India is a country which was not so big on car rentals. There were companies offering cars on rent but with a driver. The fact that you have to sit in a car for a long journey with a person who is a total stranger is not comfortable for many. There were no companies in the market offering cars on rent without a driver. It was always cars with a driver. However, this was changed totally in 2013. A couple Americans were responsible for this.
David Back and Greg Moran founded a company called Zoom. They came to India only to start a business in car rentals. It sounds absolutely absurd but they made a huge business out of it. Their market study was to the point and they saw the gaps in this market which were huge and addressed them as immediately as they could. The duo could see that there were no driverless car rental companies in India and founded Zoomcar.
They rented cars to the car owners after checking their driving license. A deposit is taken which covers the car insurance and if any kind of harm or damage is incurred on the vehicle that deposit is never given back to the user. At first, the company started out from Bangalore, where they rented out cars on an hourly basis. After it tasted success in the shortest rental space they decided to expand the business to lending the vehicle out for a day and then, in turn, started renting the vehicles out for a week.
They had to wait for the later expansions as the car rented out previously had to be brought back at the same point from where it was rented. Later on, they had set up different locations in different cities which allowed them to rent out cars for days and weeks together. That said, the company is now active in almost 27 cities across the country. At first, Zoomcar owned an army of cars but later on decided to lease it as owning a car brought a lot of maintenance and insurance cost.
However, the company is going through a rough patch right now. It has incurred huge amounts of losses as of March 2018. Its losses expanded by 10.2 % and this was mainly because the expenses of the company rose to an all-time high. The expenses in FY18 of Zoomcar stood at $39.22 million which were around $32 million a year earlier. That said, the annual revenue of the company also rose to $22.47 million in Financial Year 2018 from $17.17 million in FY17.
Zoomcar had recently acquired huge funding of about $40 million (INR 279 Cr) from Mahindra and Mahindra in the February of 2018. The company competes with the likes of Ola, Uber, LetsRide, PoolCircle and many other car-rental based companies. However, it had to shut down its bicycle business PEDL because of poor performances. The car company, however, is going to come back with this year with better cycles and bigger goals.