The Hindu Business Line : Branded rent-a-car sector set for top-gear growth

THE branded rent-a-car industry is all set to shift into top gear in the next 2-3 years as the availability of an array of top global brands is expected to drive the market growth to its full potential.

A highly fragmented industry with only five per cent of the market dominated by the branded players, the industry has had slow growth due to stagnant economy.

However, in the last three years, it has witnessed a sudden spurt in business following India becoming a major hub for IT and other businesses.

Currently the three leading international players - Hertz, AVIS and Europe Car - have been able to muster an annual turnover of slightly over Rs 100 crore only.

But this is poised for a take-off, according to Mr S.P. Balasubramanian, COO of Carzonrent (India), the master licensee of Hertz.

With the dominance of the unorganised sector in an estimated Rs 30,000-crore rent-a-car business, branded players expected their marketshare to increase considerably.

The industry is largely driven by the old Indian makes of automobiles and with a gradual replacement by the new generation cars, the branded players have also revved up their marketing strategies to cash in on the growing opportunities, he said.

Carzonrent has drawn up plans to increase its fleet strength from 627 cars to 4,000 by 2006 as part of its aggressive plans to market Hertz.

It also hopes to increase revenue to Rs 100 crore by 2006 from the current Rs 25 crore.

With the latest models of international brands hitting the Indian roads, the `self-drive' segment of the business is picking up faster. This is an attractive segment, which Carzonrent would be tapping aggressively, said Mr Balasubramanian.

Carzonrent has struck a strategic alliance with HPCL to promote self-drive through its Club HP outlets in the country. HPCL outlets would act as the booking and car pick-up centres.

However, he refused to give the details about the likely revenue share arrangement.

With several corporates increasingly outsourcing their needs for travel service, Hertz would be embarking upon leasing and fleet management as additional avenues to its traditional chauffeur driven rentals for corporates and hotel travel desks.