Self-drive car and bike rental firms such as Zoomcar, Drivezy and Revv may turn out to be the only bright spots for the Indian automotive sector this year.
As automobile companies stare at tepid vehicle sales even after the ongoing nationwide lockdown lifts, new-age vehicle subscription services may grow as consumers prefer personal vehicles to public transport or shared mobility, in the wake of increased social distancing measures to stem the Covid-19 virus outbreak.
These vehicle subscription firms could emerge as the only large buyers of new vehicles, including unsold inventories of BS4 and BS6 vehicles lying with dealers.
They could potentially buy more cars in the changed scenario, people in the know said.
“Because of the current uncertainty, new car purchases are getting deferred, leading to a pick up in the subscription business,” said Anupam Agarwal and Karan Jain, the founders of Revv, which runs a multi-brand vehicle subscription service, said.
“The fear of using public transport after the lockdown is lifted will be there for some time, and the affordability factor in buying a new car will aid this model,” they said.
Revv, which manages subscription services for Hyundai and Mahindra, said its subscription business was growing 20% month on month prior to the lockdown.
Rival Zoomcar shared a similar view. It said demand for subscription services will jump once the lockdown is lifted.
“We are preparing for a 3-4 times jump in demand. With novel subscription and a promise of guaranteed sanitization of cars after every use, Zoomcar’s subscription program also gives various personalized policy options to subscribers to partially ease the impact of the Covid-19 related lockdowns,” Greg Moran ,CEO and co- founder ,Zoomcar said.
Yamaha-backed Drivezy, the other big player in the space, said longer-term rentals will see increased uptick while short-term weekend leisure trips — which make up the largest use case for such companies — will see demand taper.
If demand for subscription goes up, Drivezy said it could be in the market for new vehicles by August or September.
Manufacturers have already approached vehicle rental firms to secure orders but the talks are still premature, a senior executive of a leading company in the space said.
“They’re offering us great prices, but we’ll wait to see what demand is like before we scale up our fleets,” the executive said, adding manufacturers were looking at buyers for unsold inventory in order to start afresh when demand makes a comeback.
Even point-to-point mobility firms have realised there could be more takers for longer term use and are planning to switch.
Vogo said it would facilitate long-term vehicle rentals for employees for essential travel starting April 20. The company has close to 20,000 two-wheelers that are currently not being utilised.
“Social distancing and the current affordability issue are strong parameters which will play a strong role in the growth of subscription,” said Veejay Nakra, CEO of Mahindra and Mahindra’s automotive business.
The subscription model should see better customer traction and the numbers will only go up once business operations resume, said Tarun Garg, director, sales, marketing and service at Hyundai Motor India.
The millennial buyer may be persuaded to evaluate subscription models to cap monetary commitments over smaller time horizons and provide the flexibility of changing vehicle models, said Vinay Raghunath, partner and leader, automotive sector at EY India.
Leave a Reply