DRIVE IT, DON’T OWN IT!

In a country where owning a car is a sign of being ‘upwardly mobile’, you wonder if Greg Moran, the co-founder of a self-drive rental car business called Zoomcar, has got his theory right when he says that it’s an “irresponsible purchase”. But, study his business model closely and you know he’s bang on target. Zoomcar’s fleet comprises 2 million registered users and 3,000 vehicles. It shows that the dynamics of urban transportation are indeed changing. Startups like Zoomcar are, in fact, redefining the way people own and utilize a car in Tier 1 cities. From commuting to work to taking family holidays, self-driven cars are now slowly and surely replacing the need for ownership.

“It’s a headache to own a car in urban cities for three reasons – congestion, air pollution and lack of parking space. Hence, an increasing number of people, and especially youth under the age of 30, prefer self-drive cars,” Moran explains. Statistically, travelling in a self-driven car is 35% cheaper than hiring a taxi or renting a car. And so, with its presence in 24 cities, Zoomcar is now planning to cover 30 cities in the next two years. The trend makes business sense!

A Growing Market

Zoomcar isn’t alone in this space. Revv, started in July 2015, is another self-drive car rental startup offering a series of customised products. “A customer can rent a car from Monday to Thursday or rent a car from one point and return it at another in the same city. For those requiring a car for a longer duration, we offer a ‘subscription’ service. In addition, one-way outstation self-drive provides the flexibility to pick a car from anywhere in the origin city and leave it anywhere in the destination city,” explains Anupam Agarwal, the company’s co-founder.

In the last one year, Revv has attracted USD 11 million in funding and expanded its services across nine cities. The average duration of bookings of Revv’s cars has gone up from 25-30 hours to 40-50 hours. The startup has 2 lakh customers and has clocked over 2.5 crore km. But what also counts is innovation. For instance, Revv has introduced a unique service that does not mandate the user to upload the driving license and wait for approval before proceeding with the first booking. “We use social profile scanning and have a one-minute booking process. We have also introduced a ‘car finds the user’ model that delivers the vehicle to the customer’s doorstep,” Agarwal says.

The Preferences

So what is the customer profile in this business? Studies reveal that up to 80% of the customers are below the age of 40. “Young travellers, solo explorers, honeymooners and families prefer to explore destinations at their own pace so that every journey is a comfortable adventure,” points out Manheer Singh Sethi, co-founder of TravKart. Also, the startups are now adding luxury cars to their fleets. “These are for weddings, anniversaries or special occasions,” says Moran of Zoomcar. In terms of pricing, while a hatchback is available at Rs 70 per hour, a luxury sedan can cost Rs 170 an hour.

Moreover, growth seems assured with rentals growing in Tier II cities also. “As I said before, the self-drive car concept will redefine car ownership and urban transportation in the next five years,” Moran says. With a current supply of 6,000 to 8,000 cars in the self-drive segment alone, the annual revenue is close to USD 80 million. Industry experts opine that this may zoom up to USD 14 billion industry by 2020. Understanding the rapidly increasing demand for self-driven cars, especially hatchbacks and SUVs, key stakeholders believe that this segment is in a very “exciting” space and will be in a continuous state of transition with new packages and offers.

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