Carzonrent confident cab rental industry will grow to Rs 25,000 crore by 2020

NEW DELHI: Despite the noise over diesel and the recent fallout on cabs running on the fuel in the national capital region (NCR), Carzonrent is bullish on the corporate cab rentals segment growing by 15-20% every year to reach a size of Rs 25000 crore in next 3-4 years.
Rajiv Vij, chief executive officer, Carzonrent said, “At present, the corporate cab rentals segment is sized at about Rs 15000 crore, with organized players accounting for 10 per cent of the market. It is estimated that the industry will grow by 15-20 per cent every year to reach a size of Rs 25000 crore in the next 3-4 years, over a third of which at around Rs 10000 crore will be organized. We are targeting a 25 per cent share of the organized corporate cab rentals market.”

To this end, Carzonrent has firmed up plans to expand its corporate cab rentals fleet to 30000 vehicles (from the current 6500 vehicles) over the next few years.

The company will invest Rs 750 crore in customer acquisition costs, developing software, installing hardware and increasing available inventory in the next 3-4 years. The resources will be raised through a mix of internal accruals and debt. Carzonrent is looking at recruiting 150 engineers at its R&D centre in Bengaluru and about 400 employees at its National Command Centre in Delhi to support its aggressive expansion plans.

Vij said given the recent decisions by the Apex Court, it is necessary that the government reviews rules and regulations for the cab rentals industry to safeguard investments. “Rules and regulations governing the industry need to be reviewed in totality. The government should harmonise norms by looking at the current market situation and also future opportunities. Those making investments need a stable environment to operate in”, informed Vij.

The Supreme Court had banned non-CNG taxis from operating in the NCR from May 1 to address concerns over pollution in the region forcing thousands of cabs off roads and raising outcries from the employers in the BPO sector who use taxi fleets to ferry employees between office and home. The sudden ruling made a group of information technologies companies state that the ban had the “potential to create the death knell for the BPO sector in the country” and lead to a possible loss of $1billion.

The Apex Court earlier this week partially relaxed this ruling by permitting diesel taxis with all-India tourist permits (AITP) to ply until their five-year licence lapsed but said that no new diesel taxi can be registered in the NCR. The Court also authorised petrol and CNG cars registered in Delhi to ply to neighbouring districts in the NCR. The Court further directed the government to change rules so that AITP holders ferry only tourists as they are meant to, and not engage in point-to-point operations.

Despite the current environment, Carzonrent aims to grow its revenues to Rs 5000 crore over the next 3-4 years on a bottom-line of about Rs 600 crore. The New Delhi-based company recorded a turnover of around Rs 325 crore in the last financial year, said Vij, adding it is a profitable venture.

Overall, Carzonrent registers 400,000-450,000 rentals (250,000 corporate rentals, 150,000 rentals through EasyCabs). About 65 per cent of its revenues from corporate car rentals, 20 per cent from EasyCabs and the rest from self-drive venture Myles at present. The corporate car rentals would continue to bring in a major proportion of the business going ahead, said Vij.

According to industry analysts, India's car rental, taxis and self-drive industries currently have a fleet strength of about 800,000-900,000 vehicles. This is estimated to cross 1.5 million vehicles by 2020.