Self-drive car rental start-ups woo private car owners to scale up fleet

Zoomcar, Myles and Revv are launching new initiatives that allow car owners to earn a share of what their car makes when used as a self-drive taxi


The move to use private cars as self-drive car rentals shows the industry is moving from an inventory model to a marketplace one to improve margins. Photo: Hemant Mishra/Mint
The move to use private cars as self-drive car rentals shows the industry is moving from an inventory model to a marketplace one to improve margins. Photo: Hemant Mishra/Mint

New Delhi: Self-drive car rental start-ups, including Zoomcar, Myles and Revv, are wooing private owners and dealers to put their cars onto the rental platforms, as they look to bolster their fleet without having to buy new cars.

Myles Angels and Zoomcar Associate Programme are some of the new initiatives that allow car owners to earn a share of what their car makes when used as a self-drive taxi.

This is part of a larger shift where the self-drive industry in India is moving from an inventory model to a marketplace one, to improve margins and free up capital.

“Supply is the only constraint. It is very clear. From a demand standpoint, the market is incredibly robust and very healthy. So, for us, it is really just a matter of getting the supply to that next level,” said Greg Moran, co-founder and CEO at Bengaluru-based car rental start-up Zoomcar.

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The company has piloted new models starting last year and claims that about 20% of its 2,500-strong fleet is not owned by Zoomcar.

“Our expectation is that by the middle of 2017, we should be around 75% on this marketplace model,” said Moran.

Over the past 12 months, self-drive car rental companies have innovated with different models to scale up their fleet. This includes tapping local car rental companies (which have black-background numberplate cars) to contribute their fleet and getting individuals to buy cars for rental platforms as a means of extra earnings or to offset the cost of the vehicle.

“So, the whole industry has gone through three stages: first we started buying our own cars on our books. Then we realized that this will require us to build very large balance sheets which takes time, so we thought, let us go asset light. Then the second model was to have others—like offline car rental companies—put their self-drive cars on our platform. This is what we have been doing for quite some time. The third step is where every individual is contributing one car to our platform,” said Anupam Agarwal, co-founder and CEO at Revv, a Delhi-based start-up launched in 2015.

Now, almost all major start-ups have schemes for individuals to buy a car for the rental platform by offering them attractive loan terms through their partner financers.

However, this happens through an agreement wherein the car owner gets the car registered in the name of the car rental company (which has the self-drive licence) for a pre-defined period. The car loan is borne by the original owner, who gets the car’s registration converted back to ‘private’ once it is returned on completion of the contractual period, which is up to three years.

This is because, as per the current rules, only entities with a self-drive car rental licence (which is given state-wise only to large companies with at least 50 cars, an office and a parking space) are allowed to ply these vehicles. Moreover, a private vehicle (with a white background number plate) cannot be used as a self-drive taxi.

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“We had a few rounds of iterations with the policymakers and asked them to allow private cars on our platform without getting it transferred to a commercial licence. This will give us a lot of flexibility if these changes to Motor Vehicles Act get passed,” said Sakshi Vij, founder and CEO of New Delh-based Myles, which has 1,200 cars in its fleet.

Started in 2013, Myles, a unit of Carzonrent, owned its fleet earlier but pivoted to a hybrid model later. “We owned cars on our books only for the first year. We now have original equipment manufacturers coming to us and asking if they can be a part of this; so a lot of avenues have opened up where entities want to put cars on our platform,” said Vij.

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