Demand Increased For Rental Car Service In 2020; Will Further Grow In 2021: Industry Players

The COVID-19 pandemic has led to some major changes across all segments, and the mobility sector has not been impervious to that. With safety and hygiene becoming the priority, there is a strong aversion toward public transport, and consumers are now more inclined towards personal mobility. A factor which was also highlighted in the carandbike survey that was conducted earlier this year. Having said that, not everyone can or wants to own a car and that notion has led to an increase in demand for rental cars and car subscription services.

Also Read: Personal Mobility The Way Forward For Consumers: carandbike Survey

Talking about the rental car business in the post-Covid era, Greg Moran, CEO, and Co-Founder Zoomcar said, "There is an exponential spike in demand expected for car subscriptions, especially considering the current recession, car subscriptions can prove to be a better option than ride-hailing and also as a more affordable and quicker way of acquiring a car, delivering a safe personal mobility replacement. We began to gradually build up operations and saw bookings and subscriptions come back in a strong way. We are already seeing a 400 per cent rise in demand and we expect this to settle down at 200-300 per cent over the next few months."

Also Read: ZoomCar Partners With PASCOS For Pan-India Distribution Of Its Mobility Services Platform

Zoomcar's CEO Greg Moran says, Post-COVID, the company is seeing a 400 per cent rise in demand

On the other hand, rental cab aggregator, Savaari Car Rentals' CEO, Gaurav Aggarwal said, "There has been a perceptible shift in the travel requirements since the beginning of December. The last 3 months primarily involved customers undertaking essential and emergency travel, whereas December has witnessed a rise in Leisure Travel." Having said that, for Savaari, business is still far from being usual when compared to pre-COVID demand. In fact, the company says that the demand for rental cars in December 2020 was just 65 per cent of what the company saw during the same period, last year.

Also Read: Expect To See Major Growth In The Pre-Owned Luxury Car Segment In 2021: Industry Experts

Savaari Car Rentals' CEO, Gaurav Aggarwal said, the last 3 months primarily involved customers undertaking essential and emergency travel

Zoomcar says that in the post-Covid era, prioritisation around personal mobility and safety has taken centre stage and that is likely to throw open a host of opportunities for rental car companies. However, the company feels that the challenge would be to rethink the business model that provides a steady stream of revenue to mitigate business risk under COVID constraints. Rental car service providers will also have to understand how consumer behaviour will change post-Covid and how they will manage costs in the absence of business continuity.

Zoomcar says while demand for hatchbacks has grown upto 80 per cent of its entire distribution, 7-seater models have not been as popular post-Covid

Talking about changing requirements of customers, Zoomcar's Greg Moran said, "People are now looking for shorter-term mobility access as opposed to long-term investment. We have seen a rise in demand for cars for personal work and emergency use cases. Rentals for intercity travel are up. The notion of owning a car amidst such an intensifying emphasis on social distance may have taken the backseat. Still, the necessity of a mobility service remains as relevant as before. As people would avoid public transport to keep themselves safe from contracting the virus, the need for rental cars will only go up." At the same time, talking about future, Savaari's Aggarwal said, "2021 is poised to witness a huge spike in domestic travel and tourism. Leisure travel is expected to completely recover by the 2nd quarter in 2021 (Apr-May-June). With remote work options becoming the norm, Tier-2 and Tier-3 cities across India are expected to witness a surge in both leisure and business travel demand."

Savaari says Leisure travel is expected to completely recover by the 2nd quarter in 2021 (Apr-May-June)

With regards to fleet expansion, Zoomcar says that it aims to more and more vehicle models to its fleet. At the same time, the company says that distribution of hatchbacks or premium hatchbacks like swift and i20 have gone up from 50-60 per cent to 75-80 per cent in the last 3-4 months post covid lockdown. Zoomcar has seen some demand for SUVs like Creta, but the 7-seater models have not been as popular post-Covid. Savaari, on the other hand, operates as an aggregator using an asset-light business model. The company says that the elasticity in supply/fleet requirements is quite high and depends upon the travel demand that they foresee through the year (Apr, May, October and December typically witness peaks). Savaari claims that it has a loyal supplier base built over the last 15 years and has a staff of 25,000+ vendors and driver-partners. By the second quarter of the next year, it's looking to expand our driver presence in Tier-1 cities by 120 per cent and in Tier-2 and Tier-3 cities by 180 per cent.