This blog is for those entrepreneurs, who are planning to start their own car rental business or already have one that they want to grow. Herein we have mentioned the current challenges of the car rental business, provided a solution for it and explain how you as an entrepreneur can grow your car rental business.
Imagine you have shifted base to a new city, either for work or as a student. How would you cope with local travel? You either have to depend on Uber or, the local transport, which will obviously take its own time. Despite being on-demand taxi app Uber requires you to wait. Won’t you miss your car at this point?
The simple solution to such a complex need is car rental services. These services allow you to hire a car for the day or by the hour, and get your work done on time. It works out more economical than an Uber and does save a lot of your time.
Let’s delve a bit more into the market of car rental business and see what it really is, and how it works.
- The total revenue generated by the car rental segment alone amounts to $338Mn in 2019
- The annual growth rate is expected to be 14.3% which will result in a market volume of $576Mn by 2023
- The growth in the global car rental market can be attributed to the fact that there is an increase in the disposable income of the people living in the developed and developing countries, as well as the development of the travel and tourism industry in these cities or countries
- The increase in global funds and players investing in this market is also acting as an accelerator of the increased development of the car rental business
- The North American markets hold the highest share in the car rental market closely followed by the Asia Pacific markets. India and China are holding their grounds in this segment, and have shown a potential increase in the number of players as well as a potential target audience
The Need for Car Rental Services
The predominant reason for the sudden surge in the number of car rental services can be easily attributed to the fact that there is a market of opportunities and need for something that is more economical and available for immediate needs. There is a demand for peer to peer car rental, which means people want to have the cars for the hour or the day and don’t want to depend on someone else to be driven around the town.
- The freedom of movement associated with car rental services is the main reason why there is a growing need for it.
- It is more economical than the app like Uber services and promises to offer a better quality of life for you
- When you live in highly inaccessible areas, then the car rental app services help you reach places with ease. Where taxis don’t come, your car rental services help you go mobile.
Every growth story is accompanied by some challenges. Here are a few challenges that the car rental app services do face that need some solutions.
The Challenges with Car Rental Business
One of the major challenges that the industry faces is the driving style that the overseas drivers are most comfortable with. Let’s say you have been driving along the left side all your life, and suddenly you need to drive on the right side, then it becomes slightly difficult. Again, the drivers who are renting out cars are not aware of the traffic rules in the city/country.
This can cause issues for the ride-hailing app services, and you may face tough charges in case the drivers happen to be involved in some legal offense or accidents. The best way to deal with it is to provide a small training to the drivers before offering them the cars on hire to avoid the consequences.
Increased level of competition
New players on the block can also be quite a challenge for the car hire app. The new players tend to affect the business of the old and known players. The only solution to this challenge that the existing players have is to keep evolving. Like every other business, it is time for car rental services to opt for technology. The increased usage of technology and the constant evolution in terms of USP, ideas and the differentiation of the brand will help them keep up with the latest trends.
Booking and pricing management
If the management system is complex, and not user-friendly, you might face challenges in managing the bookings, keeping a record of the same, and identifying the revenue you have generated. This is basically tough for the car rental services that are local and are yet to adopt any sort of technology. With time, this can prove to be a challenge for these existing players. The way to engage new customers is by breaking down the pricing structure in an easily understandable and accessible manner. Offering better deals, and plan on automating the car rental service through car rental management software or ride sharing app will evolve your business as a whole. Going mobile with booking and renting services can be quite a good deal for you.
Brand awareness- a challenge
If you are new to the market your customer conversion ratio is quite low, and you have quite a tough competition. Analyze and serve the markets with specific vehicles, target audience becomes very specific too. To attract attention, you should have a good online presence and should manage to connect with them by relevant posts and messages.
Own a Car Rental Business?
If you are planning on venturing into this business, the first question you need to answer is how to start the car rental business. Before venturing into the business, you ought to be aware of both the challenges facing the industry and the trends that are driving this industry. We have already dealt with the challenges, here we will talk about the steps you need to take to start the rental business, how you can make money, and what industry trends you need to incorporate.
- Identifying the business opportunity: The first step to start your car rental solution is to know the target market where you have the maximum opportunity to grow. If you believe there is some untapped potential, then you ought to look for that as well.
- Growth potential: Next you need to identify the goals of your car rental services, the vision you have for the business, and finally the growth potential for the business. The marketing agenda, as well as the branding, will depend on all these three aspects. You will be able to convert customers, and define the customer value depending on the growth potential you have observed and the end goals you have manifested for the business.
- Make a choice: Do you want to rent the cars on a daily basis or do you want to sign a contract with the drivers for the rental services? Your choice will depend on the amount of profit each will offer you, and what proves to be more economical for you.
- Invest in an existing franchisee: If you don’t want to build from scratch, the other option is to invest in an existing franchisee and evolve from there; buy out an existing business if that makes more sense.
- Invest in the fleets: Once you have a plan and the budget ready, it is time to execute. Start buying the space to set up the office and invest in the fleet for the car rental services. At the same time, make sure you invest in insurance for the fleet as well as the drivers. Fleet management solutions can also help your on demand car rental app development flourish.
To go for a long run in the business, you have to figure out some growth strategies for your Uber like app development.
Growth Strategies for Car Rental Business
1. Define the business model for your car rental services.
- The first model that mostly works is the marketplace where you connect the buyers and sellers and make them take the decision.
- The second model is where you own the fleet of cars or vehicles and offer dynamic pricing, which is decided based on the demand of the car, whether it is peak hour or not and other factors.
Make sure you understand whether the pricing strategies and the business models are effective for the present times or not. You need to be sure that these strategies are not stagnant, and the business model does work in the present times as well.
2. Offer better customer value in order to increase your customer engagement. Just because you have better cars does not mean you charge higher. You need to charge for the service you offer and provide them with excellent deals. The idea of conversion and engagement is just what value and USPs you offer to the end customer.
3. What is the plan of checking out once the fleet has been used by the customer? For instance, the customer has reached their destination, then where should they leave the car? This plan will help you increase conversions, thus increasing your profitability.
4. Look for appropriate marketing channels as well as the sales options for your car rental app development. You ought to be aware of the perfect channels that will increase conversions. The idea is to create a good mix of marketing and sales.
When you plan to invest in the car rental market, it is important to invest in technology as well, it helps increase access to your business. The smartphone technology allows you to manage the fleet, track the fleet and even ease the user experience and enhance functionality for the users.
Apart from investing in technology, you also ought to keep an eye out for the new trends, the challenges facing the industry, the business model that is most acceptable for the car rental services in today’s time and finally how to grow your business.
With Space-O Technologies as your custom mobile app development partner, you can just put forth your idea, and we will take care of all the other aspects. We offer end-to-end mobile app development services. We also offer growth hacks to boost your business.
In case, if you have any query regarding on demand app development solution for car rental business, Uber clone app development, car rental app developer, taxi booking app development company, Indian mobile developer cost, fill our contact us form. Consultation is absolutely free.
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This page was last edited on October 23rd, 2020, at 10:00.