car rental


car rental businesshire car, or car hire agency is a company that rents automobiles for short periods of time, generally ranging from a few hours to a few weeks. Car rental business agencies primarily serve people who require a temporary vehicle, for example, those who do not own their own car, travelers who are out of town, or owners of damaged or destroyed vehicles who are awaiting repair or insurance compensation. Car rental agencies may also serve the self-moving industry needs, by renting vans or trucks, and in certain markets, other types of vehicles such as motorcycles or scooters may also be offered.



Car Rental Business is a highly competitive business, but with the right planning and forward thinking you can minimize the risk. It is important that some research is done to find out what the actual demand is. So the first step for any business is doing ample research.


Everyone knows the importance of finance in carrying out their daily activities, and every entrepreneur knows the importance of finance in their businesses as well. No business can start, or continue in its operation without finance. The car rental business is not an easy one, and so raising capital might not be so easy.

Some of the options that you can explore to finance your car rental business includes;

  • Approaching angel investors and intimating them of your plan.
  • Raising money from venture capitalists
  • Applying for loan from financial institutions and banks
  • Financing part of the business from personal finance and sale of properties
  • Approaching specific investors


The second step is to identify the type of car rental business you would like to undertake, for instance there are two types, either a hire purchase one or a daily hire.In the case of a hire purchase, the customers are mainly business clients who hire the vehicles for a stipulated period of time. In the case of daily hire the customers are generally individuals who hire vehicles on a daily basis.


The next step to be taken is to obtain the inventory, that is it is to be identified if you would like to purchase your inventory( in this case being vehicles) or take them on lease.The greater the vehicles the larger the chances of earning. The vehicles must be well maintained and enjoy a high turnover. Employing your own maintenance staff can work out expensive for new start-ups, so it’s worth considering making arrangements with a local repair shop. 


Location plays a major role for any business. Do some research on the type of market in your area and find out as much as you can on your competition. Locations near airports, hotels and train stations are great options. Don’t forget to research your location security – it’s not a bad idea to invest in CCTV cameras and alarm systems.


Perhaps the most important issue for vehicle rental companies. It goes without saying, but it’s illegal to trade without some form of vehicle insurance. It’s worth shopping around to find adequate cover at the best price. Some companies like Tower Gate Insurance offer ‘pay as you go’ insurance solutions that offer all the benefits of an annual policy, with greater flexibility.


In the past it was common for an entire operation to be run from massive paper diaries and logbooks. This may work in the immediate short term, but the disadvantages of a manual system far outweigh any positives. Manual systems leave you liable for inefficiency, with lost time and often lost paperwork! It can quickly become confusing what vehicles are due out and in, and managing your invoices is often a nightmare. To boost your efficiency and steer clear from these pitfalls, it’s vital that you invest in car rental management software.


This is an absolute must if you wish to receive a decent flow of business. The Internet has afforded customers with greater flexibility – and most now turn to Google when shopping around for products or services. A website will allow people to do this 24/7, effectively extending your opening hours. The simple fact of the matter, especially for new start-ups wanting to establish themselves, is this: If you don’t have a website, potential customers will go with someone who does. Try to avoid the trap of simply posting your contact details with a few prices and then hope for the best. The 21st century customer is impatient and expects to be able to book and pay online when convenient for them. It’s therefore important that you fully utilise your website (your shop window) to its maximum potential by having a proper online booking engine. It may seem tempting to opt for some bespoke web-developer work, but this can turn-out very expensive. This route allows you to have a complete web booking system on your existing website in under an hour! All you would need to do is insert a code into your website and that’s it! It’s easy to set up tariffs and groups. You can set up availability rules which ensure that you never lose control over your vehicle availability.


Since nowadays people are searching for car rental online, many of them are using online travel agencies to make a reservation in advance. If you have more than ten new cars in your fleet it could be worth considering partnership with such a booking website. Advantages are that you can increase your utilisation, online booking engines can send you new customers whom you would not be able to reach by yourself.


Challenge your business model

“You must evolve with the changing landscape of the marketplace. Take the time to look at your vehicles, customers, market, rates, technology, the people operating your business, and think about all the possibilities.

Be obsessed with numbers

Take the time to look at every possible benchmark, including, but certainly not limited to, revenue per user, utilization, average length of rental, reservation build and earnings. Scrutinize your P & Ls. Know what you did this time last month, this time last year, this time three years ago.

Know your vehicle and your customers

Keep your vehicle costs in check or the business will fail. It’s your greatest opportunity to make money and your greatest risk.

Also, have a 12-month vehicle plan that is constantly moving out 12 months. Change it to meet the demands of the constantly evolving rental market, travel industry, economic climate and the aftermarket.

 When acquiring a vehicle, know when, where and how you’re going to dispose of it.

If the aftermarket wants bells and whistles and a pretty color, get them. Whatever it is, have a disposal plan.

 Manage risk.

Dedicated people in the risk area will pay for themselves many, many times over

Don’t neglect sales and marketing

Without sales and marketing, you’re just another rental company. Define what makes your business unique. That’s what you’re merchandising, and you’ve got to make your customers aware of that distinction. Your business’ unique characteristics provide opportunities to draw the customer to you and pay more.

Look for marketing alliances

If you’ve got a large hotel next door, propose a deal. Refer customers to the hotel, and have them refer business to you. Put a brochure together that talks about your alliance with the hotel, or put a phone in the hotel that dials your location. Be the rental car agency for the local convention center.

Optimize your profitability

At the end of the day, you’re selling the value of the brand. There is intrinsic value in an established brand with real customers and real revenue. There’s always someone who will see value in your business that you don’t see.

Fight for the lowest vehicle finance interest rate.

Every 1% you save has an enormous impact on your bottom line. Use your sources, friends and colleagues to find it. Meet as many lenders as possible. Once you get that 1%, start looking for the next one.

Manage revenue and adjust real-time prices based on your utilization

Companies that do this with passion can squeeze up to an extra 15% to the top line. Look at your availability and your competition’s availability.

Identify your great employees and pay them well

The value of an exceptional employee is so critical to making money in this business

 Provide full disclosure to your customers

The customer should acknowledge anything special or unique about your rental agreement. Penalties must be clear to the customer. At the end of the day, it’s your word against the customer’s.


Owners who wish to rent out their vehicles and the customers who want to drive them should be aware of the risks they are taking, as there are many considerations.
For the owners, they have to be sure it will not be the last time they see their cars after handing the vehicles over to their customers. Even a delay of a few days or weeks in returning the car would be a harrowing experience.

Should the worst happen and a police report be made, the case will be classified as NFA (No Further Action). After all, the car was not stolen as it was voluntarily handed over by the owner to the customer.

Customers who hire such cars should know the risks they face. They should ask whether they are insured for third party injuries caused by them, if involved in a collision and others are injured.

They would not want to face a situation where the injured victims or their families file large claims through the court and the drivers would have to pay compensation as insurance companies can repudiate cover when terms and conditions of the policy are breached.

It gets trickier when it comes to vehicle damage and those who have rented from roadside operators would know.


Starting the business in whatever way can have its advantages and disadvantages, and this means that you would need to have gotten your plans in place before starting off the business.


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