 "Riding on car-sharing")
Abhishek Sharma, who works with a start-up in Bengaluru, loves to go on long drives. But, like many of his batchmates, he doesn’t own a car and prefers to rent these on weekends. Susan George, who bought a car last year and doesn't need it on weekends, is more than willing to lend her car on weekends and recover her monthly loan repayment.
Bringing customers and lenders on a single platform is a self-drive car rental marketplace, JustRide. “Ford will cease production and people will increasingly share cars. We would like to be the Airbnb for cars,” says Abhishek Mahajan, co-founder and chief financial officer, JustRide. The Bengaluru-based start-up has recently raised $3 million
(Rs 20.56 crore) from a clutch of foreign investors, including renowned start-up accelerator Y Combinator.
Founded by National Institute of Technology, Allahabad and IIT-Bombay alumni, JustRide recently shifted its business model from an aggregator to a peer-to-peer lending marketplace, which will help it scale up and become profitable. It is targeting $1 million monthly gross merchandise volume (GMV) in two years, and plans to raise another $12 million by March. “The most striking thing about all business when they are this young has to be the founding team — JustRide has that in spades,” says Qasar Younis of Y Combinator.
The concept
Only five per cent of the population in India owns a vehicle, against 80 per cent in the US. Even then, there is significant amount of time when the cars are idle. JustRide offers car owners an opportunity to use the idle time to rent out their cars. Such cars need a black number plate, and a tripartite agreement is signed between the car owner, financer and JustRide. Registration of a car bears JustRide’s name, as it has the licence for such rentals.
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Nearly 80 per cent of all cars bought in India are financed, and the average cost works out to be around $250 (Rs 17,130) a month. “In our model, taking out our commission, maintenance, etc, he would still make decent money,” says Ashwarya Pratap Singh, founder and chief executive officer (CEO). This amount could be anything between Rs 6,000 and Rs 12,000 a month a car. Singh claims there is a 31 per cent return on investment a car every year for the owners. Rentals can go up to
Rs 2 ,500 a day on weekends. The company keeps 25 per cent as commission and passes on the rest to the car owner.
The opportunity
The car-sharing market in India is expected to grow at 15 per cent over the next three to four years. This opens a considerable opportunity for JustRide, Zoomcar, Carzonrent and Revv, primary players in this space.
Greg Moran, founder and CEO of Zoomcar, had told Business Standard the size in India was about 3,500 cars, and growing at 50 per cent annually. The market is currently very small, estimated at only Rs 25 crore but will see robust growth. The market for self-driven cars in China is about 220,000; the US has one million cars and New York City alone has about
25,000 self-driven cars available for rent.
While most car rental companies operate under the traditional model of purchasing cars, JustRide doesn’t keep cars on its books. “It is an asset-light model, which is helping the company to break-even faster,” says an analyst, who didn’t want to be named.
Scaling up
Google’s Launchpad Accelerator is a six-month mentorship programme, which helps mobile-centric start-ups to launch and scale up their businesses. “We spent a couple of months at the Google headquarters, revisiting the basics to improve user interface (UI) and user experience (UX) of customers accessing our platform. The mentors helped us with a crash course in fundraising and improving our pitch to investors,” said Singh. JustRide has focused on a lean business model. A considerable share of its previous investments has been spent on perfecting its in-house Smart Vehicle Technology, which amalgamates the Internet of things (IoT) and data analytics to ease the trust concern of owners renting out their vehicle. This, in simpler terms, means an owner can have a real-time idea as to where the car is going or even what is happening inside the car.
Challenges
The founders got a cold shoulder from investors initially in India. “The car rental market in India is at a nascent phase. Investors shied away from investing in a business which was yet to take off,” says Singh. His biggest challenge would be to build a trustworthy brand. However, India’s population is huge and a section of aspiring youth would like to drive around in their own vehicles, self-drive car rentals are likely to do well. The good thing, Singh claims, is that the company’s burn-rate is only $25,000 a month, and already has 68 per cent occupancy.
Road ahead
JustRide had planned to expand to a dozen cities, from Mumbai, Pune and Bengaluru. However, the start-up has now decided to go slow, and focus on deeper penetration in each of the cities it is present in. It plans to have around 2,000 cars on board from Bengaluru by July, around 2,000 from Mumbai and 1,000 from Pune by July next year. It has around 300 cars listed with it since it switched to its new model, and aims to double that number by December.