New Delhi: Self-drive car company Zoomcar India Pvt. Ltd is seeking to double its fleet to 2,000 cars in the next five months and expand its business to 10 cities in pursuit of a threefold jump in revenue by the end of 2015.

Founders David Back and Greg Moran are betting that the low rate of car ownership in India, poor public transport, road congestion and parking issues will persuade people to opt for car rentals.

According to the Society of Indian Automobile Manufacturers (Siam), only 14 out of 1,000 people in India own a car.

Zoomcar, which has raised close to $11 million from investors such as Sequoia Capital and SVB India (now InnoVen Capital India), will launch its services in Navi Mumbai and Chennai by the end of this month. It is currently present in the National Capital Region (NCR) centred on Delhi, Bengaluru and Pune and logs close to 15,000 bookings per month.

Launched in 2013, the company is expected to roll out its services to other metros and tier-1 cities such as Hyderabad, Ahmedabad, Chandigarh and Goa by December, according to Back.

Zoomcar India, a fully owned subsidiary of US-based Zoomcar Inc. did not disclose its last reported revenues. However, it said it is expecting to triple its profits from current levels.

Designed after US-based ZipCar, Zoomcar allows its users to book a car, make the payment, locate the vehicle and even unlock it with the help of a single app without the help of any executive.

Given that the Indian market is still new to the “self-drive" concept, the company has fleet executives to assist customers if required.

Zoomcar currently has 100 pick-up points, which include airports, hotels and large apartment buildings. “Airports are already a good source of business for us and will become even better once we take the business international," said Back.

The company is tying up with large hotel chains, offices and even residential complexes to act as pick-up and drop-off zones for Zoomcar. The company already has a tie-up with hotels such as Novotel, Ibis and Oyo Rooms.

The Bengaluru-based company, which is investing in technology and hiring employees, is in early talks to raise fresh capital to fuel its growth and expand to new cities. It expects NCR to be its largest market, overtaking Bengaluru, given the strong demand it has seen in the four months of the launch in Delhi and its suburbs.

“We expect Delhi and Mumbai to be the biggest markets for us going forward as there are more tourist destinations around these cities," said Back.

Zoomcar eventually wants to expand to South-East Asia and Central Asia. However, India remains the key focus market for now.

Starting Zoomcar and raising the first round of capital was not easy for Back and Moran, who dropped out of business school to pursue the business. “Many turned us down because there was scepticism around foreigners executing this kind of business," recalls Back. It took them more than a year to get initial government permits for running the business.

The Indian regulations required the company to have at least 50 owned cars to start the business. They finally financed their first 50 cars through bank loans and by tying up with a car rental company in Bengaluru.

Even today, the company buys 75% of the cars in its network via bank loans while the remaining 25% are leased from large companies such as Avis Budget Group that owns ZipCar or local tour and travel firms.

The capital-intensive nature of the business will make it challenging for the company to scale to more cities. Besides, with the price war in the cab hailing services industry, consumer preference has shifted to chauffeur-driven cars provided by cab- hailing firms such as Ola, Uber and TaxiForSure.

Few see a big opportunity in the self-drive businesses in India, given that many consider driving too strenuous.

“Driving is not a pleasure in India unlike some of the other countries. Given the traffic conditions, people prefer to be driven around rather than drive themselves as there is hardly any cost difference," said Vineet Toshniwal, managing director of Equirus Capital.

“This could only work when people are trying to travel over the weekend for leisure; however that will leave a company with an under-utilized fleet for rest of the days," points out Toshniwal.

In large markets, self-drive companies get their maximum business from corporate plans or from people who travel for business. In India this segment is currently dominated by local travel agents.

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