Business services Mar, 29 2014

Gear up for a smooth business drive

People logistics industry has a huge potential to expand transport solutions business across the country targeting small and medium sized enterprises offering people logistic solutions. Time has changed and with the entry of car rental services in India,

By Ekta Sharma Verma, TFW Bureau
Sr. Sub-editor
Gear up for a smooth business drive

With the increase in overseas visitors to India, the industry has travelled miles ahead. Let’s know more about the growing car rental industry in India and how it is attracting investors and brands to get on its franchise bandwagon.

The thriving car rental market in India is surely booming as opportunities keep flowing in. Many international names in the car rental sector have shown their presence in India via franchising. Big names in the industry are now setting up self-drive offices in major cities and desks in airports and hotels of India. Different companies are offering diverse options to its clientele. It may be a chauffeur driven car, a special pick up service, a fleet service, holiday packages and much more. The rising household income, increasing spending power has surely played a significant role in shaping the growth of the car rental industry. ECO Rent a Car is one of India’s leading car rental services brand. It claims to be the only car rental company in India to offer American made Chrysler Stretched Limousine in Delhi and Mumbai. Aditya Loomba, Director, Business Development, Eco Rent a car says: “In 2012, the car rental witnessed growth of 14 per cent in terms of value towards the expectation of revenue generation of Rs 110 billion in the year 2012/13. The Indian car rental market is expected to touch revenue of Rs 135 billion in 2014/15. The growth of car rental in India throughout the review period remained consistent and growth was gradual, with organised players increasingly investing in luxury cars, in order to cater to the shifting demand. The Indian car rental industry is entering an exciting phase. The next five to ten years will witness a lot of activities in the industry, which will outclass those in the country’s hospitality and aviation industries over the last decade.”

Mumbai based Amsons Tours and Travels Pvt. Ltd is operational since 1984. It owns and operates online cab booking services in the name Travelocar and claims to have roped in more than 250 vendors and 74 service cities. According to Munir Ibrahim Shaikh, Founder, Travelocar, the startup has already achieved break even and it’s much ahead of it. He says: “This is a platform for vendors, franchisees, agencies and corporate. Concept of this venture is to make a strong network of car rentals or individuals with a fleet of one and more than one car working under one roof as Travelocar. Most of corporates have adopted this concept and availing these services to all the cities with centralised billing.”

Zooming Trends

Car rental industry has fast changing trends. Kajal Dubey, Founder, TaxiPixi says: “There is an increased demand for reliable and convenient taxi booking service. Also, most bookings are happening though mobile app.” Self-drive business will also build up and radio taxi business will pick up momentum. Loomba of Eco Rent a Car adds: “Some Indian companies will also emerge and establish themselves as leading brands and expand their network in not just India, but also overseas. In the last decade, many international brands entered the Indian car rental market, but had to wind up because of their lack of knowledge about the market and their inability to manage the challenges here in India.”

Opportunity

The industry has lots of opportunities for budding entrepreneurs too. Loomba of Eco Rent a Car opines: “Beyond a certain scale, franchise development is the most successful way of growing a business and penetrating into the market. Since a franchisee would have invested in your brand, it will be critical for the franchisee to ensure that the desired quality of service is always maintained to get a good return on investment and to grow his business as per the agreed plans. For the sake of customer convenience, we have a centralised reservation and billing system for pan-India services. Our software is accessible across all our locations in 11 cities across India as well as our authorised franchisees can get access to all the reservations in their city. The operations is managed locally in each branch and the well defined operations process and quality control measures are followed to ensure consistent level of service every time an Eco Car is dispatched anywhere in India.” Shaikh of Travelocar has a view of organising car rental industry which is highly unorganised and fragmented market in India. He says: “We are far ahead of our competitors in terms of reach and the services. We also provide an option of multi-city car rental services which allows users to visit multiple cities in a fixed time which is not provided by our competitors. Also, we want to make car rentals available to the masses and this will be possible only when we reach out to smaller cities along with bigger ones.”

Training and support

TaxiPixi expects the franchisee to sign up a sizeable fleet of good quality taxis and provides every possible support in technology and marketing activities. For Travelocar educating its partners on the importance of providing effective and smooth car rental services is a major challenge. Additionally, organising this huge unorganised market and persuading fleet owners to do their business differently by aligning with the brand is also a key challenge and the brand provides full support to the partners. Eco being an Indian brand is promoted through word of mouth publicity; therefore, quality, consistency and reliability are the most important factors for its success so far. The brand wants all its associates and franchisees to follow and constantly improve on service to remain the first choice of all valuable customers.

Expansion ahead

Car rental brands are driving through the expansion lane. Eco Rent a Car is already present in all major metro cities and tier I in India. In the tier II and III cities, the brand has non exclusive partners but now, the brand has plans to move towards exclusive franchise partnerships. The brand targets Chandigarh, Lucknow, Cochin, Ahmadabad, Baroda, Indore, Bhopal, Coimbatore Goa, Udaipur, Trivandrum, Leh, Madurai and Srinagar etc for franchise expansion. Travelocar holds its presence in 74 cities across India and is further planning pan-India growth. TaxiPixi currently has operations in Delhi NCR, Hyderabad, Penang, and Kuala Lumpur and is planning to establish a strong foothold in South East Asia, before going to European and US markets. By 2015, it looks forward to reach out to 20+ tier II and III cities in India and in South East Asia.

The car rental concept has picked up rapidly since the past few years. Most brands feel that there is immense scope and opportunity in the market. The car rental business is surely a great choice to gear up and make fast profits in the franchising arena.

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