JustRide shifts to new business model

Self-drive car-rental marketplace JustRide has switched its business model to that of a peer-to-peer lending platform/marketplace from the aggregator model it followed earlier.

The 1.5-year-old outfit, founded by five alumni of NIT-Allahabad and IIT-Bombay, began operations with an aggregator model that had many fleet operators offering their cars for rent on its platform. This was an asset-light strategy — since the company did not need to own any cars — compared with the model followed by its competitors.

Ashwarya Pratap Singh, founder and CEO, JustRide, said the earlier strategy benefited a few companies and individuals, but the new model will bring about a fundamental change in terms of creating a rental ecosystem. After providing for EMIs, maintenance and commission for the marketplace (JustRide), a car owner who offered his car for rent could still make between ₹6,000-12,000 a month per car. “We feel the new model will be able to bring a lot more people into the shared economy model and make it go viral.”

The company is betting that a shared-services model will be the way forward for the economy as a whole — both in view of an aspiring young population, as well as shortage of infrastructure and other limitations. Car ownership in India is a mere 5 per cent compared with about 80 per cent in the US. Even so, about 3 million cars are sold every year. But the usage of those cars is still limited. JustRide proposes to put the ‘idle time’ of these cars to productive use — by offering owners a chance to rent out their cars.

Or, in a neat inversion of strategy, if you are already renting out a car regularly, they offer you a chance to own the car — and make some money off it.

The core of the company’s strategy is using technology to help build trust between lessors and lessees. This is done by using a smart-vehicle technology — named Yabber — that is attached to the vehicle to continuously track and monitor the performance of the driver through a mobile app. A trust score is given for every driver on a scale of 1 to 5. Those scoring below 3 won’t get a chance to drive further. The ones who drive well and safely will be incentivised with better rates on successive rides.

The shift in business strategy comes on the heels of some advice and mentoring from Google and start-up incubator Y Combinator. These companies had also chipped in with funding, along with other investors. The company has so far raised about $7 million from various investors, and is expected to raise another $3 million shortly.

As per its original plan, the company, which began its operations across four cities (Mumbai, Pune, Delhi and Bengaluru), was to expand to a dozen other cities at this stage. That plan has now been deferred.

The company has also pulled back from Delhi after some unpleasant experiences faced by its staff. Asked about this, Ashwarya said: “As a young company, we felt we should not take the risk at this stage. We’ll come back later. We thought we should wait. We will learn from this experience. We had about 20 cars there, so it was easy to scale back.” The company is planning to launch operations in Kolkata.