Zoomcar turns unit-profitable with new business model, to expand range to 60,000 cars in 2023
Bengaluru-based self-drive rental start-up is witnessing accelerated growth for its services, driven by the ongoing boom in domestic travel in India.
Greg Moran: “We are seeing an explosion in growth, primarily on the back of a massive domestic travel push . . . and not just in India but in other markets as well.”
Zoomcar, which has a wide range of self-drive cars, has 25,000 cars listed on its platform.
Bengaluru-headquartered self-drive rental start-up Zoomcar, which has transitioned to an asset-light, marketplace model where individuals are free to list their personal cars on its digital platform, has achieved unit profitability with this move. As a result, it now aims to rapidly expand its fleet across the country.
The company, which is witnessing demand for its services grow nearly three-fold, compared to FY2020 and FY2021, is clearly benefiting from the ongoing boom in domestic travel, particularly after two years of Covid-impacted business in a time of lockdowns.
“I think the rate of expansion is two to three times faster than it was before Covid. What we are seeing is an explosion in growth, primarily on the back of a massive domestic travel push. We are seeing this not just in India, but in other markets as well,” said Greg Moran, co-founder and CEO, Zoomcar, in an interaction with Autocar Professional.
Zoomcar, which at present has over 25,000 cars listed by individual vehicle owners on its platform, aims to triple the fleet size and host at least 60,000 cars by end-CY2023. “We estimate the rate of growth to remain steady, not just in CY2023, but over the next many years. Therefore, we are looking to widen our fleet to supply to the growing demand. And I think we are well positioned to do so,” Moran added.
Shift in India’s motor vehicle regulations now allows white-numberplated cars to be rented out by individuals.
The Airbnb of self-drive rentals
Moran explained that the shift in India’s motor vehicle regulations, which now legalise white-board cars to be rented out by individuals, has allowed the self-drive start-up to go asset-less, as it does not own a single vehicle in its fleet, which has completely transformed over the last two years.
“We have been able to successfully transition to a 100% pure-play marketplace, peer-to-peer model by leveraging the broader regulatory opportunity. It enables us for much more rapid growth on the supply side, while allowing us to focus our efforts where they are most needed,” remarked Moran.
The company, which reserves 40% of a booking’s revenue, claims that vehicle hosts can receive around 8-10 bookings every month, and earn up to Rs 50,000 on an average as passive income. It is to be noted that Zoomcar does not commit for any minimum business to the individuals listing on its platform, which, by virtue of its algorithm design, is able to generate sufficient demand.
Moreover, Moran stated that the Airbnb-like marketplace model works best when there is a strong reinforcement of the inventory in terms of growing the catalogue with higher quantity as well as quality of cars.
“The increased supply turbocharges the demand and that is what we have seen over the last several quarters. That is what we are emphasising on, and would continue over the course of this year and beyond,” said Moran, while revealing that the company aims to reach a million cars on its platform over the next 3-4 years.
IPO in the offing, eyeing profitability by end-CY2023
Zoomcar is also planning an IPO through a special purpose acquisition company (SPAC) and expects the work to be completed over the next couple of months. According to Moran, the IPO will be the final piece of the puzzle for Zoomcar’s external growth requirements and expects it to bring in fresh investment of a “double-digit, million-dollar number” to fuel future growth. “It is going to be similar or at par with what we had raised over the last couple of years, and it is certainly something which is going to put the company on a very strong trajectory,” the Zoomcar CEO said.
“We are already profitable today at a unit level – every booking that we serve, we make money. Now, we aim to be profitable on a full-fledged company basis before the end of the year. It is tracking well, and it looks quite realistic at this stage,” he added.
Zoomcar, which commands a lion’s share of the Indian self-drive car market, also operates in overseas markets including Vietnam, Egypt, and Indonesia (its largest market outside of India). It is now exploring plans to expand its overseas footprint to other high-potential regions. Emerging economies such as Latin America – Brazil, Mexico and Columbia – as well as Saudi Arabia are on the self-drive rental major’s radar for future global expansion.
“These markets offer a tremendous potential for our services as their economies continue to evolve, and they are going to be potentially on our list over the next couple of years. The good thing about these new markets is also that there is no strong incumbent doing anything like Zoomcar,” Moran concluded on a very confident note.
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