6 Steps to Starting an Online Car Rental Business

Since the success of Uber, the market has become aware of the fact that porting the transportation industry in an online environment is a very lucrative idea. This is not only about the availability of online taxi services to passengers but also about the massive growth of opportunities for a single business entity due to the accessible nature of the internet and smartphones. Two decades ago, no one could have imagined that a US-based taxi company (Uber) would operate successfully in more than 190 countries.

Another part of the transportation industry is car rental. A business, like a taxi service, was in the offline market before online car rental became a thing Uber’s success has inspired dozens of inventors to port the traditional car rental business online, and it’s been a great success so far.

According to a report by Allied Market Research, the overall global car rental market was বড় 79,648 million in 2015 alone. From 2016-2022, with a CAGR of over 11.6%, this will exceed $ 164,335 million by 2022.

It’s huge!

Honestly, online competitors share a significant proportion of this market value, but most of this segment is still waiting for online options to explore. By 2020, online car rental will be prominent in only a few regions of North America, Europe, Asia-Pacific, and LAMEA. Specifically, more than a dozen online transportation companies are sharing this huge market value, with a few working in online car rental niches.

The online car rental market is still in its infancy and there are more than enough opportunities for innovative business models. If you think you can crack the code to get a share from this billion-dollar pie, then this article will guide you through the basic steps to do so.

Is this niche right for you?

Renting a car is a complex business concept. This is not something you can manage from your garage. A simple systematic guide on how to start a car rental business is not enough to enter this market. You need some pre-requisite skills, knowledge of traditional markets, potential to grow your target market and many B2B introductions.

For example, the choice of car in your fleet. This is a clever decision, as there is no demand for all types of vehicles in all other regions. Depending on the area of ​​your operation, you will need a variety of vehicles to deal with the exact pain points. Open Jeep Wranglers can get good rents, including adventure markets in beach towns and tropical regions, while people prefer luxury cars to business cities or romantic destinations. The locals have a need for different types of vehicles for daily commute, where tourists can look for a completely different part of the vehicle.

This is about your knowledge of traditional markets in the target region, which you need to carefully analyze before you can port to an online platform. This is a segment where consumer behavior may change when moving from traditional to online options, but not the actual demand. If there is no demand for car rental in the conventional model market, then it is more likely that there will not be much in the online market in the same market. It’s simple math.

If you think you have enough experience to understand the complex nature and how to use it to your advantage, you can follow the steps below to jump directly into the online car rental market.

Step 1 – Plan your business

At first glance, this may seem like a simple step you can take in every other guide. However, this is not a generic but the most important step for any type of enterprise. You need to create and document a clear roadmap, which will not only help you plan your strategies carefully but will ultimately help you track your progress.

  • Target Market: Analyze and identify your target market with all the opportunities and studies of current consumer behavior. If you are going to make a difference, you must know your target market form from the inside out.
  • Branding: Plan how you are going to brand yourself as a trusted entity in the target market: how long it will take to plan, launch your business, research the competition, and formulate your marketing strategies.
  • Cost: Last but not least, you need to analyze your financial balance sheet. Costs for upward, technology, infrastructure development, vehicles, employee salaries, B2B services, overhead, maintenance, and profit margins in the near future from venture capital.

Step 2 – Select a business model

This step itself comes under the plan. However, since this is extremely important, we are discussing it in a dedicated section. Car rental in the traditional market consists of simple business models: go to a car rental office, complete the paperwork, deposit some security amount, take a car, complete your trip and make the final payment when returning it. However, a single business structure cannot run the entire online car rental business. Let’s examine it in detail:

Business Model: Currently, the two main models directly manage the entire online car rental market for consumers:

  • Inventory Model (B2C): The car rental company arranges its own fleet of cars and leases directly to customers under its brand. The company may jump into certain agreements with individuals or businesses to purchase its fleet or supply fleet. Still, customers see the brand as a face and contact at the same time for any kind of support.
  • Marketplace Model (C2C): Car rental companies do not operate their own fleet but allow individuals and other businesses to offer their vehicles on their platforms. Both the customer and the car owner are customers in the rental market. Just like Airbnb. The platform serves as a means of communication between car owners and customers. Here, car owners are responsible for the maintenance of their vehicle, providing some form of insurance or loss protection to encourage car owners to join the platform, excluding the marketplace.

Rental models: Online car rental companies use a hybrid of different rental models. It also depends on the business model, as explained in the section above. The companies can give-

  • Long term rent: Customers take the car for a long time. Contracts are usually for a week, a month or more. It can also be renewed as per demand. It’s more like a subscription.
  • Short Term Rent: This is similar to daily rent but under a short term contract. For example, take a car for a day or two and return it on time.
  • Trip fare: The fare does not depend on the time but on a trip. They work like cabs. Customers can take the car for a few hours or even days, depending on the nature of the trip.

Charge model: The charge may depend on the nature of the business model and the rental model. You can choose to charge based on the distance traveled, the duration of the fare, or a combination of both. In addition, it is important to consider the model you are going to adopt for fuel. Also, car owners’ maintenance and commission costs are important when determining your price point.

Step 3 – Complete all legal formalities

Car rental is not purely online. The physical environment will have most of your resources and business activities. That’s why it’s important to cover your business from all sides by completing every major legal formality.

Legal Entity: Form a legal entity by registering your company under an appropriate law. For example, LLC, Pvt. Ltd., Inc. etc. Registration will help you to easily get financial investment and stay loyal.

Tax Files: Register your business for all types of state and federal tax structures. Depending on your area of ​​operation, you may need to apply for VAT, EIN or GST numbers

Permits and licenses: It is important to comply with local business and civil laws. Depending on the region, you may need to apply for different permits and licenses to work. Failure to do so may result in closure of your business.

Service Agreement: Depending on your business model, you will work with different B2B services and individuals. It is important to formalize these relationships by entering into service-level agreements. Prepare legal documentation for everything from vehicle leases to property, maintenance services, insurance, or any seller service.

# Tip: Hire a business lawyer to get expert help and advice through the whole process. This is a non-negotiable part of your business activities and you should not do any exercise in this regard.

Step 4 – Set up the financial aspects

Money is the building block of any business activity. It is essential that you keep your personal and business finances separate In addition, you should apply for appropriate insurance and protection plans to protect your business.

Business Account: Get a business bank account to manage all transactions. Separate your personal assets from brand assets. In addition to easy access to various business credit systems, having a business account will make tax filing easier.

Business Insurance: As with any knowledgeable person, it is important that you protect your assets through the right insurance plan. This may seem like an overhead expense, but it is not. Insurance is a mandatory requirement in most areas. There are several levels of business insurance plans and you may need to buy most of them. Such as car insurance, employee health insurance etc.

# Tip: It is wise to consult an experienced financial advisor to help you with this step.

Step 5 – Establish your online presence

Since you are about to start an online car rental business, you need to build your online presence. Depending on your business model, you will need different features and solutions for your overall platform.

For example, to work in the Marketplace model, you will need Rental Marketplace software, which will provide useful features for customers, car owners, administrators, commission management, payouts and others. In addition, car owners will need your customized interface to sign up for your car rental in your marketplace.

Fortunately, turnkey solutions are available in the market for both rental market models and inventory-based models. Depending on your business model, you can search for such solutions using keywords like Airbnb Clone Script, Uber Clone Script, Turro Clone Script, B2C Rental Script, C2C Rental Script, etc. These solutions come with built-in websites and mobile applications For your needs.

Step 6 – Continuous marketing and maintenance

Once you launch your website and a mobile application, everything else is about sophisticated marketing and brand promotion to gain market share. Suggest that marketing strategies vary according to your business model. For example, for the inventory model you need to market to customers, while the marketplace model demands an equal level of representation for both the customer and the car owner. If necessary, seek the help of marketing and SEO experts and formulate your strategy.


Jessica Bruce is a professional blogger, guest writer, influential and an ecommerce expert. Currently associated with ShopyGen as a content marketing strategist. He also reports on the latest developments and trends in the ecommerce industry.

Follow me on Twitter Jessicabruc (https://twitter.com/Jessicabruc)

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