The Emerging Trend of Self-drive Car Rentals in India

In the wake of rapid urbanization, every city in India today is ridden with one fundamental problem – gridlocked traffic. The concept of ‘shared mobility’ via car/bike rental services facilitates efficient utilization of vehicles on an as-needed basis, while easing traffic and congestion in cities. Fueled by a surge in urban population and the rise of technology-backed aggregator business models, the Indian car rental market has witnessed considerable growth in recent years, and is expected to touch INR 800 billion by 2019, according to a report by Ken Research. This market is largely dominated by the chauffeur-driven model of car rentals at present. However, with over 2 million taxis operating across India, there is also the need for as many proficient drivers for this model to be sustainable.

The chauffeur-centric model of car rentals comes with serious limitations and business challenges, which go beyond the shortage of skilled drivers. Businesses that are built around this model are required to ensure customer safety while maintaining a large driver workforce, and eventually, the company’s reputation gets directly linked with the performance of its drivers and the quality of customer experience that cannot be standardized due to a crunch of skilled drivers. Companies incur severe revenue losses during downtime of vehicles, and are also subject to challenges with fleet management such as fuel price fluctuations, fleet and driver safety, accident rates and fleet monitoring. Government regulations, which vary significantly by state, pose another hurdle for companies in this space. They are required to adhere to rules governing minimum and maximum fares charged to customers, acquire permits from local transport authorities to operate within a city or state, and comply with safety regulations such as establishing dedicated call centers, having pre-installed GPS devices and a panic button within cabs, and performing a background verification of drivers. In this backdrop, an emerging trend of ‘self-drive car rentals’ is set to reap a huge opportunity in India. Already an established concept in leading nations, this model represents a shift from driver to consumer centricity. The Indian market is gradually waking up to the multiple benefits of this model. Although still at a nascent stage, a report by Ken Research indicates that in the outlook period FY’2016-FY’2020, the self-driven car rental market in India will grow at a 35% CAGR, and is expected to reach INR 14 billion by 2020.

From a consumer’s perspective, self-drive car rentals offer prominent advantages such as privacy, flexibility, variety, and significant cost savings. Renting self-drive cars is 30-40% cheaper than renting chauffeur-driven cars, and gives consumers the flexibility to use the car any time of day, and for however long they wish. From hatchbacks to sedans and luxury cars across popular manufacturing brands, consumers enjoy multiple options that allow them to choose a car that is most convenient and best suited for their commute, or one that simply matches their lifestyles. For instance, a hatchback might be a preferred option while navigating crowded streets; a luxury vehicle might be preferred for a memorable occasion, while an SUV could be chosen for road trips with a big group. Consumers enjoy all the luxuries of having a car to themselves, without the liabilities associated in owning one. Self-drive car rentals also represent environmental-friendly mobility by reducing an individual’s carbon footprint.

Companies that offer self-drive rental services must have real-time visibility into the location and performance parameters of their vehicles, as well as driving patterns of customers in order to make informed decisions for optimized ROI, and better customer experience. The foremost problem faced by these companies is when customers fail to return vehicles on time, in proper condition, and at the correct location. The unavailability of vehicles contributes to lost revenues for the company. This is where technology comes into play and will be a source of competitive differentiation for rental companies. Rane t4u’s Self-drive Car/Bike Rental Operations Management Solution is an intelligent technology-driven platform built for self-drive rental companies to maximize operational efficiency, minimize risk and yield better ROI. It streamlines the entire vehicle rental process from customer operations like integrated fleet monitoring and maintenance, booking, invoicing and digital payments, while providing mission-critical data for analysis and meaningful insights to run a successful self-drive business.


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