BackDrivezy to liquidate its fleet as demand falls amid virus outbreak
The company plans to gradually add a fleet of electric vehicles by setting up a joint venture with an EV maker
PremiumVehicle rental platform Drivezy plans to liquidate around 30% of its 15,000 two-wheelers and part of its four-wheeler fleet due to mounting debt and falling demand.
The company has launched a pre-owned vehicles buying and selling platform to dispose off the used vehicles. It also plans to gradually add a fleet of electric vehicles (EVs) by setting up a joint venture with an EV maker, Ankur Sengupta, head of business operations, Drivezy said in an interview.
The development comes shortly after two-wheeler rental firms such as Bounce and VOGO decided to sell-off vehicle assets to raise capital and use it to invest in other businesses.
Mobility startups who had earlier bought large vehicle fleets, especially of two-wheelers, are now forced to cut down on both capital and operational costs after the coronavirus pandemic and prolonged lockdown restrictions wiped out almost half the demand in the sector.
Sengupta said that over the last three months, Drivezy has witnessed a 40% fall in demand, forcing it to hive off a part of its vehicle fleet. Vehicle rental players usually get most of the demand during the weekends, but this dynamic has shifted as consumer spending on tourism and leisure travel also dropped drastically during the three-month lockdown.
Prior to the lockdown initiated in end-March, Drivezy had a significant pool of demand from delivery workers in Swiggy, Zomato, Dunzo and others. But due to reverse migration, demand from this category has also taken a hit.
“Demand from consumer side has been the main source of revenue for the mobility and vehicle rental sector, but covid has changed that. Drivezy is now repositioning its business strategy to offer a full-stack mobility platform by offering both short-to- long-term vehicle rentals, as well as a new platform to buy or rent brand-new vehicles directly from manufacturers," Sengupta added.
In 2015, Drivezy launched as an aggregator; buying vehicles directly, either through equity money or through financing options from banks and other lending institutions. However, as the company began to grow in scale, it pivoted to newer models in order to bring down capital expenditure on procuring vehicles.
Last year, Drivezy pivoted to a full-franchisee model, wherein it allowed private owners— individuals, fleet operators, dealers — to list on its platform, thus removing the cost of procuring vehicles. It currently has more than 15,000 two-wheelers and 4,000 four-wheelers on its platform.
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