Money Startups

Self-drive car rental startup Zoom raises $215K in angel funding; targets $3B rent-a-car market

1 Apr, 2013

Bangalore-based ZoomCar India Pvt Ltd, which runs a membership-based, self-drive car rental service Zoomcar from the city, is looking to tap the multi-billion dollar Indian car hire market, a top executive of the TechCircle DEMO India startup told TechCircle.

Zoom, which recently raised over $215,000 from New York-based Empire Angels and a UK-based investor group led by Lady Barbara Judge, is also looking to expand to multiple neighbourhoods in the city as well as to Mumbai and Delhi within nine months.


The company operates seven vehicles with a mix of Ford Figo and Mahindra Scorpio SUVs and charges customers on an hourly as well as daily basis. "We offer our members an opportunity to hire a vehicle by the hour or by the day. Currently, no provider in India offers a self-drive vehicle for hiring by the hour. This will open up many new short-term intra-city destinations for self-drive," said David Back, cofounder and president, Zoom.

Back claimed that Zoom provides the best available in-car navigation, including real-time traffic updates, assistance in locating parking and location-based service apps. The company charges Rs 199 per hour and Rs 1,999 for a day's rental for Figo, while it is Rs 249 and Rs 2,499 respectively for Scorpio. The customer will be charged Rs 8 for each kilometre beyond 200 kilometres for Figo and Rs 12 for Scorpio. The rates cover the entire trip, including petrol, insurance, maintenance, road-side assistance, and tax.

According to Back, who set up the company with his friend Greg Moran as a subsidiary of US-based Zoomcar, Inc., car clubs are attractive for individuals who make occasional use of a vehicle or for families having no access to a second vehicle.

"Moran (CEO) and I took classes on India and international development in undergrad. Greg has worked on energy infrastructure project finance in India before business school. He was also interested in urban infrastructure in developing countries. The car club was an opportunity to implement these interests. Meanwhile, I was particularly interested in taking the car club business model to a place that didn't already have it, and India was the perfect opportunity to do so," Back said.

Zoom worked with its US-based vehicle technology partner, JustShareIt, to develop state-of-the-art vehicle reservation, billing and security technology services.

In Bangalore, the company has partnered a local car hire service to operate. "Once we have enough vehicles to decently serve the core of Bangalore, we will begin offering point-to-point, one-way hire options to complement the current core offering of same location pick-up/drop off.

Estimates show that last year, the $3-billion Indian car hire market grew by 14 per cent, in which self-drive car market expanded by over 40 per cent, he said. "India has more than 42 metro areas with population of over one million, increasing to at least 68 million by 2030. These metro areas are also incredibly dense, thereby creating massive traffic and parking challenges. This phenomenon is largely responsible for keeping private car ownership rates exceedingly low across the majority of these metro areas. Dense cities also mean each car club vehicle is within walking distance of more potential customers," said Back.

There is considerable evidence from around the world that car clubs tend to produce natural monopolies in each city. This comes from the ability to lock up the most desirable parking spaces, to enter into long-term contracts with large corporate and government clients, and to provide convenient access to a large variety of vehicles throughout the city.

The company said that its utilisation rates have trended steadily up after the initial hiccups. "By the end of March, our 7-vehicle fleet had 57.5 per cent utilisation for the entire week. We are working on a referral basis. We've had a huge number of repeat customers," said Back.

Self-drive car rental service is a quite established business overseas and giants such as Hertz, Zipcar etc are largely driving their business from self-drive rentals as against corporate lease in India.

Zoom is just an Indian spin off of this model. However, the novelty value is that it has entered a market where incumbents like Meru etc have not tried to offer self drives. Zoom is basically competing with CarzOnRent  which offers a complete bouquet of end-to-end long and short term car rental solutions through its fleet of 6500 cars across the country, and Pune-based SelfDrive.in, which is more focused on corporate leasing.

How it works:

You need to register with your credentials and create an account on the website to become a member. You can choose the car you want from the website or the mobile app from the location closest to you. Pick the time you want the car and then enter your debit/credit card number, and hit book.

Once it is time for your pickup, go to the pick-up location on the Zoom map and you will see your car waiting for you. Use the app or SMS to a prescribed number to unlock the car. The key will already be in the car. You can lock the car with an SMS while parking the vehicle. Once your usage is over, you can bring the car back to your location and send and SMS to lock the car and end the reservation.

Zoom accepts credit or debit card payments only and no cash or online payment is accepted. All payments are made in advance through the website or app. If you extend your reservation, your credit or debit card will be charged the additional amount and you will immediately receive a confirmation e-mail for this new invoiced amount. You can also fill in fuel in case you need and can get it reimbursed by way of a driving credit or a cheque for the full amount which will be mailed to your address after the trip.

(Edited by Prem Udayabhanu)