Zoomcar targets 30% rise in margins as it gets asset light

Currently, its fleet comprises 3,000 cars across 17 cities of which it owns around 2,000 cars

Banking on an asset light model to increase net margins by 30-40 per cent, self-drive car rental company Zoomcar is planning to triple its fleet size this year and expand presence across 30 cities.

Currently, the fleet comprises 3,000 cars across 17 cities, of which it owns around 2,000 cars. It hopes to take the fleet size to 10,000. However, it wants to decrease the count of owned cars and rely more on brining partners on board, which would drive its business.

“It is not advantageous to own a car which is about two years old”, Greg Moran, the company’s chief executive officer and co-founder. He said the depreciation and wear and tear in company-owned cars is more than the ones owned by its partners. Under the asset light programme, Zoomcar, which claims to command a 70 per cent market share in the self-drive car rental space, is planning to have atleast 8,000 partner cars in the targeted fleet size of 10,000.

This move, according to Moran, will result in its net margin increasing by 30-40 per cent. “At the city level, we are already profitable, and this (calendar) year, we’ll be profitable at the company level”, he said.

While Zoomcar initially focussed on building an own fleet when the company was started in 2013, lately, it has been shifting its focus on partnering with individual new car owners who uses their car both for personal use as well as rents it out for others to use.

These type of cars, which uses a black number plate, currently comprises 33 per cent of the fleet and is estimated to be tripling month on month. Now, the company, under its flagship Zap smartphone application, is encouraging individuals to buy a new car, list the vehicle on its platform and earn money.

Moran claimed that individual car owners who have bought their vehicle on equated monthly instalment (EMI) can recover 70 per cent of their EMI cost if they are able to rent out their car for 20 days a month on Zoomcar.

To attract individual car owners to partner with the company, Moran has also come up with its integrated flagship full-stack solution which provides the car owner information about the car's handling and usage by a customer. The solution which is installed in the cars and operates on the cloud, tracks real time information on fuel level, clutch positions, harsh braking, inconsistent acceleration, seat belt usage, engine heath and several others.

The Bengaluru-based company, founded by Moran and David Back (who resigned in 2015) - both from USA, the start-up has so far raised $50 million or Rs 350 crore from investors; the prominent ones being Ford Smart Mobility LLC, a subsidiary of Ford Motor Company, Sequoia Capital, Nokia Growth Partners, ex-Infosys CFO, T V Mohandas Pai and several others.

"However, we are not looking at raising more funds now as we are well funded", Moran said.

As per company estimate, the current level of funds and the asset light model will allow Zoomcar to have a maximum fleet size of 25,000 cars.