What the Future of Car Rental Industry in India Might Look Like

The car rental market has several factors in its favor that are responsible for its growing success in the country.

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By Aditya Loomba


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The Indian Car Rental Industry has grown leaps and bounds over the years due to a rising demand for better and sustainable modes of transportation among its growing urban population. Driven by a hunger to experience vast avenues, coupled with an innate fear of missing out on certain opportunities, the millennial youth of India is gradually becoming the force that is fueling the growth of the car rental industry.

According to a report by Ken Research – a global aggregator & publisher of Market intelligence research reports, the Indian car rental market's revenue is projected to grow at a considerable Compound Annual Growth Rate (CAGR) of 35 per cent. Furthermore, this sector is expected to be worth more than INR 800 billion by 2019, which is quite an encouraging aspect for market players in this segment.

Car Rentals – Indian Youth's most preferred Mode of Transport

The car rental market has several factors in its favor that are responsible for its growing success in the country. Let us explore the most prominent advantages of this industry:

  • Easy availability – With Car rentals, consumers can easily find the best vehicular options based on their requirements. Whether it is for reaching another city, attending an event or business meeting, or simply for travelling, car rental services offer a wide range of vehicles that best suit an individual's needs.
  • Better chance of accommodating a big group – A typical hatchback car can only accommodate a maximum of 5 people. However, for those who wish to travel in a larger group, car rentals are the best option. Most car rental service providers these days allow people to pick the vehicle of their choice for their travelling needs, while some have an in-house team of dedicated professionals who can help customers choose a vehicle based on their individual requirements.
  • Limited responsibility regarding vehicle repair and/or maintenance – Perhaps one of the biggest advantages that rental cars have over personally owned cars lies in its limited scope for repair and maintenance. While most car rentals companies do have guidelines in place in case of accidental damages caused to their vehicles by the customer, it usually involves an advance security deposit or minimal charges.
  • Rental Cars are cost effective – Despite being a relatively new market, rental cars get an upper hand over personally owned ones when it comes to being pocket-friendly. This commuting option is cost effective, allowing customers to save a lot of money, while also enjoying a hassle free experience.

Advent of Technology based Car rental services

These days, it has become quite common for people to book or rent cars as and when they want, or from wherever they are via tech-enabled online car rental services that can be accessed with just a touch or tap of a button. Since most people possess smartphones nowadays, accessing such services seem like child's play – Pick, check availability, book the car, done. It is really as simple as that. Integrating comprehensive technology in one's car rental business has enabled many business owners to expand their services on a wider user spectrum, a move that has helped in significantly improving their overall customer experience.

What's more, such online platforms have managed to accelerate the growth of India's car rental industry, and have also enabled several offline service providers to upgrade their business model and explore more opportunities and gain more customers by following the digital route.

"Retailification' – A potential future trend in Car Rental space

In a 2015 report, Cognizant – a Multinational company that offers business and technology based solutions to its clients, stated that players in the Car Rental Industry have the potential to acquire more visibility and competitive edge over their peers in the market, via "Retailification'.

Retailification of car rental services involves introducing retail-based business concepts into this space in order to make them more scalable. It usually involves: Building an Omni-channel market base; Utilizing location-based and real-time technologies; Social media optimization; and hands-on customer support.

With many businesses already following this concept in the country, it is possible to see many brick and mortar businesses in the Indian car rental space following this trend to increase brand visibility across various platforms in the near future.

Aditya Loomba

Joint Managing Director, Eco Rent A Car

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