Zoomcar, India’s first and the largest self-drive car rental service that allows user to book car online. The company allows user to rent vehicles on an hourly, daily, weekly or monthly basis & thus, avoid the need to buy a vehicle of its own. The company’s operation started in the year 2013 in Bangalore and has now panned out all over India covering 29 cities.
The company’s two founders- ‘Greg Moran’ & ‘David Back’, were old college friends sharing same dream of starting up some Business venture in India. Choosing India was a well thought plan, owing to the country’s huge growth potential & untapped markets. A leisure visit in the country helped them zero the idea of ‘Zoomcar’.
The founders brought an investment of $100,000 which the founders sourced from their personal savings & professional contacts. In India, most of the investors were disinterested in the project citing infrastructure as the biggest risk.
Few of the investors who had agreed to the concept asked them for a pilot test. The founders faced hiccups in starting up with operations, when they needed to acquire a license in order to start with a taxi business in India. While acquiring a new license for the fleet of taxi was difficult, Greg Moran thought of collaborating with some existing fleet player & rent his license. The founder reached on the verge of shutting down the business even before starting up. This was because 4 out of 5 taxi players in Bangalore had refused to the business model citing Infrastructure issues which will pose a big risk for the operations. Disappointed, Greg thought of never returning to India, but the last player Ramesh Tours & Travels agreed to collaborate. Zoomcar eventually kicked off with a fleet of seven Ford Figos & Mahindra Scorpios on 14th February 2013.
The company offers a variety of cars ranging from Swift, Honda City, Ford Figo, Mahindra Scorpio to BMW 3 series & Mercedes Benz A Class Sedans. The cars are offered on rent on hourly, daily, weekly or monthly basis. The company operates with fleet of both owned and arranged vehicles in Tier I & II cities. The company also provides car pickup facility from the Airports for the in-city fliers.
The cars are priced at an all-inclusive price which includes the cost of fuel, insurance & taxes (apart from Toll Tax). The company charges a commission of 25% on the revenue that its associates make. Further, the company does not try to propagate itself as a cheap company in terms of Price rather portrays itself as a Value for money service provider. Apart from the pickup facility of car from a specific location, the company also provides door step delivery on the payment of nominal fees.
The business model is transforming towards Marketplace model that allows an owner to rent out his car when not in use and providing the benefit of Asset lightness to the company. The owner of the car is paid as per the usage of the car. The company allows a customer to even borrow a car directly from its neighbours with a facility called ZAP.
The company’s main target user is the youngster who remains mobile. They come to work in new cities & live on their own. The company has encouraged them to start using the cars for weekend travels both in & out of city by giving them loyalty bonus etc.
The company in November 2017 had come up with a Bicycle sharing platform called as ‘Pedal’ on its portal. The service was discontinued in December 2018 citing quality of the cycle as the key concern.
Currently, Zoomcar has its operations in around 29 cities, and is constantly expanding to cover other cities of India. The company has more than 6500 zoomcars & has a frequency of more than 3000 rides on a daily basis.
The company in order to ensure the safety of the car as well as its passengers had launched ‘Cadabra’- which transforms the fleet of cars into Internet of Things (IOT) enabled vehicles. The cars are equipped with Bluetooth & 4G cellular connectivity. Cadara tracks driver behaviour & in-car data such as Fuel level, Braking pattern, engine heat, seat belt usage among other things.
The company has also tied up with Israel based company called as ‘Mobileye NV’, in order to provide advanced driver assistance system that use image processing technology to warn drivers & prevent accidents caused by lack of attention. The company has been able to reduce accidents by 35% after the installation of IoT, which alerts the driver of a prospective mishap.
The company earned revenue of Rs 158 Crore in FY 18, which had grown by 31.67% from Rs 120 Crore in FY 17. The company’s losses increased by 10% from Rs 225 Crore in FY 17 to Rs 274 Crore in FY 18. The asset heaviness impacts the operations of the company with huge maintenance costs that further impact the margins.
The company reported that it is profitable in most of the cities, and is earning a margin of more than 50% but it is yet to attain profitability on the corporate level.
The company got registered in May 2012 & raised its first funds of about $60,000 from professional contacts of the founders, while the founders invested their personal savings of around $40,000 in the company. The subsequent fund raising activities initiated by the company are mentioned below:
May 2013– Zoomcar raised $300,000 from ‘Mr Larry Summers’, former US secretary & professor at Harvard University. This news spread like Wildfire & the company got 5 more investors, which invested another $400,000 in the business,
October 2013– In its Seed Round, the company raised $1.6 million from New York based ‘Empire Angels’, San Francisco based ‘FundersClub’, ‘Basset Investment Group’ & ‘Lady Barbara Judge’, former US Securities & Exchange Commissioner among others.
March 2014 – The company was able to raise yet another $1.5 million from the existing investors & Dubai based angel investors. With this support, the company got resources to expand into Pune, with 25 vehicles.
October 2014– With the company having multi city operation, it raised $8 million with its Series A funding from ‘Sequoia Capital India’, ‘T.V. Mohandasa Pai’ (former CFO of Infosys) & ‘Abhay Jain’ (Head of corporate affairs at Manipal Group). The funding enabled the company to further expand to Delhi, Mumbai, Chennai & Hyderabad.
July 2015– In the Venture Round, $11 million was raised from ‘Sequoia Capital’ & ‘Nokia Growth Partners’. The company had achieved monthly revenue of more than Rs 5 Crore and had a fleet of 1,300 cars.
July 2016– Series B fund enabled the company to raise $24 million. The investment was backed by ‘Ford Smart Mobility’ & existing investors Sequoia Capital, Nokia Growth Partners & Empire Angels.
December 2016– As an extension of the Series B round, Zoomcar also raised $15 million from Chinese Venture Capital firm, ‘Cyber Carrier’.
February 2018– In its Series C funding, the company was able to raise $40 million. The round was led by ‘Mahindra Rise’. The deal valued the company at around $170 million.
August 2018– Company raised $3.6 million (around Rs 25 Crore) as Debt Financing from ‘Trifecta Venture Debt Fund’.
April 2019- Zoomcar is said to be in talks with Mahindra & Mahindra Ltd, in order to raise around $500 million. Industry estimates that the valuation of the company shall shoot up to around $1 billion, if 40% of the deal is financed through the equity route. Although, Mahindra is expected to invest $300- 400 million into the company, Zoomcar’s existing investors from the US may also participate in the round.
Zoomcar faces competition from Drivezy (a Bangalore based vehicle rental company), MylesCars (backed by Carzonrent) and other similar car rental companies. The segment is going to become more competitive with the arrival of Ola & Uber’s car rental services.
Miles to Go
Although the company has attained a valuable position in the Self- drive car rentals. But the Car rental category is dominated by Ola & Uber apart from the local operators, who have penetrated deep into the cities as well as into the changing lifestyle of the people.
Zoomcar & other cab aggregators operate on an Asset heavy model, which adds to the cost of operations. Although the company has announced shifting to a market place model by selling the entire fleet of cars, allowing the company to benefit from Asset lightness.
Zoomcar is largely used for leisure purpose or travelling inter-city by the younger generations & is not a utility service. In the long term it might become utility, but at present it is more of a leisure & recreational service product.
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