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Is Car Rental A Better Mobility Option In Post COVID-19 Era?

The fundamental reason for this spike in demand for a subscription-based model post lockdown lies in flexibility, pricing, and availability.

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How would you define mobility? In simple terms, it’s the ability to move freely. Ideally, that is what we all look for when it comes to moving from one place to another. However, the ongoing pandemic has disrupted the way we live and move around. 

When COVID-19 induced lockdown was imposed, it impacted our everyday life including daily commuting and leisure travel plans. These all came to an abrupt standstill. Now, after a long hiatus due to the global health crisis, the economy has begun to reopen. Offices and several activities are also resuming operations. 

However, on the mobility front, winds of change are blowing. As many office-goers return to their workspace, they are shunning public transport or shared mobility due to fear of the spread of corona infections. At the same time, considering that job losses and pay cuts have furthered dampened the buying sentiments, therefore, purchasing a brand new car isn’t a feasible option for many.

In such a scenario, self-drive car rental or car leasing services are emerging as a new favorite and gaining traction with a large number of commuters opting for them. This trend is likely to grow in the near future as the car rental industry in India is expected to reach a target of ₹1000 billion by 2022. 

But, what is driving this growth? Why is there a shift in consumer’s behaviour from owning to leasing or subscribing to a car? Let’s us have a look at a few factors leading this change.   


A pocket-friendly alternative

No doubt, car ownership is considered a status symbol in India.  But, it is a big-ticket investment for many. Whereas renting a car under a leasing or subscription model allows a consumer to own a car by just paying monthly or yearly subscription charges. It is also a hassle-free affair as it comes with no conventional financing method involved such as a down payment or monthly EMI. Plus, registration charges, maintenance costs, and road tax are all included in the subscription plan. With all these added benefits, car subscription or leasing services are proving to be a viable replacement for owning a car while delivering affordable personal mobility. 


Safe and secured 

In the current situation, commuters remain wary of travel. Manydo not want to board an auto or cab as they are unsure who the last passenger was who traveled in the same vehicle. Hygiene is one of the key concerns now. Brands in the car rental segment are therefore going the extra mile to ensure the safety of commuters. Leveraging, AI, and ML, car rental players are offering new propositions from keyless entry systems to real-time updates on vehicle sanitization. The focus is to implement the best practices of hygiene that will offer a safe and comfortable travel experience. This is why many consumers are choosing a leasing or subscription-based model in place of public transport.   


Flexibility it offers 

Further, with shorter lock-in periods and nominal pricing, leasing or subscription models are a convenient option. Especially, for those who like to experiment with cars and the freedom to choose an alternative after a short period of time. Given such an option, consumers can use a car for a month and then switch to another car model. If they do not wish to continue using it, they simply return it. In addition to this, car renting is also suitable for those who are in transferable jobs. As leasing or subscription allows consumers to own a car on a monthly/yearly basis, they have the advantage to clear off dues and return the car whenever they are shifting from one city to another. This also eliminates the need to transport their car during their transition while saving on their transportation cost. 

It is therefore evident that the fundamental reason for this spike in demand for a subscription-based model post lockdown lies in flexibility, pricing, and availability. Additionally, the global car rental market is expected to reach $122.6 billion by 2024, registering CAGR of 7.9% during the forecast period (2019-24).  Now this means, that the car rental sector is fast-growing. In India, we are already witnessing an uptick in demand for car rental services.  Thus, it is undeniable that an entirely new system of mobility that is quicker, more convenient, cost-effective, and commitment-free has already taken its stride.




Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Avis India

Mr Sunil Gupta

Sunil Gupta - Managing Director & Chief Executive Officer Avis India

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