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Want to self-drive a rented car?
Nanditta Chibber |
June 13, 2005
The concept of renting a car and self-driving it has long been associated as a facility only available in the West. Few know it is available in India and that too since quite long.
It was in the late 80s when the government of India passed the rent-a-car scheme, permitting car rental operators to offer self-drive cars, besides a chauffeur drive option.
Though it's been more than 15 years since, the branded car rental companies have not hit the accelerator when it comes to penetrating the Indian market.
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Co. (self drive)
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It is estimated, says Hertz India, that the total size of the Indian car rental industry is worth around Rs 4,000 crore (Rs 40 billion) annually. It is highly fragmented with an approximate 150,000 cars registered as taxis and the organised sector comprising a mere 2 per cent of the total and contributing 10 per cent in terms of value.
The drastic change in the economic scenario of the country, growth of the tourism and aviation industries and the improvement in road conditions in recent years has fueled the growth of the car rental industry.
It is expected to register an annual growth of 24 per cent over the next three years. According to industry experts and global operators, the focus will be on international standards with the branded segment all set to have a larger share of the expected growing pie.
Take Hertz International, one of the largest global car rental operators, which has major expansion plans in India. In India since the late 1980s, it appointed Carzonrent India as its licensee for India in 2001.
Currently with a fleet of over 675 cars in 23 locations, it plans to extend to 32 cities and have a fleet of 5,000 cars in the next three years.
Recently, it also had a tie-up with HPCL where it offers self-drive and car on rent products to HPCL customers visiting selected petrol pumps in Delhi, Bangalore and Chennai.
According to a study conducted by Hertz, self-drive as a concept has a lot of latent demand. Says Rajiv K Vij, CEO, Hertz India, "We conducted a survey in the 25-35 young corporate executives age group and found that 90 per cent had no clue that self-drive was available in India, and an equal percentage said that they would love to have the facility."
To hire a Hertz self-drive car, one has be above 25 years with a minimum of three years driving experience. One needs, of course, to fill fuel oneself.
Rates for hiring depend on car model, time frame and city. An economy class chauffeur-driven Hertz car for eight hours and 80 kilometers would cost Rs 1,250. A Ford Ikon will be Rs 2,100 and a Mercedes would cost Rs 6,000.
Avis India, the other international car rental brand that came in 1998, claims that it is the first and only car rental company in India with the international partner having a strong say.
In India, Avis operates in a joint venture with Oberoi Hotels. With a fleet of 575 cars, a major chunk of its business comes from airport transfers, overseas and outbound travellers and mini-leases.
According to an Avis India official, "As there is not much difference between the cost of self-drive and chauffeur-drives due to cheap manpower in India, less and less people opt for self-drive."
Avis India's car models start from a Ford Ikon which costs Rs 800 for an airport transfer in a city and Rs 1,600 per day with a chauffeur for eight hours.
If you plan to hire a Mercedes for an airport transfer, then be prepared to shell out Rs 3,500. Unfortunately, a Mercedes is not available for self-drive but a chauffeur driven one will be for Rs 6,200 for a day.
If you rent an Avis India car for self-drive for six days then the seventh day is free. Both companies block a certain amount from the client's credit card for security purposes.
Services like fleet management and vehicle leasing for corporates by international players is also catching-up in India. Says Veerle Behets, managing director, LeasePlan Fleet Management India, a Dutch MNC that started operations in India in 1999 and has 8,400 cars on Indian roads, "There is enough place for more professional players in these services in the Indian market."
With LeasePlan, a Maruti Zen leased for a contracted boundary in New Delhi for 60,000 km and a duration of 48 months will cost Rs 10,887 per month.
A Honda City and a Toyota Corolla with similar conditions will cost Rs 16,697 and Rs 27,177 respectively per month. LeasePlan will be expanding its network to four more cities soon and plans to have a managed fleet of 50,000 vehicles in India by 2012.
Domestic car rental companies, on the other hand, feel that the market is highly saturated and competitive.
Says Aman Jhulka, proprietor of Ace Rent A Car, "We were the first domestic company in the country to offer self-drive facilities as a franchisee with Europ Car but withdrew it in 1997 due to security and weak insurance reasons."
"The MNCs score over the domestic players because of their networking, technology and professional management", says Vij. Hertz India has recently acquired 18 Mercedes from a competitor and even plans to start a budget segment under a different brand name.
As the market opens up for more players --Budget is already here and domestic car rentals are seeing the advantage of fleet branding -- India could literally be driven on to to the roadmap.