market, there is no standardization on service standards or rates. In any given city, both can fluctuate immensely. Thus, there was need for a car rental company that can be associated with offering the best value for money to the customer in terms of the services that they get for the price that they pay. And we knew that just aggregating local transporters and their rates would not solve the problem that exists in the industry.
To build a pan India car rental company, at the outset, we knew that it would not work to own our cars in each city that we provide our services in. The reasons were, first this would make the investments needed very high and second, based on the two generations of transport experience that my family has, we knew that there is a lot of local context and help that is needed to run this business. Thus, we opted to use local transporters as building blocks and built processes in place around them so that we can deliver quality services across India.
This way we not only had the local experience, but also same standards across India. The processes are for the entire loop starting from the way local transporters are selected to be part of Savaari, authentication of their credentials, exchange of information between Savaari, local transporters, driver and customer, driver recruitment and training, car maintenance schedules and finally, the customer feedback.
However, this was just the first half. The other part was to ensure that right from the point the customer gets in touch with us to the point they get billed, they interact with Savaari and its standards and in case there is any issue, it is Savaari that takes the responsibility. Even now in all our bookings, the customer sees Savaari placard, Savaari chauffeur card, Savaari duty slip and Savaari branded newspaper and water bottles. To the end customer, we are a pan India car rental company and at the backend to provide services, we have decided to aggregate local players.The other differentiation is that with an experience of over 30,000 car rental days, we have evolved the business and service model which is very scalable. We knew it was important to learn from one customer at a time before moving to next to build this business. The scalability is in terms of serving more customers including both retail and corporate, adding more local transporters in existing cities and adding more cities with in India.
How did the business idea for Savaari come about?
It was in 2006 when I was traveling from Mumbai to Delhi and had to go to Roorkee. But after reaching Delhi, I found no reliable option to book a car. This is when I realized the need of a reliable car rental that is available 24x7 where the customer is assured of a clean, fully functioning car and an informed courteous driver. I decided to analyze the scope of the future of car rental in India and soon I found that not only there is no standard and quality assurance in this sector but also that there are no national players. There are franchises of some western companies present but they are serving only to a niche segment. This is how Savaari was founded in 2006 with an initial investment of around Rs.55,000.
Tell us about your background.
I have a Masters in Computer Science from Georgia Tech and have worked for 10 years in a networking company in the Bay area. I was involved in router development. The experience of working in such a complex environment helped me in designing a completely customized and scalable backend for Savaari from scratch. I have been managing technology, marketing and business development in Savaari. The family background of two generations of transport experience helped in evolving the business and the service model.
What is the size of the market that you’re addressing? Is there acceptance for your concept?
The car rental market in India is expected to be Rs.12,500 crores. It has grown pretty much at 15% in the past few years except for 2008 and 2009 when it grew less because of the economic slowdown. It is expected to grow at the same rate in coming years as well and we expect the market to be around Rs.15,000 crores in 2011.
The market is divided into airport (and also point to point) and non-airport (local full day/outstation) car rentals. While airport rental is around 14%, it is the remaining 86% that is our target market. The non-airport market is a combination of both inter/intra city and retail/corporate.
In terms of trip type, business adds up to 72% while leisure contributes about 28%. Revenue is equally divided between business and leisure. 40% of revenue is coming in from retail and remaining 60% comes in from corporate and travel partners. Going forward, revenue from business is expected to increase, to align with the market.
We have over 150 corporate customers which consist of SMEs, MNCs and travel partners including OTAs using our services. We have also seen repeat customers on the retail side and also new customers coming to us through word of mouth. The acceptance of the concept can also be seen on the backend where we have seen great support from our local transporters in helping us build and grow Savaari. With Savaari, they get business sitting in their offices and also, timely payments. The delay in payments is a big pain point in this industry.
Where do you see the online cab rental aggregator space in India and Savaari five years from now?
While continuing to focus on quality and expanding our reach through more local transporters within existing cities and adding new cities, we plan to be India’s largest car rental company in the next 5 years. With adequate funding, we should be able to consolidate 3 - 5% of this unorganized market. Given a very large percentage of this market is unorganized; there is huge scope for car rental aggregation. For anyone to do so, the challenge would be to ensure quality on a pan India basis.
What is Savaari’s revenue model? Are you looking at raising funds?
On the front end, we provide car rental services to retail and business customers on a pan India basis and on the backend, we use local transporters to provide those services. We have pre-negotiated rates with these local transporters and we add our margins to those before sharing it with our customers. We now look to expand our customer base, build technology solutions to further automate our model and we are looking at raising money to do that.
How big is the team behind Savaari? Are you looking at hiring?
There are currently 17 employees managing operations, customer support, sales and IT including senior management team of 3. We also have 2 advisors helping us with brand and business development and 3 consultants in the team for marketing and accounting. We are currently looking for a senior software developer who can help us with optimizing and scaling our backend as well as our front end. We are also looking at hiring a senior sales person with relevant experience in retail industry to head our sales.
Let us know about your plans for expansion.
We plan to increase the number of cities where we provide our services and increase the number of local transporters in our existing cities. We are looking at completing Savaari branding in terms of drivers' uniform and the cars' exteriors on a pan India basis. We also plan to build a GPS integrated device to better manage our services, automate corporate billing entirely and provide value added services to customers.
We at YourStory wish Gaurav and the entire team at Savaari much success. To try out this cab rental service, check outhttp://savaari.com/. Also, do let us know what you think of this story by writing to us at email@example.com.