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How to organize car sharing - car rental business

Published: 27th January 2023

In many countries of the world, car sharing has long become a familiar and widespread service. This business is very promising, because the demand for it is growing every year, and for many people in large cities car sharing is an excellent alternative to a taxi or your own car.


Source: rentsyst.com

Car sharing is a short-term car rental service that is especially popular in big cities. Thanks to this service, the user can register in the system, provide the requested information and link a bank card to their profile. After that, the client sees available cars in the car sharing system in the location of interest.

Typically, car sharing companies rent separate parking lots or parking spaces throughout the city, so after the trip, the client can also park the car in a convenient place. In this case, payment is charged solely for the time during which a person used the car.

Due to the obvious advantages of this type of car rental and its demand for many residents of large cities, such a business has every chance of becoming successful, profitable and steadily developing. However, before organizing your own car sharing service, you need to study in detail the features of such companies, research the needs and expectations of the target audience, create a detailed business plan and calculate all possible costs.

Who and what makes it profitable?

Before starting any business, you first need to determine how profitable it can be. One of the main payback factors is the potential demand among the target audience. As a rule, residents of large cities become regular customers of car sharing services. Most often this is true for office workers who need a car only for a short time.

For users, there are several important advantages of car sharing:

  • Material benefit. The client does not need to buy their own car, regularly spend money on gasoline, maintenance, parking or insurance. All these efforts are taken over by the car sharing company.
  • Saved time. It is much easier to rent a car for a short term than for a long term. The client does not need to go anywhere to pick up the car and draw up all the necessary documents, they only needs to be registered in the car sharing system.
  • Convenient tourism. For business trips or traveling purposes, car sharing often becomes a more comfortable alternative to public transport or taxi services.
  • Emergencies. Car sharing services can help the driver in emergency situations, for example, when gasoline runs out or an unexpected breakdown of a personal car occurs.

Also, the profitability of the car sharing business provides benefits for company owners:

  1. Opportunity to work on a franchise. In this case, you can significantly save on marketing, application creation, support services and other expenses.
  2. Favorable conditions for buying a car. Many car dealers and leasing companies provide customers with favorable conditions for buying several vehicles at once.
  3. Cost optimization with the help of software. You can install special corporate car sharing software to control the work of the company and optimize the budget.
  4. Opportunities for development. With a careful approach and competent planning, a car sharing company can quickly pay off and bring good profits for further business scaling.

All these advantages ensure the profitability of the business not only in the short term, but also in the long term.

Is this business profitable?

Of course, the car sharing business can potentially be very profitable. But for this you need to pay attention to the details that are of great importance for successful activity.

First of all, you need to conduct a thorough study of the target audience in order to determine the positioning of the brand, its values, as well as the company's pricing policy, because the number and class of cars depend on this. As practice shows, it is best to buy middle-class cars for a car sharing service, but if the starting capital allows, it is also necessary to purchase several premium class cars — they are in demand for celebration events.

Also, special attention should be paid to brand promotion. To date, relying on so-called word of mouth is a rather ineffective and risky strategy. If your team does not have a marketing department, it is better to trust professionals and seek help from an advertising agency. Using modern communication channels, experienced professionals will be able to competently convey information about the new service to potential customers.

In addition, it should be taken into account that corporate car sharing software pays off much faster due to the automation of business processes and well-coordinated work in a single system.

Obviously, for business success, it is also necessary to monitor the quality of the services provided. As for the car sharing service, there are many details that need to be constantly monitored, such as support for a mobile application, collection and storage of information, the effectiveness of advertising campaigns, the technical condition of cars, minimizing the risks associated with fraudsters. Fortunately, some of these processes can also be effectively controlled using corporate car sharing software.

Main costs of car sharing

The business plan of a car sharing company should be as detailed as possible. This will help to accurately calculate all costs and compare them with potential profits.

The main costs to consider are:

  • car purchase,
  • buying or renting premises,
  • car registration and insurance,
  • re-equipment of cars for the needs of car sharing,
  • payment for parking spaces,
  • maintenance of cars,
  • fuel costs,
  • car wash,
  • application development,
  • support for corporate car sharing software,
  • salary of employees,
  • marketing activities.

If the owner of the company correctly calculates the costs for each of these items, they will be able to predict the time it will take for the business to pay off and reach a stable income.

Conclusion

At first glance, the car sharing business may seem complicated. But if you have enough experience in entrepreneurship, all these stages can be completed fairly quickly and without much difficulty. With a limited budget, you can also find a way out of the situation by looking for investors and reliable partners.

It is necessary to responsibly develop a plan and pay due attention to all the details at the start. This is the key to future success and profitability of the car sharing business.

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