With popular taxi hailing apps Ola and Uber impacting the earnings of traditional rent-a-car companies, Mumbai-based startup JustRide is helping such companies restructure their business model by deploying unbooked cars through its self-drive platform.
JustRide, an aggregator of self-drive cars, is the first of its kind in India. Apart from using the idle inventory of rent-a-car companies, it also sources new cars at discounted prices for its vendors (rent-a-car companies) to make their operations viable.
“The entry of Ola and Uber in the point-to-point transportation space has had a huge adverse impact on traditional rent-a- car companies. Since their business has gone down, they are finding it difficult to meet loan serving and HR costs (driver wages). Their cars are underutilised,” Ashwarya Pratap Singh, Chief Executive Officer, JustRide told The Hindu.
The startup gives them a value proposition whereby there would be no human resource cost for drivers and the cars could be used in the self- drive space, “giving us constant supply of unused inventory at an assured stream of income,” he added.
“By doing this we are helping an ecosystem that is passing through a bad phase and we are also bringing balance in the business,” Mr Singh said. By approaching rent-a-car companies which have more than 50 cars that are less than three years old in their fleet, JustRide is helping them to convert the cars from commercial licence to a rent-a-cab licence with a black-and-yellow number plate.
“The cabs with a black-and-yellow number plate can be used as both a regular driver-driven taxi and as a self-driven car. Whenever the car is not booked, it can be used by us as a self-driven car,” Mr Singh said.
He said through 16 vendors (rent- a-car companies), JustRide has commitment to get 6000 cars for its self drive rent a car business.
To make it more convenient for the rent-a-car companies JustRide procures cars for them at discounted prices.
“We operate our business through sale and lease back model just like IndiGo airlines does. Because we book cars in bulk, we get heavy discounts from manufacturers and we pass on the benefits to our vendors. This also helps us to operate an asset light business unlike conventional rent-a- car firms, which purchase their cars outright,” Mr Singh said.
The firm, promoted by five youngsters who have graduated from NIT Allahabad and IIT Bombay, started its operations in April 2015 with revenues of Rs 8 lakh. By November 2015, the company had total revenues of Rs 1.18 crore.
“We have been growing by more than 200 per cent per month. Operationally we are profitable. Salary for 150 staff is the only cost we need to recover and by February 2016, the net (cash) burn will stop. Then we will break even,” Mr Singh added.
From eight cars in its fleet in April 2015, the company has 348 cars (as of November) through the sale and lease back scheme.
“We are bound to succeed as Ola and Uber are more into ride sharing. We are much more into the functional aspect which is car-sharing. The market we are targeting is much bigger than the point to point transportation segment catered to by Ola and Uber. We will be better shaped after three to four years,” he added.
The company has operations in Mumbai, NCR, Pune and Bengaluru. JustRide is the brand name of AS JustRide Tours & Travels Pvt Ltd, and it plans to expand its operations to Chandigarh, Hyderabad, Chennai, Kolkata, Nagpur and Ahmedabad by February 2016.
It started with an all-BMW fleet of eight cars purchased at Rs 4 crore and now includes Toyota Fortuner, Mahindra XUV 500, Scorpio, Honda City, Honda Amaze and Maruti Ritz which are rented out as self-drive cars.
Recently, the company was selected by Google for its Startup Accelerator Programme. JustRide is part of a consortium of eight Indian companies which been handpicked by Google for the first edition of the Launchpad Accelerator programme.