A person living in a strategic place of a high density of population with business centers and entertainment outfits, car rental business would be a lucrative and profitable venture for him. If you are interested in starting a car rental business, read this post for detailed information.
The renting of the car business is getting competitive with every passing day. In the coming years, the automotive industry is expected to grow both in developing as well as in developed countries. As per this report, the global car rental market size was valued at $92.92 billion in 2019. It is estimated to reach $214.04 billion by 2027, registering a CAGR of 10.7% from 2020 to 2027.
The reason for growth mainly attributes to the growth in per capita income and an increase of passengers preferring flights to travel.
The primary requirement of starting a car renting business is scheduling customer reservations and supplying the rental car. A car rental business can be started with low investment provided you come out with extensive research and networking plan. In addition to this, you must have a well thought out business plan before starting a renting car business.
Here are the 8 Steps to Follow to Start a Car Rental Business
1. Do Some Research – Check Whether Car Renting Business is Right For You?
Understanding the local market is the key to success in this business. Go for detailed market research and collect information regarding the market potential of the car rental market.
The car rental business is essentially a city-oriented business. If you are staying in a small town, car rental may not be the right business to run.
Before starting the business, gather information regarding what kind of cars are in demand, what are the existing rental rates, who are the dominant players, and more related feedback.
2, Car Rental Business Plan
Create a detailed plan for your car rental business. In writing a business plan you must include the target market, your start-up investment, supplies. How you access the market considering the demand, projected annual revenues, and expenses.
Additionally, do not forget to provide details about the following aspects:
What Kind of Car is Best for Car Rental Business At your Location
The decision of choosing the right cars will largely depend on the local demand. Check with existing car rental companies and find cars that are in demand.
How Many Cars You Need?
If you want to make a decent profit, 3 to 5 cars will be good at the initial stage. If you are targetting luxury cars, you can start with or 2 luxury cars.
Where will You Park Your Cars?
Choosing a safe parking space for cars in the idle time is a must. Talk to local real estate agencies, and find suitable space.
3. Choose the Right Business Model
The most important part of the process of starting this business is fixing the right model of your business.
What kind of specific service will you offer your customers?
What are the types and features of the car you are going to offer?
Will you focus on regular cars or sedan class? Based on these factors you need to create an appropriate business model.
4. Register Your Business
Every country and state has different options for registering a company. Talk to a professional and decide upon the best-suited business structure under which you are going to run your business.
If you are from the United States, an LLC registered company will provide you with some extra benefits.
5. Check for Licenses Required to Start Car Rental Business
Check the requirement of licenses and other legal necessities in starting this business. Different states and countries have their own legal requirements. Check with local appropriate authority about the legalities required. Another important issue is insurance.
The first step is to fill out the vehicle rental license application. After filling up, do not forget to get it notarized. Check with concerning authority whether there is a need for a vehicle leasing/renting license compliance certification.
Another important issue is insurance. In fact the most important one. In most countries and states insurance is mandatory. Check for insurance companies and find the one giving the best cover at affordable prices.
Other than general liability insurance, you will need to pay special attention to insurance that also covers the workman’s compensation. It will protect your vehicle as well as your business from the losses caused by road accidents.
6. Name Your Business
The name of your business has a tremendous impact on how clients view you. Choose a comfortable, familiar, and easy to pronounce for your business and get it registered.
7. Car Rental Pricing
Decide the rental pricing rate. You can go for an hourly basis, kilometer wise or daily basis. The class of the car, that you are offering, will also determine the pricing. As an example, the rental charge for a regular model car’s charge will be different than a luxury car.
8. How Do Rental Companies Make Money
Identifying, anticipating, and satisfying consumer requirements are the keys to more profitability in this business. You can start contacting corporate clients and hotels that have bulk requirements for rental cars.
Go for some local classified advertisements to promote the business.
Create a website for your car rental business company to make an online presence with an online booking system.
Can You Start Car Rental Business Without Owning A Car?
If you don’t own a car yourself, it will certainly be going to be an uphill task to start a car renting business. A full-scale business by renting leased-cars is not advisable. For them, a better choice would be to create a car rental mobile app. Talk to a mobile app development company having experience in creating car rental apps would be a better option.