Car Rental Industry History

Car Rental Industry History

The car rental industry dates back to 1916 when Joe Saunders – a man in Nebraska began renting out his vehicle to locals as well as visiting businessmen, attaching a mileage meter to one of the wheels, and charging his customers 10 cents per mile they travelled in his vehicle. Today, the advent and usage of technology have resulted in the conceptualization of an economy around the concept of rental. The Rental Economy is propelled forward by the existence of excess capacity.

But what leads to this excess capacity in the first place? One way that excess capacity comes to exist is when supply far exceeds demand for a particular category of goods. The other way excess capacity comes into existence
The car rental industry dates back to 1916 when Joe Saunders – a man in Nebraska began renting out his vehicle to locals as well as visiting businessmen, attaching a mileage meter to one of the wheels, and charging his customers 10 cents per mile they travelled in his vehicle. Today, the advent and usage of technology have resulted in the conceptualization of an economy around the concept of rental. The Rental Economy is propelled forward by the existence of excess capacity.

But what leads to this excess capacity in the first place? One way that excess capacity comes to exist is when supply far exceeds demand for a particular category of goods. The other way excess capacity comes into existence is via resources/assets being underutilized. For instance: in India, personally owned cars lie parked 95% of the time in people’s compounds/garages and are driven only 5% of the actual time

Given the excess capacity held by the Indian car industry, it is not surprising to see car rental is on the rise in our nation. Add to this excess capacity, the rise in internet penetration and technological advances; we propose that within this segment of car rental, self-drive cars may be the next big thing to look out for!

The self-drive car rental industry was initiated into our country by startups like Zoomcar, Ola Ride, Revv, and Uber hire. However, larger players like ORIX have also entered this arena, a move that has given great impetus to this industry. It had been estimated in the pre-COVID era, that the self-drive car rental industry had grown to 80,000 cars by 2020 alone.

Moreover, given the recent pandemic, there is a newfound emphasis on minimizing social contact, especially with strangers. This may result in less utilization of public transport and a shift in preferences towards the utilization of private vehicles. This may raise the desire for purchasing private vehicles amongst the common Indians. However, given the financial constraints of Indian consumers, buying a car may be completely out of the question; driving these consumers instead towards car rental which allows for temporary access to private vehicles, as per need. Self-drive cars take safety from the virus, one step further by eliminating contact with a driver who you do not know the health status.

Indeed, our own company LetzRent which is an online rental aggregator dedicated to the growth of the Indian rental industry; expects increased demand in the self-drive car rental bookings post the lock-down being lifted.

At precarious times like these, they say safety first, now more than ever. And indeed, this drive for safety may make self-drive car rental a very successful proposition in India.

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