The annual growth in car rental in Russia is 20% per year. The average turnover of funds in this industry is approximately $ 2.5 million, and the annual one reaches $ 40 million, which is small compared to developed countries.
That is why there is a need to popularize car rental, which is still used by a fairly narrow circle of consumers.
Competition
Car rental as a business with good incomes can develop only if you take into account all the participants in the car rental market, and also find out the features of the services that are provided.
Companies in this area can be divided into the following main groups:
- representatives of world leaders in car rental, which have a fairly large fleet;
- domestic companies with a fleet of at least 50 cars;
- small companies with a small fleet of vehicles (no more than 20 cars);
- companies that offer rental of retro cars and exclusive brands for organizing various celebrations, weddings, festivals.
What investments should be made?
A car rental business requires quite a large amount of costs. So, an entrepreneur must have at least ten vehicles that could be leased. A good option for people who are not able to purchase transport for their own funds is to lease them, paying at the first stage up to 30% of the total cost.
It should be noted that significant insurance is required for CASCO insurance for each car, as well as rental of premises where cars will be located. You will have to invest certain funds in good advertising, which will help you find potential customers, since the car rental business is quite new. So, some people can constantly drive rental cars, while others just try to save money for their own car, without even thinking about using a rental car.
Despite large investments, the profitability of this business is very high - according to statistics, payback period is only 1-2 years. It should be noted that for the effective development of this business (car rental) requires careful planning.
Defining a customer base
In order to optimally provide services in this area, you need to know who most often rents cars. I must say that renting even a domestic car is quite expensive - 18-30 dollars a day. This means that clients of companies that specialize in car rental should be people with sufficient income. But, as a rule, they have their own car, sometimes not one.
Why do people still use such services? Most often, car rental customers are those who have their own car, but for a number of reasons there is no way to use it. Unlike foreigners, our citizens are not used to renting a car while in a foreign city, therefore, as a rule, customers are local residents and people living in remote areas. 20% of them are people who decided to rent a car for recreational purposes or travel.
Another group of consumers is people who take a car for a short period (for example, for a day in order to appear at a business meeting on a new car). Do not forget about corporate clients.
Fleet characteristic
If someone is interested in car rental, a business plan in this area is mandatory. Before you do this type of making money, you should decide on the services that will be provided. So, there is a “cheap” segment, in which companies specializing in the rental of domestic cars work. As a rule, Zhiguli, which are characterized by the optimal ratio of quality and price, fall under operation.
It should be noted that a limited number of large companies offer domestic cars, since it is impossible to enter a more expensive segment without money to buy hundreds of cheap cars. In addition, it should be remembered that retro car rental is also in low demand.
Most rental companies operate in the “expensive” sector, offering mid-size, economy, and business class cars. They often work with foreign cars for two reasons - they are more reliable and you can take a large amount of money for their rent. Most often in the car fleets of rental companies you can find Mitsubishi, Audi, Honda Accord, Volkswagen Passat or Skoda Octavia.
Limousine Rental
You should be aware that when drawing up a business plan, limo rental is the most expensive. As a rule, rent is calculated not in days, but in hours. Often such a car is taken for a short time and only for a certain event, for example, for a wedding. So, for rent, for example, Lincoln can be for $ 60 per hour. It should be noted that such cars are rented together with the driver. Wedding car rental - this is most often a limousine or another expensive or unusual car.
If clients are foreigners, then, as a rule, they want to use the services of drivers when renting “simple” cars. The usual mark-up on the work of the driver is approximately $ 60 per day. At the same time, it will work only 8 hours. To use its services for a longer time, you have to pay extra. As a rule, car rental companies in their state do not keep drivers. They are hired to serve only specific orders, although some companies may have one driver for 7-10 cars.
How to get good income?
Most professionals who understand the specifics of the rental market claim that it is most beneficial for a small or medium-sized company to have no more than 30 cars in their fleet. In addition, it is better to rent foreign cars. Experts say that when working with domestic cars, you will have to take two cars for one rental position (one for rental, and the second for spare parts). That is why the use of foreign cars is more reliable and, of course, cheaper.
If you are interested in car rental, your business plan should include calculations on the profitability of this activity. It usually makes up 20-25%. To obtain a stable income should ensure maximum load machines. So, on average, each car should be operated approximately 230 days a year.
It is good if each car is rented 70% of the time, but to get such a result, you should not save on advertising - it should be of high quality to attract the maximum number of customers.
Features of car leasing
It is believed that a rental company should not buy vehicles, freezing significant funds, it is better to lease them, since this requires significantly lower costs. In this case, you can use the cost of leasing payments at cost or accelerate depreciation of cars. It is advisable to do this in view of the fact that in 2-3 years a car that was rented is sold, losing about 40% of its original cost, or simply written off.
There are various schemes of car leasing, but the most common is as follows. First, the client must make a down payment, the amount of which is 30% of the cost of the car.Then every month he must deposit a certain amount of money. As a rule, this is 3% of the total cost of vehicles. Moreover, the lease term is approximately 25 months.
After that, the rental company pays, fully buying the car. So, if the lease payments correspond to 500 dollars a month, and the income from putting the car in is 1,000 dollars, then half of this amount remains to the rental company, which is quite profitable.
Rental Features
You have arranged a car rental. A business plan of even the highest quality will not help you get a lot of income if you do not follow certain rules. So, cars are not for rent to everyone. All rental companies have certain restrictions on the age of customers - they must be older than 21, and sometimes 25 years. Driving experience also matters. Typically, rental companies give preference to customers with at least a year of driving experience (sometimes at least three).
People who want to rent a prestigious and expensive car are checked for crime. This can be done informally through the special security services of the rental company, having links with police or traffic police. If a potential client has a criminal record, then he is usually denied the provision of services.
It should be noted that the cars that are rented out fail for various reasons. Car rental without a driver more often ends in similar situations. According to statistics, for every 100 orders there are 6 accidents.
At the same time, the rental company incurs losses, because a damaged car cannot be leased during the repair period. To reduce the cost of repairing damaged cars, rental companies can insure vehicles or take money from customers.
Useful tips for car rental owners regarding insurance
Before you open a car rental, you should calculate the basic costs of its maintenance. The biggest costs are for voluntary insurance. If you insure cars as a corporate vehicle with the possibility of use for many people, then the cost of the policy will be 12% of the price of the car.
If the insurance company informs that the car will be used for rental, an increasing factor of 2 is added to the tariff. It should be noted that not all insurers agree to provide their services to car rental companies, and the branches of small insurance structures must agree on agreements with the central office.
It should be remembered that you should not hide information about the status of insured cars, because in this case the insurance company can terminate the contract unilaterally. It is better to take advantage of the corresponding discounts that can be obtained when insuring a large number of cars.
Rental Company Office
Regardless of what the company will specialize in (renting a wedding car or any other motor vehicle), an office is not a prerequisite. You can independently deliver the car at the time and place specified by the client, however, most people prefer rental companies with an office.
You can first contact this in order to talk with the manager, carefully familiarize yourself with the terms of the contract, evaluate the condition of the car, and only indicate the delivery point of the car the next time you contact.
The office of the rental company should be located near transport interchanges so that customers can conveniently get to. It is advisable to have a parking lot nearby, where it will be possible to store free cars. For an office, it’s enough to rent 15 square meters. m, where there should be a workplace with a computer for the employee who will draw up the contracts. Experts recommend renting premises in such buildings, where customers can contact at any time.
How to choose employees and attract customers
The number of employees depends on the number of cars and the operating mode of the rental company. When the car rental works round-the-clock, two qualified dispatchers are enough to take orders, as well as four technicians who can monitor the condition of the cars and issue them.
Representatives of the car market recommend recruiting "acquaintance." All candidates should be carefully checked for a criminal record. If the future employee had problems with the law, then the risk of car theft or other unpleasant situations immediately increases.
It is believed that outdoor advertising works best to maximize the potential customers, since almost half of the customers use it. You can also take advantage of online advertising or the distribution of special business cards and booklets. For start-up companies, pasting cars with advertising can be an effective method, since it is effective, but at the same time low-cost (regardless of whether car rental is provided without or with a driver).
How to rent a car correctly
The car rental business must not conflict with applicable law. According to the Civil Code, a contract for a rental car must be made exclusively in writing. With the participation of an individual, such a document must be notarized.
If, for example, the owner of a wedding or retro car wants to rent it out on his own, you should consult a specialist. It is necessary to develop a lease agreement and be sure to take out insurance. When drawing up the contract, the conditions for the delivery of the machine should be carefully prescribed.
So, you need to take into account the cost of a monthly rental, who will undergo maintenance or, for example, pay for a car breakdown. In addition, you should carefully study and establish the appropriate cost of providing services. Depending on the class of car, the price can range from 40 to 400 dollars per day. The best option would be to take a photo of the car and put the necessary information on the Internet.
Draw conclusions
In modern life, a person must be prepared for various unforeseen situations. Often you need to be in two places at the same time, while the car can become the best assistant. Unfortunately, not everyone has the opportunity to purchase their own car, but this is not a problem, since there are a large number of companies that provide car rental services.
You can rent a vehicle with or without a driver. Anyone can rent an economy class car, limousine, business or elite class models. This opportunity is especially attractive for businessmen and business people.
If someone decides that the main method of making a profit for him is car rental, the business plan should be carefully thought out, because this is the starting point of support for the start. You should study the car rental market, get acquainted with its main advantages and “pitfalls”. Only in this case can we hope for an optimal result and receive monetary benefits from such activities.
