EDITIONS
Analysis

How self-drive is heating up car rental space

Tausif Alam
19th Oct 2015
3+ Shares
  • Share Icon
  • Facebook Icon
  • Twitter Icon
  • LinkedIn Icon
  • Reddit Icon
  • WhatsApp Icon
Share on

According to Ken Research, the Indian car rental market revenues will grow at a considerable CAGR rate and is expected to touch Rs 800 billion by 2019. From on-demand service to self-drive, car rental space has been evolving continuously in the country. In on-demand car rental space, no other player has been able to breach the market of Ola and Uber. However, self-drive car rental space is witnessing a boom with multiple players exploring this market.


yourstory-self-drive-car-rental

Zoomcar, Revv, Just Ride, MiCar, Carzonrent, Selfdrive.in, Voler, RentoMojo, and many other players are exploring the opportunity in self-drive car rental market. According to an estimate, more than 10 organised players are working in the segment in the four metro cities, with new players continuously joining in.

“The market is expanding exponentially. In the past two years, the market has evolved and witnessed a huge growth, both in terms of users and service providers. This number is going to grow further,” says Greg Moran, Co-Founder and CEO, Zoomcar.

Founded in 2013 and headquartered in Bengaluru, Zoomcar, which holds the distinction of being the country’s first self-drive car rental company, disrupted the market with its service. The idea was derived from the concept of sharing economy. Based on the Zipcar business model, the startup was introduced in India by Greg Moran and David Back. Since the launch in 2013 with just seven cars, Zoomcar has expanded its fleet to 1,800 with price range varying between Rs 95 per hour to Rs 250 per hour. The company started its operation in Bengaluru and now offers self-drive car rental services in cities like, Mumbai, Delhi, Pune, Chennai, and Hyderabad. They plan on adding 7,000 new cars to their existing fleet and launch Zoomcar in 15 more cities. Zoomcar recently raised a funding of $11 million from Sequoia Capital, Empire Angels, and NGP, raising their new capital to $22 million.

Evolution of the market

The players in the space are also launching various campaigns, packages, and services to increase its user base.

Revv another competitor in the segment describes its model to be a mix of Zipcar and Dominos. They home deliver the car to the user. Till now, the self-drive car rental companies have had parking lots from where a user picks up the car but Revv wants to make this bit easier as well. “We were the first company in the world to introduce doorstep delivery, no other car rental company does this on pure-play basis,” says Anupam Agarwal, Co-Founder, Revv. The other differentiator in terms of the model is unlimited kilometres. Revv has raised a seed round from investors, which includes CEO of Myntra more than 10 directors and partners from McKinsey.

Since the launch of the doorstep delivery launched by Revv, many other players have also adopted the service. Taking convenience to a new level, Zoomcar recently unveiled door-step services for users across key markets to become operational before year-end.

Recently, Zoomcar launched SuperMiler, the first-of-its-kind campaign which allowed customers to drive for unlimited kilometers. The campaign was designed for corporates, office goers, and travellers who were planning a long distance getaway.

They have also designed special packages including ZoomCommute, to attract corporates and office goers who are looking for an economic weekday self-drive option. This package offers a range of cars for weekly use, accompanied by special packages to suit the consumer needs as an affordable alternative to owning cars.

Use of technology

 Companies have started integrating technologies like Driver Behaviour Monitoring (DBM,) and On-Board Diagnostics (OBD) in their cars. Zoomcar, Revv, Voler, Carzonrent and many other companies are using such technologies in their cars.

In 2013, ZoomCar started with the usual GPS tracking system, but soon realised the potential to evolve technologically. A speeding alert system enabled via an in-car ‘black box’ helps the company monitor the speed of its vehicles in real time and penalise over-speeding customers. The OBD device monitors the performance of the car and gives real-time feedback to the driver. Zoomcar is using these devices in its cars.

Revv also incorporates technologies like DBM and OBD. Revv is also planning to switch to dynamic pricing system. "Technology is going to be the core of the industry. The soon-to-be-introduced dynamic pricing system will be based on the overall demand and supply and the driving history of the customers. Based on the driving behaviour of a person the platform will generate customer scores which will vary with customers. And once the database is built, we’ll use the score as an input into the price an individual customer is charged,” says Karan Jain, another Co-Founder, Revv.

Future of the industry

Presently, the market is inundated with numerous players. However, according to industry experts, only a few players will survive in the longer run.

“At present, the market is at a very nascent stage and hence it’s witnessing a flood of players moving into the space from all the corners. However, as the market matures only two or three players will survive, holding the larger sway while others have to settle with small percentage,” says Greg of Zoomcar.

Karan of Revv reiterates the viewpoint and says that the other markets like US and China has observed the same trend with only a few players dominating the market.

On further growth of the market, Karan says that in the next five years, the market will have a large fleet of self-drive cars. He estimated that by 2020, the number of such cars will be around some two lakh. “Currently, US has some 20 lakh self-drive cars in the market; and considering the population and emergence of the Indian market we expect our market to grow on the same line.”

The quick emergence of this shared economy has threatened other industries in the country as well. All the self-drive car rental companies claim to offer an alternative to owing a car.

According to Anupam of Revv, one self-drive car is replacing around 15 cars. This is surely an ominous sign for car makers in the country.

Remember, Anand Mahindra, the chairman of the Mahindra and Mahindra group, flagging off the issue of Taxi hailing apps like Ola and Uber eating into the business of passenger car makers in a press conference has.

Is car rental threatening the economy?

According to industry experts, the answer is no. Despite a longstanding rental car industry, most Americans own cars. Rental cars serve as a substitute on specific occasions such as holiday travel, supplementing and not replacing the existing status quo.

Besides, the rural market in the country is still under-penetrated for automobile companies. According to the data available at How India Lives, there are just 37,85,355 four wheelers in the rural India as compared to 76,88,232 units in the urban areas. A company like Maruti makes 31 per cent of its sales in the rural market.

As the data suggest, the emergence of sharing economy in automobile space does not pose a bigger challenge to the automotive industry. However, it will be interesting to witness the growth of both the self-drive car rental space and the automobile manufacturing sector in the country. On our side, we wish both of them, all the best!

3+ Shares
  • Share Icon
  • Facebook Icon
  • Twitter Icon
  • LinkedIn Icon
  • Reddit Icon
  • WhatsApp Icon
Share on
Report an issue
Authors

Related Tags