Car rental business is a fairly simple direction and a profitable investment. It is especially popular in resort towns or in regional centers. There, the demand for rented cars is higher than in small towns. The best part about starting a business like this is exceeding customer expectations. After all, there is nothing more valuable than a loyal regular customer. People who use the car periodically will much more often seek help from a rental company, rather than buy their own personal transport.
Before you start a business, you need to decide on the direction of the car rental system – franchise or create your own company from scratch. In the first case, you become a representative of a well-known large company, follow the instructions in the contract and pay royalties to the franchisee. We will cover the second option in the article, which means creating a car rental business on your own.
Car fleet
The backbone of any car rental company is the fleet. It is worth starting with the choice of cars. To rent a premium car, you need significant funds, so a set of middle-class cars or domestic cars will be the best solution. The client prefers companies that have a wide range of cars. This means that the effectiveness of car rental will be visible if you offer at least 5-10 options. The larger and more diverse the fleet, the better.
If you have enough financial resources, you can form a fleet of cars of different classes:
- Economy class is designed for those who want to get a car at the lowest price. Such cars do not have powerful engine, are not designed for racing and consume less fuel even in an urban environment. Economy-class cars include Renault Logan, Skoda Fabia, Chevrolet Spark;
- Middle class represents powerful cars with a wide range of functions. They are intended for those who appreciate, first of all, comfort. Middle-class cars include Renault Sandero, Skoda Fabia Wagon, Nissan Leaf, Peugeot 301, and Volkswagen Polo Sedan;
- Comfort class is designed for those who want to comfortably accommodate the whole family in a car. The dimensions of such cars, compared with the middle class, are larger and are unlikely to suit beginners. Comfort class cars include Mazda 3, Volkswagen Jetta TSI, Hyundai I30, and Ford Focus;
- Business class cars are chosen for business trips, such as business meetings. Business class cars include Hyundai Sonata, and Volkswagen Passat;
- SUVs are a car enthusiast’s dream. These cars have a large set of functions, and high ground clearance and are perfect for those who are going to conquer off-road. Off-road vehicles include Toyota Land Cruiser 150 Prado, Toyota RAV4, Volkswagen Tiguan, and Ford Escape;
- Minivans are designed for a large company of 7-8 people with a driver and are great for traveling. If you decide to purchase a minivan for your fleet, you can choose Toyota Sienna;
- Convertibles are two-seater. Convertibles are equipped with a powerful engine, two comfortable seats, and a large trunk. These cars include the Mercedes SLK350, and Volkswagen EOS.
Personnel
A business cannot operate without qualified employees. You will need managers to work with the front office and answer the phone; accountants to track the movement of funds; technical workers for the maintenance of the fleet. Personnel salaries are calculated on an individual basis, so a specific figure cannot be given here.
When renting cars, it is also necessary to prepare a specific set of documents for each:
- vehicle registration certificate;
- insurance policies;
- an agreement on the transfer of a car for rent, indicating all the nuances;
- an act of technical serviceability of the car, certified by a notary;
- maintenance document.
Place
One of the important factors that you should pay attention to is the choice of a place for an office and a parking lot. If you want to achieve business success, it is recommended to rent a parking lot and an office not far from each other. This is necessary for the convenience of customers who, after signing the contract, will go to pick up the car. Remember that the comfort of your customers should always come first. An excellent option would be to rent an office and a parking lot near the motorway so that even tourists who have just arrived in the city can quickly find you.
The car rental owner should make sure that the client can conveniently book the car they need. In this case, a special program for car rental software will help them. Such a service ensures the security of the transaction, the ease of issuing a car, keeping records, invoicing, data analytics and encouraging loyal customers. The rental software also allows you to take a fleet inventory, track GPS, and generate vehicle history reports. For car rental software to be as effective as possible, it is worth ordering its development from a company specializing in this. So you will receive a program with all the necessary functions, and will not overpay for unnecessary services.
Advertising
Do not neglect advertising. It is not only an element of business, but also a true art of trading. With the help of advertising, you can create the necessary image of a car rental company and generate demand for it. And if you move in the right direction, choosing effective promotion channels, you can increase turnover and strengthen confidence in your product.
Car rental management system may be a complicated topic. You need to choose the right advertising tools. And first of all, you need to create your own website. With its help, potential customers will be able to familiarize themselves with the company’s policy, view the entire range of cars, select and book the right car, pay for everything through the site, and even contact the technical support department. Car rental companies that have their own website are much more trusted than dubious companies without one.
You can place advertisements in various media, such as newspapers, magazines, Internet blogs, and outdoor advertising. You can use the services of radio or television. It all depends on your budget and target audience. Advertising on TV is certainly the most effective way of promotion. However, this type of advertising is also considered the most expensive. Therefore, it will be unprofitable for small firms to organize such a campaign.
Conclusion
Car rental is a popular field today. Especially in resort towns and regional centers. And if you decide to open a car rental company from scratch, you need to carefully consider all the peculiarities: choosing a car fleet, hiring staff, finding a place and advertising the company. It will require a lot of investment to start, but the car rental business is gaining popularity and you can earn good money from it.
As in every business, car rental companies carry risks that should not be neglected. First of all, risk factors include market conditions with unstable consumer activity, the economic crisis, and a decrease in the flow of tourists. In addition, competition can also affect the car rental company. The only way to counter it is to target specific customer groups. Another risk that rental companies bear is the high capital intensity. The financial threshold for entering the car rental business is quite high. As well as the costs of technical maintenance, fleet maintenance and legal support. Therefore, if the price of spare parts, fuel, or auto insurance rises, the operating profit of the firm may decrease. In this case, the owners are advised to have a financial reserve and make up for their profit losses in time until there is an adaptation to reality in the new economy.
