The car rental market has been affected by the crisis that began in connection with the coronavirus pandemic. Sales volumes fell and many small firms closed, while large players reduced their car fleet and the number of rental stations.
In recent years, car rental has become an increasingly popular service. For many, renting a car is easier, more profitable, more convenient than traveling in your own car. For example, let’s take the same Dubai. The distances between locations there are colossal, so it’s easier to rent ferrari dubai. Firstly, you won’t have to wait for an hour for public transport, and secondly, this is a great opportunity to show that you can afford such a car.
Car rental as a business
With the right approach, the profitability of car rental approaches 25%, with each car loaded by 65-70%. So the idea itself is a good one. But not for everyone.
So, rental will be in great demand in large cities, especially tourist or industrial ones. In the first case, most of the customers will be tourists who will need a car to move around the city. In the second – business travelers and business people who are not accustomed to being left without a car.
In small towns, this service will not be in demand – there is public transport, taxis, and this is enough for a small town. An exception is the rental of wedding cars, limousines for graduation or for photo shoots.
Advantages and disadvantages
- car rental is a business that does not require the owner to be constantly present at the rental office, so it can be easily combined with other work;
- the business does not require large investments – a few cars are enough to start, the costs of which will be only passing the technical inspection and paying for insurance;
- the owner of the office does not need any professional skills – the service is in demand and sells itself.
The disadvantage of the business is the long payback period, therefore, in order to achieve quick profits, it makes sense to purchase several cars at once. In addition, the life of the car is limited to two to three years. After this time, cars lose their presentable appearance, and depreciation costs exceed rental income.
Market and competitive environment analysis
The target audience of the business is car owners, tourists, businessmen, taxi drivers, private drivers who rent cars more often than others. Of the organizations – small companies, holiday agencies, carriers. A separate category is customers who need a car for a long time. The countermeasure is to focus on certain customer groups – hotel guests, tourist groups, the event industry.
Risk assessment
The car rental business plan has high depreciation costs (about 1.5%). In addition, there is a high probability of encountering scammers and vandalism in relation to rented cars by customers, there is also a risk of vehicle theft. The main way to deal with these risks is competent legal support for business (insurance, payment of taxes), an attentive approach to the choice of clients (high driving experience, age restrictions). You need car rental business insurance to protect your business from these situations that happen quite often. Without it, you can go out of business in no time.
What are the best cars to buy?
Traditionally, the park is formed in the following ratio:
- low price segment – 40%;
- middle class – 40%;
- business class – 20%.
Drawing up a range of company services
You can start with hourly car rental, long-term car rental and services “Car for a holiday”. Later, you can add car rental to taxi drivers, transfer to the hotel, etc.
Pricing
The price of a rented car consists of the basic cost of the service, which is affected by the depreciation of the vehicle, its mileage, equipment, and the presence of additional functionsAnother indicator that is included in the cost of the service is insurance and all mandatory payments.
You also have to solve all organizational issues: personnel, renting an office space, parking for cars, car rental advertising, and of course, draw up a detailed financial plan so as not to burn out.
