Car rental service sector rent automobiles to the people for serving their temporary transportation purposes (You and Hsieh 2014). The literature review will evaluate the opportunities of care rental service in Indian market. This literature review will evaluate the demand and supply of car rental service in Indian market. Apart from that, the literature review will evaluate car rental service opportunities in India through various positive factors associated with this country. Moreover, various statistics and concepts of the country will evaluate the opportunities of car rental service in India. Furthermore, the literature review will also evaluate the competitive pressure of car rental service in Indian market.
Car Rental Service is a kind of business, where car rental agencies rent automobiles to the customers for shorter period of time. Such services are generally provided for few hours or for few hours or for few weeks. According to Singh et al. (2015), car rental agencies generally provide services to the people, who require temporary vehicles for their transportation. On the other hand, Roy, Pazour and De Koster (2014) opined that such service are mostly beneficial for the people, who do not have their own car, but need cars for serving their temporary transportation needs. Moreover, car rental services are also serving the self-moving industry needs through renting vans, trucks and other types of cars.
Apart from providing car renting, the car rental agencies also provide extra facilities like global positioning system (GPS) navigation system, insurance, child safety seats, entertainment system and many more. Vaithianathan et al. (2013) stated that customers can easily book the cars through the mobile app or other online system for getting immediate availability of the cars. However, some local taxi service allows offline booking of the cars for serving temporary transportation needs of the customers.
Freedom of Movement
In car rental service, people can avoid the congested routes and traffic jams of the roads. Moreover, Menon and Mahanty (2016) pointed out that in such service, the drivers will automatically choose the shortest routes for the destination, which is also have less potential to face traffic jam. Furthermore, the customers can also choose their preferred routes for reaching their destination.
Quality of Life and Comfort
Car rental agencies often provide luxurious cars to the customers for serving their temporary transportation needs. As per Srivastava et al. (2015), some car rental agencies in India are also allowing the customers to choose their preferred cars before renting the car. Moreover, recently, all types of rent cars are having the facilities of air condition, clean and hygienic seats, some entertainment system within the cars. The customers can travel to their destination with high level of relaxation, which can enhance the quality of their life.
Affordability and Money Saving
Recently, the car rental agencies are providing affordable price for renting their cars to the customers. Therefore, such service can actually reduce the transportation cost of the people. On the other hand, Lazov (2017) stated that people do not also have to pay insurance fees, parking fees, mechanical checkups in such service. Therefore, people can also save their money through this service.
Low cost of Travelling
Car rental service also provides cars for the tourists, who are do not have their own cars in foreign countries. In such situation, such tourists need to hire cars for serving their transportation purpose in various tourist destinations. Czerny, Shi and Zhang (2016) opined that Car rental service can effectively serve the purpose of such tourists through helping them in their travelling with providing cars. Moreover, the low cost of the cars rents can also reduce the cost of travelling for such tourists.
Demand and Supply Analysis of Car Rental Service in India
Indian car Rental market is divided into organized and unorganized sectors. Car rental industry is mainly dominated by the organized sectors. Unorganized care rental sectors have captured maximum market share over the organized sectors. According to Liu et al. (2014), the estimated market size of car rental service is about $9 billion and among this, only 6-7% is captured by organized sectors. However, over the past few years, the market of this sector has seen phenomenal growth, which has been increased by 15-20%. On the other hand, Oliveira et al. (2014) opined that the car rental industry has grown leaps and bounds over the years for increasing demand of better and sustainable mode of transportation from the population of urban areas. The hunger of experiencing vats avenues and the fear of missing out certain important opportunities have increased the demand of car rental service among the millennial youths. Furthermore, Guerriero and Olivito (2014) opined that the revenue of Indian car rental market has been projected to grow at considerable Compound Annual Growth Rate (CAGR) of 35%.
According to Huefner (2015), the primary factors for small market share of organized care rental services are seasonality of demand, lack of well tarred roads, depreciation cost, changing customer loyalty and lack of availability of skilled driver. The online car rental service has gained huge popularity with lot of market share in India. Moreover, Vervaeke and Calabrese (2015) opined that it has presented major market in the metropolitan cities of India. Delhi has gained the major market share of Indian Car Rental market, which followed by Bangalore, Chennai, Pune and other cities. Online car rental service has facilitated the growth of various car rental companies like Ola cabs, Carzonrent, Meru Cabs and Savaari car rentals. These companies are supplying the car rental service in whole India with their attracting facilities. However, the supply of car rental service is quite low as compared to demand of the service.
These companies follows business model different from each other. Moreover, they follow either of two business model such as Aggregator and the ownership model. As per Alfian et al. (2015), Aggregators do not own their cars and link their business with private car owners. On the other hand, He et al. (2017) pointed out that ownership model have their own cars and have direct contact with the customers.
Government Support
The recent Government of India has huge support of industrialization for developing the overall economy of the country. Moreover, this industry has huge scope towards pumping money in the Indian economy, which can enhance the economic condition of the country. Recently, the car rental industry contributes 9.5% to the total GDP of India (Malhotra 2014). In future, this industry can infuse fresh capital from other countries to India towards its economic development. Furthermore, the industry can also reduce the unemployment rate of the country. Recently, the industry provides 15% of the total employment in India (Alfian et al. 2015). Therefore, Indian care rental service will get huge Governmental support, as it is developing Indian economy and reducing the unemployment rate. Apart from that, the reduced tax structured of the country can also be the opportunity for the car rental service of India.
Developing Economy
Indian GDP has recovered from marginally from 6.9% to 7.3% in the previous year. Moreover, India has gained a developed economy with growing industrialization. Therefore, the car rental service sector can gain huge profit from their business in this market. Moreover, the market investment will assure high return on investment. On the other hand, Kathan, Matzler and Veider (2016) opined that developed economy has also increased the confidence level of the customers on their spending power. Therefore, the can effectively manage a comfortable life having some luxurious amenities. In such situation, the car rental service sector can get huge response from customer side with their increasing spending power. Therefore, car rental service sector can have huge opportunities in Indian market.
Modern and Sophisticated life of People
Most of the Indian people are extremely willing to have a modern and sophisticated lifestyle. Moreover, Oliveira et al. (2014) stated the literacy rate of India is 93.91%, which is indicating that most of the Indian people are educated and they are surrounding with developed culture. Such modern and sophisticated life style of Indian people can encourage them towards hiring some comfortable and luxurious transportation service during their travelling. Therefore, car rental service has huge scope in Indian market with modern and sophisticated lifestyle of Indian people. On the other hand, Broadberry, Custodis and Gupta (2015) opined that the developed economy of Indian has increased the per capita income of Indian people. Therefore, such people can spend some amount for their comfort and flexibility in their transportation.
According to Kathan, Matzler and Veider (2016), young generation people of India are becoming highly tech savvy and they want most of their activity through online system. In such situation, the online car rental service system can gain huge popularity to such people. On the other hand, Enoch, (2015) opined that almost 547 million individuals in India belong to middle class families. Such people do not have enough capability to afford their own car for their transportation. Moreover, even in urban areas, car ownership of people in presenting only 10%. In such situation, they often have to hire and rent cars for serving their transportation purpose. It can also be the opportunities for the car rental service sectors in Indian market.
Flexible Labor Market
The car rental service can get flexible labor market in India, which can promote business growth. Moreover, the car rental service sectors can get huge supply of labors and employees for their business purpose. On the other hand, Huefner (2015) opined that the wage rates of labors are also quite low in Indian market. Therefore, the service sectors can get huge supply of labors with lowest cost.
Increasing Tourism
Developed tourism can be a positive sign for the development of car rental service. Tourists from other country or region generally do not bring their own cars with them, while they travel in various tourist destinations. In such situation, such people need hire or rent some cars for travelling to tourist destinations. India is gradually becoming popular tourist destination for its cultural heritages. Therefore, increasing rates of tourists are coming in this country for visiting such tourist destinations. In this way, increasing numbers of tourists in India can ultimately increase the business development of car rental service.
Advanced Technology
The science and technology is quite developed in India, which can be an effective backbone for the development of care rental service in this market. Moreover, the Government of India is committed towards making science and technology as an integral part of socio-economic development. Moreover, Indian has the third largest scientific and technical manpower in the world. Car rental service sectors can use such developed technology of India towards increasing business development. Therefore, car rental service has huge opportunities towards business growth in Indian market.
Ola has shared large market India over the other competitive car rental companies. The most competitive companies in car rental market are Ola, Meru, Carzonrent and Savaari cabs. On the other hand, car rental service sector also face competition from the local taxi companies. Ola serves almost 78% cab users in India (Guerriero and Olivito 2014). Moreover, the company has owned almost 60% of the total car rental market of India. On the other hand, Meru cabs are also being popular for the people in India.
From the above figure, it can be said that there is tough competition among the car rental companies of India. The new share pool strategy of Ola and Uber are also being highly popular for the people, as this service seem to be quite affordable to them. On the other hand, the brand value and premium service quality of the existing car rental companies can create tough competition for the new business in the same category (Menon and Mahanty 2016). Apart from that, price structure of the already existing care rental companies can be highly competitive for any new car rental agency towards earning more profit.
Conclusion
While concluding the study, it can be said that car rental service rents automobiles to the customers for shorter period of time towards serving their transportation needs. In this service, people can personally hire a car for meeting their transportation needs. Such car rental services provide premium quality transportation to the customers. People can avoid congested routes and choose their preferred routes for travelling comfortably. People can also save their money through such service by avoiding parking charge, car insurance and mechanical repairing fees. The estimated marker size of Indian car rental service is $9 billion. The car rental market is still dominated by the unorganized sectors. However, for the last few years, the organized car rental service sectors have increased their CAGR by 35%. The developing economic condition of Indian can bring great opportunities to the car rental service of India. On the other hand, the modern and sophisticated lifestyle of Indian people can encourage them towards choosing premium quality transportation. Furthermore, increasing tourism developed has increased the foreign travelers in this country, who always need to hire a car for travelling in various tourist designations. Therefore, it can be said that car rental service has huge opportunities in Indian market.
Reference List
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Broadberry, S., Custodis, J. and Gupta, B., 2015. India and the great divergence: An Anglo-Indian comparison of GDP per capita, 1600–1871. Explorations in Economic History, 55, pp.58-75.
Czerny, A.I., Shi, Z. and Zhang, A., 2016. Can market power be controlled by regulation of core prices alone? An empirical analysis of airport demand and car rental price. Transportation Research Part A: Policy and Practice, 91, pp.260-272.
Enoch, M.P., 2015. How a rapid modal convergence into a universal automated taxi service could be the future for local passenger transport. Technology Analysis & Strategic Management, 27(8), pp.910-924.
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Lazov, I., 2017. Profit management of car rental companies. European Journal of Operational Research, 258(1), pp.307-314.
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