When Uber was first launched, those who operated traditional taxi services opposed this new model because it threatened the incumbent cab business.
When Turo, a new rental startup, introduced a modern business model for car renting, the same thing happened. Traditional rental giants did not like this new model. It was not good for their established businesses.
So what makes the two car rental models different?
With the traditional one, a company owner has a fleet of various car models. This approach offers predictability and safety. A user browses the different cars and picks the model they like for temporary use.
A rental car marketplace, on the other hand, allows their users to make some extra money by renting out their cars. Anyone can find a car nearby and unlock it to run their errands.
So you can use either one of these two models for your car rental business: the traditional approach or the car rental marketplace which is what new rental companies are using.
How Do You Start Your Car Rental Business?
Step 1: Assess Your Business Idea
You should research your business strategy extensively. There are many competitors in the market. You have to assess their apps’ features, monetization strategy, the location they target, existing audience and target market.
Trying to do something new with a product that already exists will be hard. Instead, you need a platform that offers premium features and an outstanding user experience. To provide that, you have to understand the inclination and psychology of your potential customers. Know their pain points.
Many startups have tried to copy Uber before but they failed. Lyft came up with their own business model and they are now a car-hailing giant.
Step 2: Choose a Business Model for Your Car Rental Business
So now you know that you can choose one of two business models.
Take a look.
B2C approach: with this one, you will be dealing with your customers directly. Customers, thus, look at the cars you have and book the one they like for a two-way or a one-way trip, fill out the necessary papers and you give them the keys. Hertz and Enterprise Rent-a Car use this model.
P2P car rental marketplace: this is a more flexible model for a car rental business. It relies heavily on mobile applications. One thing that makes this idea interesting is the fact that you don’t have to own a vehicle. Get Around and Turo use this business model.
More start ups are investing in this idea because the interest is growing and it is becoming more popular.
If you want to start a car rental business, you will need resources, a clear business plan, marketing strategy and a license.
Step 3: Choose a Car Type Segment
You will need to have different options for your users. For instance, some businesses will offer luxurious cars, exotic cars, sports cars, special events cars, etc.
Alternatively, you can choose to target a super specific audience and only offer a single dedicated car model. Silver car app, for example, only provides Audis. The other option would be to allow all car types. This is the option that many startups prefer because if more car owners register, the business benefits. Customers will also have more options.
Step 4: Get a License
The procedure for applying for and getting a vehicle rental license varies from one country to another. You can contact an insurer to help you with payment of license fees and rental insurance coverage.
When it is done, you will receive your license from the local authorities and they will inform the insurer too. Most licenses are renewed annually.
Step 5: Build an MVP Car Rental App
A mobile app is necessary because people love convenience. This goes for both the P2P and B2C approaches. Initially, you may not need a full-featured app. You can opt for a minimum viable product (MVP) for the app or even build a website. An MVP app only has the basic features that your users will need.
You will only require a customer app with the B2C approach for the users to look for and book cars.
The P2P model will require two apps, one for car owners who register their cars and another one for customers who are looking to rent.
Step 6: Offer Insurance
As a car rental company, you should provide insurance for car owners and customers. So you have to find an insurance provider company you can count on.
Liberty Mutual Insurance, for instance, covers renters and car owners for Turo.
You can have different packages for renters.
What Features Should Be Included in Your Car Rental App?
If you want to stand out among your competitors, here are the most important features that your app will need.
Car Owner App Features
The car owners are a crucial part of your car rental marketplace. Great features will attract more car owners and your customers will have more options.
Car owner’s verification: this is for car owners to add their updated personal information such as license expiry date, insurance number, car photos, license number, email, phone number and name.
A user-friendly dashboard: it lets owners see their transaction history, listed cars, conversations with renters, and more.
Car listing option: an option for car owners to list multiple models in order to earn more.
Car booking management: for owners to check the status of booked vehicles—including payment status.
Availability management: car owners should be able to choose availability, like weekend options, weekdays or daily.
Discounted price: if car owners want to offer special prices for various occasions, they should be able to do so.
Booking cancellation: have cancellation policies and a feature that allows car owners to cancel rent requests.
Reservation history: car owners should be able to see their current and past reservations.
Car Renter App Features
Easy registration: the signup process shouldn’t be lengthy. Offer sign up options via Email, Facebook and Google.
Filters: renters should be able to filter their options based on car company, fuel, car type, price, etc. when choosing a car.
Dashboard: this feature lets renters track and manage their profile, activities, messages, transaction history and bookings.
Renter verification: car riders should include information such as email, license information, etc. for safety purposes.
Location-based rental: for convenience, users will want a feature that allows them to search for and rent a car nearby.
Booking options: options like instant booking or prior booking for renters to book their dream car would be nice. You should also include per day and per hour renting options.
Calendar option: car renters will love being able to see when cars are unavailable or available.
Cancellation: have a cancellation option.
Admin Panel (You) Features
Dashboard: you want to be able to monitor and control the platform by viewing the total number of registered renters, car owners and cars.
Revenue management: admin should be able to manage the revenue aspect of the business, which includes cancellation charges, commission decisions, etc.
Manage users: for managing car renters and owners as well as their activities.
Manage listing: this one will allow you to screen new car owners to make sure they comply with the set guidelines.
Booking management: the admin should be able to manage every booking, that is, decline or accept bookings.
Manage listing dimensions: the admin will be able to manage and edit car models, categories and features.
Ratings/reviews: car renters and owners can rate each other and you can ensure that the language used is appropriate.
Manage dispute: resolve any issues that arise.
How Do You Earn with a Car Rental Business?
If you decide to use the B2C approach, you can just set a fixed price for the different car models that you rent out. The customer will pay that price and you can charge them more if, let’s say they overstay with the car.
The P2P marketplace is commission-based. So the renter pays the set amount for the rental period and the car owner pays you commission.
The car rental sector is booming and it is a great opportunity if you are looking to start a business.