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How to Start a Car Sharing Business

Car Sharing Business

Obviously, having a personal car is much more comfortable than constantly traveling by public transport. But for many reasons, you can not always use your car.

Many people consider buying their own car unprofitable, as they will have to spend money on gas, parking and maintenance all the time. There are times when at the most inopportune moment the car breaks down or runs out of gas. In addition, sometimes the driver needs transport only for a short time: for example, if they go to another city or country. 

In this regard, many people increasingly prefer car sharing. This is a relatively young branch of business that allows the customer to obtain the right to use a car only for a certain time. There are many advantages to this method of transportation, and the obvious benefit for the customer plays an important role here, because using the car sharing service is cheaper than constantly getting a taxi. At the same time, the customer personally drives the car, relying on their own driving experience, and not on a stranger.

Due to the popularity of such services, many businessmen (both experienced and beginners) are increasingly thinking about starting their own car sharing business. In this material, we will take a more detailed look at the advantages of such a business and tell you what you should pay special attention to.

The Essence of the Business

With sufficient investment at the initial stage, car sharing can become a successful and very profitable business project. This is especially true for large cities where the population density is quite high, and the customer may need a car at any time. 

The essence of this service is that the user pays only for the time they spent driving a car. At the same time, they can pick up the car in one place, and leave it in a completely different one. To do this, the customer most often uses a special mobile application. There are the following advantages of car sharing:

  • No worries about maintenance or washing;
  • Sometimes cars from such services get free parking;
  • It is more profitable than a taxi, and more convenient than public transport;

Car sharing can help out in extreme situations (if the car breaks down or runs out of gas);

This service also allows you to take care of the environment, because one car can be used by several drivers a day.

If you finally decide to open a car sharing business, first you need to choose whether you will work from scratch or use the franchise of an already well-known provider. Each of these approaches has its advantages and disadvantages: in the first case, you will have to invest in the promotion of a new brand, in the second, your business will already be known, but you will have to share part of the profit with the provider.

 It is also important to devote enough time to work out the algorithm for providing the service. Usually, for a short-term car rental, the customer does not need to go to the car park, sign the contract and waste their time. The owner of the car sharing service must take care of paying for parking spaces in different parts of the city, create an application with which the customer can choose an available car, and, if necessary, create a hotline in case the customer has difficulties.

If you have already created a basic fleet, you need to establish a process for car insurance, maintenance and washing; develop a tariff system. In addition, you must establish clear and understandable rules for using the service. In most cases, the car sharing system provides for the following basic rules: 

  • When registering in the system, the user must link their bank card.
  • The customer also provides a valid driver’s license.
  • Companies often impose age restrictions for drivers (for example, cars are provided to customers over 21 years old).
  • It is also worth assigning a minimum driving experience (not less than 1-2 years.) 

In the rules for using the service, it is a good idea to indicate the algorithm of actions in extreme situations. For example, what the customer should do in case of an accident, and what responsibility they can incur for causing material damage to a rented car. Many services also use special car sharing software to collect data on the correct behavior of drivers.

Buying or Renting a Car

One of the most important steps to start a car sharing business is buying or renting cars. Depending on the amount of investment that you are willing to invest in this business, you can choose the optimal number of vehicles for your fleet. In cities with a population of over a million, the fleet of car sharing services can reach several hundred, while in small towns it is quite possible to start with a dozen cars.

Basically, most of the fleet consists of mass models of middle-class cars, such as Kia Rio, Volkswagen Golf, Hyundai Sonata and others. But for the fleet, it is also worth buying executive class models, because they are in demand for rent for important events, weddings and various holidays.

Car sharing service operators also often purchase cars under a leasing system, since this option is in most cases more profitable than a regular car loan purchase. Another way to replenish the fleet is to rent a car from a private owner. In this case, they become an investor in your business. 

Keep in mind that in addition to buying a car, you need to take into account other costs, because you still need to complete and tidy up each car. The standard equipment of a car from car sharing usually includes a first aid kit, airbags, a fire extinguisher, and sometimes a rear-view camera. In addition, each car should be equipped with an ignition key built into the lock.

You can equip your car with other useful things for drivers to stand out from the competition: a charger and a mobile phone holder, a child car seat, a pet carrier, a fuel card – all these things can raise the brand’s reputation in the eyes of the user. Do not forget to take care of other important things: car registration documents, insurance, alarm and navigation system.

Development and Acquisition of Software

Managing such a business requires not only monetary investments, but also a significant amount of time and effort. Therefore, company owners often use car sharing software to optimize their work.

CRM systems allow you to automate many processes, improve business efficiency, streamline tasks and reporting, and synchronize the work of all company departments. There are many special car sharing systems on the market that can directly affect the profitability of a business. Therefore, such a system should be implemented already at the stage of starting a business, so that in the future you do not waste time and resources on staff training.

Corporate software for car sharing will help you:

  • collect orders from customers and process them automatically;
  • eliminate the risk of the human factor in many work processes;
  • put in order accounting and reporting from all departments;
  • monitor the fleet, condition and location of vehicles;
  • analyze the profitability of each individual car and the business as a whole;
  • communicate with customers and learn about their needs;
  • adjust marketing and business strategy based on the data received.

Today, the possibilities of car sharing software are practically unlimited. You can order the creation of an individual application that will meet your specific requirements and the needs of your business. Thus, you will manage the company with the help of special mobile applications, cloud services, and portals. This is a convenient way to significantly increase the efficiency of your business, because all the important information will be collected in one place.

User Acquisition

The last but no less important stage on the way to creating a successful car sharing business is its promotion. There can be a lot of ways to attract the attention of users, but all of them can have different effectiveness. The result depends on many factors: the selection of the target audience, the choice of communication channel, the tools you use, and even the cultural characteristics of the region – anything can directly or indirectly affect the success of marketing.

Therefore, to promote your business, in many cases the best solution is to turn to special agencies that have relevant experience and expertise in design, advertising and marketing.

To attract new customers in car sharing, the following methods are often used:

  • SMM: you can get traffic through paid social media campaigns (targeting), as well as drive organic traffic through quality and interesting content on your page.
  • Contextual advertising: will help attract users who are looking for relevant information about car sharing services in search engines.
  • SEO: careful and regular work on the content of your site allows you to increase its ranking and “raise” your brand in the search engine results.
  • Advertising in applications: it encourages users to install your application for car sharing in third-party applications.
  • Native advertising: it can be placed in the media, popular blogs, social networks of opinion leaders, thanks to which it has a high level of consumer loyalty.
  • Outdoor advertising: it is mainly used by large car sharing companies, as this type of advertising is often more expensive than online promotion.

It is important to understand that the path to starting a business is not always easy. But if there is initial investment and a competent approach, such a project has great potential. If you put enough time and effort into not missing important details, you have every chance of creating a successful and profitable business.

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