Buying a car? Don't! Here is what you should really do, according to Avis India MD & CEO, Sunil Gupta
Idea of renting a car is gaining popularity. Even corporate houses are interested in taking a car on rent rather than buying a car for its officials and other staffers.
Having a car to commute has had the middle class in its thrall for decades now. However, this trend is dying! Thanks to the customised rates and designs introduced by the car making companies, the middle-class quickly started buying a car. This helped boost status and payment in EMIs made things tolerable. However, nowadays, owning a car has become expensive due to rising insurance, maintenance cost, regular repair, etc. So, the idea of renting a car is gaining popularity. Even corporate houses are interested in taking a car on rent rather than buying one for its officials and other staffers. Speaking on the matter, Sunil Gupta, MD & CEO, Avis India clarifies where things really stand in this segment and explain what people, especially millennials, should really know:
See Zee Business Live TV streaming below:
Here are the changes taking place in the car market:
Car on lease option
The millennial mindset is characterized by a decreasing focus on asset ownership and an inclination towards accessing assets when required for unique experiences. For this reason, big-ticket purchases such as homes and cars are taking a backseat for this generation while renting or leasing is becoming the new normal. Speaking on the matter, Sunil Gupta said, "Millennials wish to enjoy the comfort and prestige attached to driving cars but using their savings for a down payment for a car or their salaries for loan EMIs is not a priority anymore. They are early adopters of the sharing economy and therefore renting a chauffeur-drive or a self-drive car has seen an increasing trend over the last couple of years."
Industry growth in self-drive, cars on rent, chauffeur drive space
Sunil Gupta says the global car rental market was valued at approximately $58.26 billion in 2016 and is expected to reach approximately $124.56 billion by 2022, growing at a CAGR of around 13.55% between 2017 and 2022. The Asia Pacific region is one of the fastest-growing regional markets for car rental within the forecast period due to the increasing population coupled with transportation issues in the region.
"Car rental service is very useful in Asian countries like India, Singapore, Japan, China, etc. We have also seen an increase in the business this year with an increase of 40% in car rentals in comparison to the same period last year," Sunil Gupta added.
Reasons for high demand from corporates
Offering exceptional employee-experience is becoming a key focus area for Indian corporates. Providing seamless employee transportation forms a major part of this mandate. As long commutes become common, more and more companies are opting for chauffeur-driven cars or corporate ridesharing options to avoid issues of unreliable public transport and traffic congestion. Companies realize that long commutes are a drain on employee productivity. By reducing commutes for employees, companies can boost employee productivity and morale and retain employees longer.
Chauffeur-drive space gaining attraction
Companies are using chauffeur-drive and ridesharing vehicles for seamless employee transportation. However, chauffeur-driven cars are also becoming more popular outside the corporates space. Users are opting for chauffeur-driven options for airport transfers, weddings, inter-city travel, etc.
Gupta said, "Since we offer vehicles across the economy, premium and luxury cars and economy and luxury vans for all use cases, customers can choose their ride according to their need and preferences. Since chauffeur-drive cars offer the convenience of car-rental combined with the comfort of being driven around rather than driving through congested city traffic with hardly any parking facilities, chauffeur-drive cars at affordable rates are becoming popular".