The challenges of the car rental business in India

Car Target India Car Rental industry

Are you considering starting a new or developing your existing rent-a-car business in the Indian market? Thinking of entering this rapidly growing environment as an easy step? Consider converting your investment into a profitable business venture? All of that may be a real challenge.

Despite the constant growth of the Indian travel market, the car rental business only recently started to show up as the service we all know worldwide. It was only after 2009 that the first success stories were noticed in some major cities, especially in tourist areas.

The ugly truth about the car rental business in India

Of course, there are also some major international players in the Indian rental car industry, like Hertz and Avis Budget Group, which are recognized by most travellers as well as local businesses. I presume that international and well established local brands will continue to look for new ways to drive ancillary revenue (this segment reached approximately US$450 million in 2016).

Other less organised and lesser quality car rental services have guided the market since 2009 and have accumulated revenue almost five times higher than the professional high quality market participants reaching a record high volume of more than US$2 billion dollars in 2016.

A number of smaller, local travel agencies already run their basic rent-a-car business with low costs, low quality and minimal fleet size. According to some market data available, this segment is still the vast majority compared to the well organised car rental industry. This segment, that we cannot even call a niche as it is so huge, puts less emphasis on fleet quality, have poor communication and sometimes even verbal arguments with customers, lack of technology, have no online presence and often only cash payments are accepted which is absolutely unacceptable in the developed international car rental environment.

But still, where there is disorder, there is an opportunity for improvement – creating the order that will serve you as well others involved.

How to start your rental business in India

So, the local competition is very aggressive and straight forward but nothing is impossible. If you have a good business idea about the car rental industry and have a clear vision with some great ideas, then no one can stop you.

First, you would have to find out who your toughest competitor in the area is and what services they provide, including basic insurances, taxes other extras.

Evaluate all these factors and make a proper business concept for yourself.

Come up with a list of what general services are required locally for potential customers and how you can satisfy those needs with your car rental offers.

Think about which valuable inclusions and services you can add for corporate car rental segment, try to outbid local car rental services by highlighting your benefits in a simple, clear way as in this business, you must make yourself known with some good offers and clear rules.

Once you successfully pass the entry line, you can start to consider ways to be more profitable. Depending on the location you want to set up your car rental business, your odds of success could double or decrease ten times, and this, of course, is not the only factor. If you are going to start in big cities like Bangalore, Hyderabad, Delhi, Mumbai, Chennai or other tourist spots, then this could be a good kick start because in big cities, car rentals are very popular and its customers are hungry for a good rental experience. Accepting the fact that these cities have many tourist spots assures us that there are many markets within India that are ready for the start-up of a proper rent a car business, able to meet the needs of customers.Review Android Smartphone

Developing a professional car rental business requires precise planning. It’s a highly price sensitive industry and a highly competitive environment that is often why car rental broker like can outperform even their major competitors just by being able to react faster and adequately to the market fluctuations.

Marketing and business planning in the car rental industry overall requires considering factors like:

  • Size and structure of the rental fleet, clear segmentation based on the market demand
  • Fleet structure, acquisition and resell strategies
  • Source of revenues – basic rental charges, extra charges like insurance fees, mileage fees, etc.
  • Pricing mix and strategy
  • Specific rental prices reflecting business strategies and right segment mix (leisure rates, weekend rates, business rates, rates based on the length of the rental) as well as overall revenues from each source
  • Rental office locations and initial network coverage
  • Management team car rental, travel industry or automotive experience that could be used
  • Target market – leisure travellers, corporate business travellers
  • Detailed market analysis for competitiveness
  • The definition of what are the key aspects making you different from competitors, how is this demonstrated in your message to the end consumer

One of the other key features of successful car rental companies is the advanced software application that on one side, enables a business to control all sides of the business including fleet planning, usage and pricing while direct integrations allow customers to gain quick access to the offers, either directly online via the company’s website or through any other affiliate system like online car rental brokerage. It must run flawlessly and look simple to satisfy the customer.

All these small bits and pieces can help you to boost your car rental business at a super fast pace or break it in no time.

Car Target already successfully started car rental affiliate network in India. If you want to ride the wave of opportunity, contact us.