The way more & more people are adopting “renting rather than owning approach” in the car industry, it is tempting to know how to start a car rental business.
In this detailed article, we have tried to cover every aspect of starting a car rental business. Also, you will get to know how new business models are replacing traditional rental businesses.
Do you know, back in 2010, during the inception of the new taxi business startup called Uber, many legacy taxi services that operate in a more traditional way were concerned and protested Uber and its peer-to-peer taxi service business model due to the threat to their incumbent cab business?
That same happened when a new car rental startup Turo came up with a more modern and lean business model for renting a car. The traditional rental giants were not happy with the car rental startups who were changing the way people rent and own vehicles through their peer-to-peer car rental, business model. But it was bound to happen because these companies knew that these new startups would eat up their established business.
Basically, these two car rental models work in two different ways. One is a more traditional approach where the owner of the company has a fleet of different car models and provides more safety and predictability. It’s a straightforward way in which a user browses through companies’ different cars and selects any model for temporary usage.
On the flip side rental car marketplace provides a platform for those users who want to make some extra dough by giving his or her car on rent. And people who are looking for running local errands or weekend trips could find a nearby car, unlock it, and escape the city without any hassle.
Since you want to start a car rental business, you could do it in these two ways. A traditional approach and another way that these new edge car rental companies are doing which is the car rental marketplace.
Checkout Video- How to Build Taxi Booking App?
How To Start a Car Rental Business?
Step 1: Evaluate Your Business Idea
Carry out research about your car rental business strategy. Because the market you are going to invest in is laden with multiple competitors. You must evaluate their target market, their existing audience, the geographical location they are targeting, monetization strategy, and most importantly their app’s features.
It would be tough for you to survive if you are reinventing the wheel and making the same product that has already been established. You must build a platform that provides a better user experience and state-of-the-art features. For that, you must understand your potential customers-their psychology and their inclination. You should understand your customers’ pain points.
In the past, there were many startups that tried to copy Uber or other apps but failed miserably. On the other hand, Lyft, a car-hailing giant implemented its own business model and got a toehold in the cab riding industry.
Step 2: Decide on Business Models for Car Rental Business
As explained above, there are two business models you could start your business.
1. B2C Approach: In this approach, you can build a business in which you directly deal with the customers. Customers can book a car from the pool of available cars you have. They can book the car they want for their one-way trip or two-way trip, do some required paperwork, and get the key for their commute. Enterprise Rent- a Car and Hertz are popular examples of this kind of business model.
2. P2P Car Rental MarketPlace: This one is one of the trending and flexible business models for starting your car rental business. Mobile applications are the heart and soul of these kinds of businesses. Interestingly, in this business idea, you don’t own any vehicle. And that’s what makes this business model so appealing for a new startup. Turo and Get Around are the most popular car rental startups in the USA that are earning massive revenue with their business model.
Since we have been a part of some successful car rental business app projects, we know them inside out of it. Moreover, the popularity of these services among its users and their growing interest in the on-demand economy is also encouraging new startups to invest in this idea.
We will only be discussing how to start your car rental business like peer to peer marketplace. Let’s know what you will need to start it in your city?
Starting a car rental business in your city requires a clear-cut business plan, strategy, resources, license, and marketing strategy. And for that, you have to follow these steps.
Step 3: Decide On Car Type Segment
You might want to provide your users with multiple options for choosing cars. For example, some auto rental businesses provide wedding and special events cars and luxurious rental cars. Where some businesses provide exotic cars, muscle cars, sports cars, or more.
You can also go for only one dedicated car model type for targeting a special section of the audience. For example, a car rental company called silver car app has the only provision of Audi cars for the users. Or you can allow any car type in your marketplace. Generally, most startups prefer to go with this option because it would be beneficial for their business if they allow more car owners to register in their marketplace. It will help you increase the fleet of cars which leads to better options for customers.
Know more: Uber App Development Cost: A Budgetary Study
Step 4: Get a License
Usually, the license processes are taken care of at local levels. Each country has its own procedure and rulebooks for doing vehicle rental license applications & providing the license. You can hire an insurer for handling car rental insurance coverage and payment of the license fees.
Once this is done, the local authorities mail you the license and also inform the insurer about the same. Most of the time, the license gets renewed annually. So, make sure you acquire the necessary license to run your rental car business.
Step 5: Build an MVP of the Rental Car App
Once you decide on which kind of car rental business you want to start, you should think of the technical aspects of the business. People today prefer mobility in everything. So, it becomes imperative to have a mobile application for your business.
Whether you are going to the B2C approach or a P2P car renting marketplace model you need to have an application for both. Again it is not necessary you start with the full-featured mobile apps. Initially, you could go for an MVP (minimum viable product) for the required apps or just build a website. MVP app consists only of essential features that people mostly use while renting a car.
For the B2C approach, you need to have only a customer app from which they could locate your car station, book the car, and start their journey.
On the other hand for the P2P car rental business idea, you need to have two mobile apps; one for the customers who want a car on rent and one for the car owner who has listed his car in the marketplace to earn extra income.
Step 6: Provide Insurance
Every popular car rental company provides insurance to its customers as well as car owners. You should also provide car rental business insurance to them. For that, you have to collaborate with a reliable insurance provider company.
For example, Turo has cooperated with liberty mutual insurance which covers both car owners as well as renters.
You must have a policy that covers any physical damage theft or major collision up to its cash value for the car owners. Car rental marketplace Turo renders $1 million in liability insurance for the host.
On the flip side, you should also provide different packages that cover the travelers for various damages that might occur on their trip.
SEE ALSO: How to Make an App Like Uber?
Features To Include in Your Car Rental App
Now that everything is set, you have finally decided to start a car rental business and go digital with it, you must consider what type of features you should include in your app. We have curated a list of the most vital features and functionality that will help you get an edge over competitors.
Features For Car owners
Car owners are an indispensable part of the car rental business if you are creating a rent a car business marketplace. Hence, you must include all the necessary features that attract new car owners to enroll in your marketplace.
Here are a few important features that will make your business unique.
1. Car Owner Verification: The app must have a feature that lets car owners update their details like name, phone number, email, license number, car photos, insurance number, license expiry date, and other details.
2. User-Friendly Dashboard: You must include a dashboard for the car owners so that they could oversee their listed cars, their transaction history, messages from the renters, etc.
3. Car listing Option: An unlimited car listing option will help your user to list multiple car models for earning more.
4. Car Booking Management: The feature will help owners to know the status of their booked vehicles and their details like a renter, payment figure, and payment status.
5. Availability Management: You must incorporate a feature that allows car owners to choose their availability. A leading car rental marketplace Turo asks owners for available options for weekdays, weekends, and every day.
6. Discounted Price: To make your app unique among competitors, you should implement this feature. Car owners should be able to set a special price offer for renters on a special occasions.
7. Booking Cancellation: You should provide a feature that facilitates owners to cancel the rent request under the cancellation policies.
8. Reservation History: By including this feature in the car owner app, you allow them to view their past, current reservations and related details.
Features for the Car Renter App
You must build a feature-packed app for the riders who are looking for renting a car to go for weekend trips, run an errand, or have business meetings.
Here are some features you must include in your app.
1. Easy Sign up/ Registration: Riders look for instant rental car options. So you must create a signup form that can be filled in speedily. For that, you can provide sign-up options through Google, Facebook, and Email.
2. Filters: You don’t know which kind of riders will be using your app. Hence, you should provide filters that let renters select their preferred car option. You could include filters such as price, car type, fuel, car company, etc to choose from their favorite car.
3. Dashboard: A dashboard for car renters helps them to monitor and manage their booking, transaction history, messages, activities, profile, and account.
4. Renter Verification: For safety purposes, you should include a detailed form for the car riders which includes their identity, license information, email, and more.
5. Location-Based Rental: The user must be able to search for a nearby location and hire a car through the app.
6. Booking Options: Provide your users with options that allow them to book their dream car through prior booking or instant booking options. Do not forget to integrate an option for per hour or per day hiring.
7. Calendar Option: Provide a calendar option through which a car renter can see the dates when the car is available or unavailable.
8. Cancellation: There could be some last-minute plans and changes from the rider’s side. Hence, you should provide a cancel booking option in the app.
Features for Admin Panel (You)
If you are going to own such a huge business, you need to have your admin panel through which you can monitor every operation related to car owners and car renters.
1. DashBoard: Through the dashboard, you can control the platform. You can see the total number of cars, car owners, and renters registered on your platforms. Also, you can oversee users’ login/Sign up data like Facebook, email login, etc.
2. Revenue Management: Since the admin has control over the system, They would be able to manage all the revenue-related matters like commission decisions, charges for cancellation, etc.
3. Manage Users: You will have all the control over managing car owners and renters and activities related to them.
4. Manage Listing: You will be able to do a screening process for every new car owner. Through that, you can allow or disallow the listing according to your guidelines.
5. Booking Management: Every booking that happens on the platform can be managed by the admin. You can accept or decline the booking at your will.
6. Manage Listing Dimensions: All the car models, their features, and category added by the car owner can be edited and managed by the admin.
7. Rating & Reviews: Your car host and the user will be able to rate and review each other and their experience. You being an admin can see and manage these reviews and ratings. If you find that someone has written some abusive language and you don’t think it is appropriate on your platform, then you can delete such reviews.
8. Manage Dispute: If a passenger will have some adversity during the trip and decides to generate a ticket regarding his issue, you will get notified and resolve it.
So, these were the most important features you should at least include in your car rental app to stand out among your competitors.
How to Earn by Starting a Car Rental Business?
Now, you might have a vague idea about how to start a car rental business, but there is one important question still remains- how you will earn from your car rental business?
If you are starting a B2C rental car business, then there is not such a hassle in deciding your fees. You just have to decide on a fixed price for the different models of your car. Customers would pay for the car models he or she hires. You could also add some additional charge if renter takes more time to return the car than the agreed time.
On the flip side, Most P2P marketplaces work on the commission-based method. They just build the Platform for the stakeholder and take the commission from it. In this case, a traveller or a renter would pay a pre-decided amount for the time they rent a car. From that amount, take a commission from the car owners.
Turo takes 15% of commission from the car owners on each successful transaction and takes additional charge for the deliveries, booking fees, additional mileage, and protection plans.
SEE ALSO: Airbnb Business Model – A Home Rental Business Idea
It’s Time to Start a Rental Car Business in Your City
According to Statista, in 2020 the car rental segment amounts to a whopping $22, 260 m. And it is further predicted to touch $23,545 m in 2023 with a CAGR of 1.9%.
The stats clearly indicate a lucrative market for those who are searching for business ideas in the car rental business. Most importantly, the pace at which the P2P marketplace economy is booming is really encouraging for the entrepreneur and startups who are willing to venture into the vehicle rental business.
Do you want to know how to start a car rental business as soon as possible? The clone script for an app like Turo would be the best choice for you. As a leading clone script provider company, we guarantee you a scalable marketplace script that will help you establish your business in the car industry. Let’s talk.