Scriptwriter Toshi Gupta, in her 20s, recently went on a seven-day road trip from Mumbai to Goa with some friends in an Audi hired from a self-drive car rental company.
Ms. Gupta loves the feel of driving a premium car, but doesn’t want to own one.
In space-starved Mumbai, she is among a growing tribe of people who prefer to rent cars to meet their travel needs. While the Ubers and the Olas are radically transforming Mumbai’s point-to-point transportation, the Zoomcars and ECO Rent a Cars of the self-drive sector are redefining the personal driving segment.
“I like such services because they provide me with independence and are hassle-free,” says Ms. Gupta.
Self-drive car rental services offer cars on rent for a day or on an hourly basis, and pack in privacy, cost effectiveness, a good lifestyle and convenience. While a Maruti Swift can be hired for as little as Rs. 55 an hour, a Mercedes is available for Rs. 240 an hour. Some players even offer home delivery and pick-up of cars for an additional Rs. 600.
This is a market with potential. Over a dozen self-drive car rental companies with a combined fleet size of about 7,000 to 8,000 cars — from the Nano to luxury sedans and sport utilities vehicles (see chart) — are growing this market, estimated at Rs.500 crore in gross revenue. The market will notch up revenue of up to Rs. 7,000-8,000 crore by 2020, according to industry estimates.
“By 2020, India will have a car population of three crore and if the self-drive car segment gets even one per cent market share, we are talking about three lakh cars by then. There’s a huge opportunity,” said Anupam Agarwal, co-founder & MD, Revv, a self-drive car rental company.
“We are part of a larger transformation in the automotive industry. In the age of Uber and Ola, where people are questioning the reason for buying a car, which comes with heavy ownership costs, we are bound to grow,” added Karan Jain, co-founder, Revv.
Revv offers an Audi Q3 for Rs.229 an hour. If the car covers 25 km in that hour, then the per-km cost works out to less than Rs.10 without fuel. In effect, it is cheaper than hiring a kaali-peeli (black-and-yellow) taxi in Mumbai. Similarly, the company provides a Mahindra Scorpio for Rs.89 an hour; the per-km cost would work out to around Rs. 7.50, including Rs. 3 towards fuel.
The demand for these services is growing so fast that Reev, which started with eight cars in July this year, has scaled up its fleet to 80. By the year-end, the company plans to have a fleet of 500 cars in four cities.
User Profile Typically, people who don’t need a car every day and those who cannot afford a big car but want to drive occasionally in style go in for self-drive cars.
“People hire our cars on special occasions such as birthdays, anniversaries and taking a boyfriend or girlfriend out to dinner or a long drive,” said Mr. Jain, adding, “We are sold out on weekends.”
Self-driven cars give customers privacy, as opposed to having a driver around all the time. “Some people want to drive different cars and enjoy the thrill of driving them, without owning them. When people go out of town, they need a roomier car and we provide those,” said Rajesh Loomba, MD, ECO Rent a Car. And then, of course, customers save on driver costs as well.
A lot of people who aspire to drive a luxury car hire a BMW or a Mercedes without the headache of owning or maintaining one.
While the rental companies have their cars insured, the customer bears a limited liability starting at Rs.5,000. For a Mercedes S class, it can go up to Rs. 1 lakh in case of a major accident.
The players ECO Rent a Car, which is in this business for the past 15 years, is possibly the oldest player. It provides cars for a minimum of one day and a maximum of five years.
“Of late, we have seen a huge spurt in demand with improvement in roads, good cars and high disposable incomes,” Mr. Loomba said. The company has 650 cars in Delhi, Mumbai and Bengaluru, and is looking at 70 to 80 per cent year-on-year growth.
ECO Rent a Car provides a Toyota Etios for Rs. 2,000 a day plus fuel while an Altis or Innova costs Rs. 3,000 a day.
A Fortuner costs Rs.4,900 a day while a BMW 5 series costs Rs.15,000 a day. A Mercedes Benz S class or a BMW 7 series costs Rs.40,000 a day. A Mumbai-Pune trip will cost around Rs.5,000 in a mid-size sedan.
Car rental companies say most of the demand is for luxury sedans and compact SUVs. Most of these services are available at the click of a button. In the US, there are about two million cars in the self-drive segment. India still has a long way to go, but with such easy access and cost savings, someone who earns even Rs.50,000 a month can give wing to his or her dream of driving around in a BMW.
Toshi Gupta sums it up best: These services have given an opportunity to working professionals like me to enjoy the luxury of driving a premium car without owning one.
