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How to do business by renting means of transport

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emma jane
How to do business by renting means of transport

In Pakistan, as in the world, cars are the main means of transport used. We appreciate the absolute comfort and independence it allows when traveling. For this reason it is not difficult to understand how car rentals are activities that offer an interesting earning opportunity with respectable estimated turnovers. 


The market

The market for short, medium and long-term rental of cars and vans, especially without drivers, is expanding and, despite the economic crisis, it is a sector that shows one of the most positive trends. The number of people turning to car rentals is constantly growing and the target is very broad: tourists, families, companies and professionals. In fact, people choose to rent a car or van for various reasons: weddings, events, work trips, holiday travel, removals and many more. The number of car rentals in the area is also growing and, finally, the asking price for car and van rental is decreasing. All these factors show an expanding sector with good prospects for future development.

Despite the covid-19 coronavirus pandemic causing the entire traditional mobility sector to suffer a major setback, primarily the sale of new cars, the rental market continued to stay afloat, still proving to be an excellent investment for those who wish to enter the sector. Even in the near future, it is expected that short, medium and long-term rental services for cars, motorbikes, vans and commercial vehicles will be increasingly in demand.

However, it will be important to always remain in line with innovations and market trends, also offering flexible rental services such as sharing or hourly rental , and cutting-edge vehicles such as hybrid and totally electric cars, as well as other vehicles and micro electric vehicles .

The bureaucratic process and requirements

Opening a car rental lahore company does not require knowledge, skills or particularly restrictive requirements but it certainly requires time, commitment, entrepreneurial spirit and a large starting budget for the purchase of the cars to be rented.

The process for starting your own car rental varies depending on the type of service you want to offer. In fact, you can choose to offer a short or long-term rental service, with or without a driver.

In the case of a car rental with driver, to start it it will be necessary to request a specific license from the municipality, granted by the local authority after passing a public competition.

To start a car rental without a driver, however, the license will be obtained through a simple declaration of start of business at the Municipality.

If there are employees, in both cases, the relevant personal data must be communicated to the Municipality every year and social security contributions paid.

Finally, to open a short-term car rental, you will need to complete the following common steps:

Opening a VAT number.

Registration in the Company Register at the Chamber of Commerce (Register of Craftsmen).

Possess a driving license.

Not having had any criminal or bankruptcy convictions.

Have a garage or car park available.

Draw up a contract that clearly states the conditions of the service offered and the responsibilities of both parties in the event of accidents, thefts, car malfunctions, etc.

Insure the means of transport you rent and arrange for regular maintenance and inspections.

The premises must comply with the law and obtain authorization from the ASL.

If you own more than 9 cars, you will need to obtain fire prevention authorization from the Fire Brigade.

Finally, it will be necessary to send the floor plan of the premises and the data of all the vehicles owned to the Municipality.

How to find the means?

When you start a car rental there are several possibilities when it comes to sourcing cars and vans.

The first possibility is that of the classic purchase which can take place at dealerships or other resellers of new or used cars. This, although convenient discounts are given to car rental companies, is the most expensive option. In fact, for about ten cars you will need over 100,000 pkr . This sum combined with all the other costs to be incurred brings the necessary initial investment to approximately 300,000 pkr .

However, the investment can be significantly reduced if you opt for alternative solutions such as leasing , franchising or a sub-leasing agreement with long-term rental companies. These three options all allow you to avoid having to purchase cars directly, against the payment of periodic fees, and thus reduce the budget needed to start the business to a minimum.

Leasing, franchising or sub-leasing also allow you to take advantage of an equally important advantage: replenishment. On average, when it comes to car rentals , the useful life of the vehicles is around ten months. After this deadline it is important to renew the offer, both to meet the changing demand of the market and to offer vehicles of consistently high quality. 

How to be successful

Furthermore, to open a successful car rental business , you will need to pay attention to several key elements:

Marketing . Advertising, whether carried out on the web, via social media and specialized sites, or via traditional tools such as billboards and flyers, is of fundamental importance for every commercial activity. In the case of car rental it is important to calibrate a marketing campaign based on your primary reference market / target and the size of the activity. It will also be important to carry out periodic promotions, discounts or offers for certain categories of people/customers or at certain periods of the year (e.g. promos during holiday periods in the most touristy locations, packages designed for workers or students on the move, and so on ).

Website with online booking system . For every successful car rental it is necessary to create your own portal where you can advertise, show the details and costs of the services, allow the customer to access all the necessary forms and fill them in directly online and allow you to make reservations and payments online, also via credit cards. It will also be interesting to combine the website with a personalized APP designed to maximize the mobile user experience and through which, in addition to booking/paying for services, also loyalty operations can be carried out (such as collecting points, discounts and promotions). confidential).

Location . Choosing the ideal location is essential for the success of the business: proximity to airports, stations, public transport, areas of tourist interest or close to companies. To make a strategically successful choice, studying the reference market and local peculiarities is crucial: the catchment area, the primary reference target, the current competition, the type of demand/needs of your local target, the best services to offer / that the competition is still missing, etc.

Costumer service. Offering a complete customer experience will be key. In addition to the rental service of various vehicles designed for every type of need (hybrid or electric cars, mini/city cars, subs, vans, commercial vehicles and vans, etc.), it will also be important to offer services capable of offering the customer safety and comfort. in the rental and travel experience including: complete insurance, clear and exhaustive price quote immediately and which does not undergo changes, 24-hour roadside assistance throughout Europe / in the world, steam / ozone vehicle cleaning services after each user to guarantee maximum hygiene / healthiness, driver service on request, short / hourly rental service, long-term rental services, leasing possibility, etc. 

Furthermore, a new business idea, with good prospects and clear advantages, is home car rental . In this case the location of the car rental is no longer a determining factor as the cars are delivered directly to the place indicated by the customer and can then be left by the customer directly in strategic points of the city such as stations, airports, city centers, shopping centers , large parking lots, and so on.

 The costs and potential earnings

As mentioned above, to open a car rental completely independently you will need a very high budget to cover a minimum investment of between approximately 100,000 and 300,000 pkr . To open a car rental franchise, however, we are talking about very different figures, above all thanks to the vehicle supply agreements and other economic benefits reserved for affiliates. Opening a car rental franchise requires an average investment of around 20,000 pkr for a turnkey, all-inclusive format.

However, the potential earnings of a car rental are no less and are particularly interesting especially if you have managed to start the business with a budget that is not excessively high, thus returning the investment made in a short time.

Car rentals manage to achieve an annual turnover starting from approximately €80,000 - €200,000 , depending on the size of the business, the size of the vehicle fleet and the services offered to customers. For a small rental, such as a sharing of small electric vehicles such as electric scooters, the average annual turnover is around €50,000 .

Clearly estimating the turnover and revenues of a car rental is just as complex as estimating the start-up costs and the minimum investment necessary. To make an accurate and truthful estimate of potential earnings , as well as costs, it will be necessary to draw up an ad hoc business plan and a detailed economic-financial plan that takes into consideration every specificity of the activity.

 Read also: Costs and Revenues of a Car Rental

 The franchise

Today the rental market is very dynamic and there are countless affiliation proposals from franchises that allow you to open a car rental, motorbikes rental, commercial vehicles or electric vehicles, both with medium, long and short term rental services, as well as with innovative services such as sharing. Generally, the investment required to open a franchising vehicle rental business is quite limited and accessible, starting from a minimum of approximately 3,000 - 5,000 pkr, up to average investments of 20,000 - 30,000 pkr for the more structured formats.

Among the main advantages offered by opening a car rental franchise we find:

exploitation of the brand's notoriety and consolidated reputation

tested business format with proven success on the market

centralized communication and marketing campaigns at national level

access to the know-how and experiences gained by the parent company

turnkey supply of everything necessary (software, hardware, equipment, communication and exhibition material, uniforms, information material, website, social networks, and so on)



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