How to Start an Online Car Rental Business?
How to start a car rental business? How to set up a car rental business website? How to make money from car rental businesses? If you have been looking for answers to these and many such questions, you are at the right place to find your answers. This article will discuss some straightforward ways to get into car rental business, manage it, and adopt manifold ways to make money.
If you are an entrepreneurial mind looking for ways to make money from a modern business idea with a scope in current and the market far ahead in the future, car rental is one of the top-notch ideas for you. It’s a highly niched business idea with roots from the traditional transport industry, modern eCommerce market, and the very recent, service marketplace model.
In other words, the niche is capable of accommodating every modern monetization channel to make money. As indicated by the Zion Market Research report, the worldwide car rental market will reach $124.56 billion, at a CAGR of about 13.55% somewhere in the range of 2017 and 2022. Looking at the current developments, this number seems not only feasible but there is also a big chance that it will cross all the assumptions.
- 1 Do you need a fleet of cars for starting a car rental business?
- 2 Things to know before starting a car rental business
- 3 When you own a fleet of cars
- 4 When you don’t have a fleet
Do you need a fleet of cars for starting a car rental business?
Undoubtedly, starting an online car rental business seems easier when you own a fleet, but it doesn’t mean you can’t start without cars. Yes, there are ways to start an online car rental business with one, two, or even without owning a single vehicle of your own. We will discuss the expertise required for both the ways to start your business-
- When you own a vehicle fleet
- When you don’t own any cars
Things to know before starting a car rental business
Irrespective of whether you don’t own a car or you have a big fleet, you must be acquainted with certain aspects that influence both the situations. For any kind of car rental model, you must make sure that the location you choose even needs your service. Location of service is one factor that can make or break your business.
Not all geo-locations are promising for car rentals. Most of the time, suitable locations are either tourism centric or business hubs. To put in other words, the locations where people often visit and stay for a bit or longer; the locations where people don’t take their private vehicles, but don’t mind renting one for the period of their stay to get a smoother commute. People who often rent cars are travelers, tourists, and temporary residents staying on rents.
That’s why the best places to find target customers would be airports, motels, hotels, vacation houses, travel companies, and tourism offices, etc. You should collaborate with such businesses to promote your services. A collaboration based on commission sharing would work perfectly.
When you own a fleet of cars
The points discussed in this section are worth considering for those who already have a fleet or planning to acquire one after purchasing, leasing, or through any form of B2B collaboration; in the end, you would be responsible for managing your fleet and all sorts of costs associated such as servicing, repairing, and insurance, etc. Let’s see how to start your own car rental business with a fleet and how many vehicles you need.
How many cars do you require?
It depends on the size of the area you want to cover. Do some research about the demands in the target area, businesses already present, and the challenges you might face. Depending on your initial investments, you can start with a few cars and then expand as the demand upsurges. You need not purchase all the cars you require. You can also lease them and save overhead costs on maintenance. It’s a great way to start on a limited budget.
Business model to start with a fleet
When you own a fleet or lease your fleet, you should start with a B2C car rental model. People who need a car would contact you, and you would be responsible for delivering the cars, arranging a pickup, and collecting the rent.
Revenue channel to follow
It’s a straightforward revenue channel when you are starting a car rental business with your owned cars. The rental fee paid by the customers would be your source of revenue. The profit would include the amount left after paying out your bills for servicing, parking, repairs, insurance, fuel, website maintenance, and mobile apps maintenance.
If you have leased your fleet, you have to deduct one more additional cost from the profit i.e. the lease amount. Besides, let’s not forget the cost of managing a workforce, in case you want to hire a team. Apart from the fundamental rental fee, you can include an array of value-added services, service tiers, and penalties to charge some extra amount from the customers:
- Penalties: Fines on rough usage, traffic rule violation, or accidents
- Cancelation fee: A fixed fee or percentage cut on canceling a booked rental
- Transaction fee: A percentage cut on the rental fee to manage the online payments
- Value Added-services: Extra fee for value-added services such as drop, pickup, driver, out-station trip, specific types of cars, etc.
- Different rent plans: Different rental plans customized as per usability. For example per-hour billing, per-miles billing, full-day, weekly, monthly, and annual rental plans, etc.
- Security deposit: Mandatory refundable securities deposit from customers before renting your cars.
How many mobile apps and solutions you need?
To operate under the B2C business model, you need-
- A website front-end for customers
- An Android Mobile app for customers
- An iOS mobile app for customers
- A backend control panel for the Admin
Customers will reach you digitally through your website front-end or mobile apps. Depending on how you want to conduct the renting process, you can automate the entire process or program the booking request to come to the admin first for profile verification and approval. You can give both digital and cash options to pay the rents.
Therefore, as per your development budget, you can use ready-made car rentals script, hire a development team, or outsource your project to build and set up your B2C car rental platform. Acquire the business license, build your platform, list your cars, and start making money.
When you don’t have a fleet
At first glance, it seems impossible to start a car rental business without owning a single car. However, it is actually not only possible but also easier to start a car rental business without a proprietary fleet. How to set up a car rental business without a fleet? The only biggest task you need to do is building a highly impressive online car rental platform.
The business model to start without a car
Instead of the B2C model, which we saw in the previous segment, you would be following a peer-to-peer rental marketplace model. Here, your website or mobile apps will act as platform to connect the people who need cars to the people who can rent their cars.
The P2P car rentals are a direct inspiration from Airbnb’s business model. It works exactly like Airbnb, except there are cars in place of vacation houses. With your P2P car rental platform, you need to get in terms with private and commercial car owners who want to make money from their vehicles. Here, you would connect the car owners and your customers directly on your platform and manage the bookings and transactions for them.
The business process of your platform would follow a sequence something like this:
- Listing: Car owners will list their cars on your platform
- Verification: You will verify the details and conduct a physical inspection of the car
- Approval: Once you assured of the car details and inspection, you can approve the listing
- Search: People looking for car rental will visit your platform
- Matching: As per their preferred choices, the matching algorithm populates a list of cars viable for renting
- Booking: If satisfied, the user will place a booking request and make payment.
- Confirmation: The car owner will get a request notification, verify the customer details, and accept it.
- Delivery: The customers will pick-up the car from the owner’s address at the specified time.
- Return: After completing the trip, the customer will return the car.
- Inspection: The owner will inspect the car and confirm a successful trip.
How will you make money?
The fundamental P2P marketplace model uses commissions as the primary source of revenue. However, you may adopt various other sources as well to make some additional money. For instance, Turo is a popular P2P car rental app. Following is how it makes money:
The primary source is still the fixed commission cut from the car owners, but Turo boosts its overall revenue through transaction fees from customers and various value-added services such as pick-up and drop, additional mileage, and insurance plans.
How can you build your P2P car rental marketplace?
Since the platform is your biggest asset in a P2P model, you need to be extra conscious while building it. Developing a P2P car rental marketplace is one of the trickiest and most expensive undertakings. A few years ago, entrepreneurs would spend up to $100,000 in just the development of a basic car rental website.
No doubt, it is so expensive. If you are building a car rental marketplace from scratch, even with the development cost as low as $50/hour, the entire collection of websites and mobile apps will consume at least 500 hours. An expense of $100,000 is easily attainable.
Is there a cheaper way to build a customized car rental marketplace?
Of course. In fact, every entrepreneur today is using this cheaper way to start-up car rental business. Who would want to spend a fortune on development from scratch, when one can purchase a ready-made Airbnb clone script and build a car rental marketplace without even coding?
Since the P2P rental business model is inspired by Airbnb itself, an Airbnb clone is all you need. Such scripts come ready-made with every required feature and solutions already built in. You just need to install the script on your preferred hosting server, set up the site using a graphical user interface, and you are ready to go live with your website.
Here are some necessities that you must consider while purchasing an Airbnb clone from any software development company:
- It should offer open-source code access
- You should get the option to self-host your website
- It must at least include:
- A website script with front-end and back-end
- An Android mobile app for customers and car owners
- An iOS mobile app for customers and car owners
- Vendors should offer:
- Free installation and deployment services
- Free technical support under the warranty period
- Free software upgrade and security patches in warranty
- A one-time payment model to purchase the source code
If you can get a vendor to offer the above requirements in their Airbnb clone script or any customized P2P car rental script, you can crack a profitable deal. Depending on various factors, these scripts cost not more than $2000-$4000. If you are lucky, you can crack a seasonal deal and get a script for up to 50% cheaper price. So what are you waiting for? Start-up car rental business without coding and without a single car of your own today.
I am a professional blogger, guest writer, Influencer & an eCommerce expert. Currently associated with ShopyGen as a content marketing strategist. I also report on the latest happenings and trends associated with the eCommerce industry.
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