BusinessHABTop 20 tips about Car Rental Business
Top 20 tips about Car Rental Business in Nigeria | Are you interested in starting a car rental business?
If YES, here are the top 20 tips for starting a car rental business not only in Nigeria, but in every part of the world.
In this article, we will be considering all the requirements for starting a car rental business. So put on your entrepreneurial hat and let’s proceed.
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1. The type of car to rent:
The first thing to consider when starting this business is the type of car rental you intend to operate.
You will have to know the types available – contract hire and daily hire, and decide which you want to go on.
Contract hire is usually for business customers who hire the vehicles for a set time, while daily hire is for individual customers who hire the vehicles usually for a shorter period of time.
2. How to get your fleet of cars:
The next thing to consider is how to get your fleet of cars.
The options available are outright purchase or leasing; outright purchase is usually more expensive than leasing.
You will also have to decide how many number of cars you intend to start with, bearing in mind that the higher the number of cars your business owns, the more earnings your business makes.
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3. How the car will be maintained:
The cars have to be well maintained, so that you could enjoy a high turnover.
You could decide to contract the maintenance out, or hire your own maintenance staff, which could prove more expensive for your start-up business initially.
4. Industrial information about the car:
The car rental business has grown more strongly over five years, after previous years of recession. This was primarily due to the fact that airlines saw a decrease in customers which have now seen an increase too as compared to recent years, thereby linking air travel to car rentals.
5. Statistics About the Car Rental Industry
The car rental industry is expected to rise through 2021 following an increase in the number of passengers traveling by air, which is due to a rise in per capita income as well as corporate profit.
The largest car rental companies in the industry have a competitive advantage over smaller firms, especially as they have strategic alliances with airlines and hotels, which the smaller car rentals do not have.
The major companies in this industry have created strong brand awareness and therefore enjoy its recognition.
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This helps in retaining customers for these businesses, and creating difficulty for new car rentals start-up towards getting customers and retaining them as well.
Also, major companies constantly need to purchase fleets to meet up with customers’ demand.
A feat that smaller companies cannot match up with, and yet regardless of the number of cars in one’s fleet, maintenance, storage, and then staff the rental location.
The industry has projected #43 billion revenue with an annual growth of 5.2% from 2011 to 2016.
6. Global segmentation:
The industry has employed about 134,732 from 2,907 businesses.
The global car rental is segmented into four places.
intracity, intercity, on-airport, and others.
Out of these four, on-airport is regarded as the most significant segment accounting for 49.5% share of the overall market in 2017, and is still expected to remain the most prominent.
The car rental business is mostly segmented into two.
Business and leisure, with the business segment accounting for a higher percentage than the leisure segment.
However, the leisure segment is expected to increase due to higher leisure activities, and domestic travel.
The car types are mostly segmented into economy cars, intermediate cars, compact cars, premium cars, luxury cars, as well as others.
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7. Booking period:
More people now book to rent cars via offline, mobile application, and other internet access. The mobile application has seen an increment between 2015 and 2016.
8. Increase in international travel:
The car rental business is also segmented into organized and unorganized labour, with the organized labour expected to provide the highest incremental opportunity between 2014 and 2025.
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9. Increasing population of the people:
Apart from the increase in international travel.
Other key factors that drive the car rental market include the increasing population.
As well as increasing internet usage amongst the people.
Most online car rentals are due to the increase in internet usage, which has made it more convenient for customers to access car rentals, and for car rental businesses to increase their revenue.
10. Environmental regulations:
The major restraint in this industry especially globally has been the increase in the implementation of environmental regulations around the world.
The high amount of environmental pollutants that is released by cars is highly responsible for these environmental regulations.
Executive cars and MUVs are the leaders in the car rental business globally, followed by economy cars, SUVs, and luxury cars.
Apart from revenue from the airport segment, other segments that contribute to the car rental business include outstation, local usage, event transportation, employee transportation, and self-drive.
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11. The demographic and psycho-graphic composition:
The demographic and psycho-graphic composition of those that use the services of a car rental business.
It is obviously corporate executives, tourists, travelers coming in or out of a town or country. Others that might require the services of a car rental business are government agencies, field managers.
Young adults, working class, senior citizens, and people those are financially capable of using the services of a car rental business.
12. Niche Ideas within the Car Rental Industry:
The niches that are within the car rental business industry are those that are uniform in nature.
Especially as the services are to ensure that customers get to their point of destination using your vehicle as their mode of transport.
However, some of the areas of specialization in the car rental business are those that specialize in the following;
- Transport services
- leisure services
- corporate services
- individual services
- or other such services
One thing about finding your niche is that while you might stick to just your niche or two niches.
Other larger car rental companies might offer more areas of specialization.
Thereby gaining more customers due to their large offerings.
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13. The Level of Competition:
Starting a car rental business is not an easy venture.
One needs a huge source of capital to purchase the cars needed to purchase the business.
Apart from needing money to pay for car rentals.
You would need money to maintain the cars as well, and ensure that there is enough staff to help in your business.
While small car rental companies might easily compete with other smaller car rental businesses regionally or locally.
They might not be able to easily compete with larger car rental companies.
14. Relationship with the customers:
As a small car rental company, your best hope is in building a relationship with your local customers as regards your business.
And also try to partner with medium or larger scale car rental companies.
These large scale car rental businesses sometimes often outsource some little jobs o those that deal with difficult or interior terrains to local or small scale car rental companies.
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15. Get to Known Brands in the Car Rental Industry:
Well-known brands are those that have performed better over the years in their various niches and have become known for their brands and services, due to several strategies that they would have employed during their years of operation. Well-known brands in the car rental business in the United States are as follows;
- Hertz Corporation
- Avis Budget Group, Inc.
- GlobalCARS
- Sixt SE
- Eco Rent a Car
- Enterprise Holdings Inc.
16: Economic Analysis
Before venturing into this business.
It is one that you would need to carry out a feasibility study on.
You would need to put so many factors into consideration so that your business does not fail before it even starts.
Chief amongst your concerns should be how you intend to draft strategies that would distinguish you from your competitors.
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17. Map out the strategies:
You would also have to draft strategies that would ensure that you get a share for your business either by carving out a niche for yourself.
Or by ensuring that your unique selling point is attractive enough to get you noticed to your customers.
This means that you would need to draft a business plan that would aid you and make you see clearly whether the car rental business is worth venturing into.
18. Start-up capital:
Another thing you should consider before starting this business is where you intend to get your start-up capital from.
Bear in mind that banks and major financial institutions will likely lend to already established and successful car rental businesses than a start-up business.
This means you would have to be extra aggressive in getting funds to start up your business.
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19. Location:
Another thing to consider is where your business will be located.
If you intend to start on a medium or large scale, you would need to ensure that your location is large enough for the fleet of cars you intend to use for your business.
And also convenient for your staff and customers to access.
20. The Service Delivery Process:
The process involved in the delivery of rental services to customers depends on the needs of the customers.
The processes involved ranges from providing regular services to providing premium services.
Other process involves ensuring that customers stay satisfied, and providing other services that might be needed.
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