How to start a car rental business?

by GK August 05, 2019
Steps to start a car rental business

After ride-sharing business ported to the internet, we saw businesses like Uber and Lyft coming to reality. It was a time when not just ride-sharing, but a whole lot of businesses were transitioning to the online sphere.

The concept of eCommerce was evolving, and it was not just online shopping and online taxi services who were making their way. Of course, the brands who had a hold on their offline market took did transit to the online media. People were now requesting on-demand services online, hiring freelancers online, and selling their goods online, that too directly to the seekers. I am talking about the online marketplace model.

The eCommerce marketplace model gave a lot of opportunities to the entrepreneurs:

  • Opportunity to sell without having an inventory of own.
  • Opportunity to earn without investing in the supply chain.
  • Opportunity to earn by just connecting the providers to the seekers.

But most importantly, the online marketplace model gave birth to concept peer-to-peer connections. A whole new model that allowed a business like Airbnb to let anyone put their houses on rent and make money. I am talking about a concept that allowed-

  • Consumers to find cheaper occupancies than traditional hotel aggregators.
  • Travelers to find homestays in the remote locations where there are no hotels.
  • Airbnb to become largest accommodation provider without having a single property of its own.
  • Uber to become largest taxi and ride-sharing provider without having a single-vehicle of its own.

Car rental business startup guide  

Car rental marketplace is yet another extension of the traditional car rental business model. It uses the same peer-to-peer concept to connect the business owners with their customers. In fact, the car rental business itself is a $125-160 billion market, which is growing at CAGR of 12.5%.

What’s more impressive is that the global market is also on the boom. Europe and North America already own the biggest share of this pie, while the market in the Asia Pacific is also growing at a rate of 10% annually.

Just think of the scenario where these numbers combine with the stats of mobile commerce. When these two massive markets combine, you can’t expect your ROIs to stay any less appealing. A simple idea of offering a car rental app can let you leverage the combined benefits of car rental startup and mobile commerce. Keep reading because we are going to discuss this niche in detail and comprehend every aspect of how to start a car rental business.

P2P car rental marketplace business model

P2P car rental marketplace works the same as vacation rental marketplaces such as Airbnb. There they connect the owners of the homestays with the consumers who want to stay. Similarly, a car rental business plan connects the vehicle owners with the customers who want to rent them. 

It’s different from starting a car rental business in the B2C model. The B2C car rental businesses offer their services directly to the consumers. Whereas, the P2P or so-called C2C car rental platforms get in terms with the car owners and ask them to provide services to the consumers. The owners and the consumers interact directly to rent the car for a predefined period.

The workflow goes something like this:

  1. Listing: Car owners list their cars on the marketplace with several details.
  2. Verification: Marketplace verifies the car details and conducts an inspection.
  3. Approval: Marketplace approves/declines the listing after verification results.
  4. Search: Customers search for a car under specified requirements.
  5. Matching: Car lists matching the requirements get populated on the customer screen.
  6. Booking: Customer checks out the car details and books a car from the listing.
  7. Confirmation: Car owner gets the notification for the booking request and accepts it.
  8. Delivery: Customer collects the car at the specified venue and time.
  9. Trip: Customer completes the trip.
  10. Return: Customer returns the car at a specified time and venue.
  11. Inspection: Owner/marketplace inspects the car for damages and confirms the end of the trip.

How P2P car rental businesses make money?

The basic revenue generation model includes the commissions earned from the car owners. However, the business may further sophisticate the model to increase revenue. For example, this is how Turo, a popular P2P car rental app, makes money:

How Turo Car Rentals Make MoneyTuro takes a fixed commission cut of the total value of the transactions from the car owners. Besides, it also takes extra charges from the customers to offer value-added services like car delivery, additional mileage, and protection plans.

Features of a P2P car rental marketplace

We are going to comprehend the basic set of required features for a P2P car rental platform. We’ve divided features into three categories based on the key users: Features for the marketplace admin; Features for the car owners; Features for the customers.

Features for car owners

  • Registration and login: Register a user account and provide details for verification.
  • Car listing system: List a car and provide the required details.
  • Booking system: Receive booking request, View customer detail, View trip details, chat with the customer, Accept/Reject the request.
  • Availability: Update car availability, hide listing for a specific period, etc.
  • Payment system: Admin to owner payment system includes earnings analytics and payouts of the earnings.
  • Navigation system: Track a trip/vehicle in real-time using GPS.
  • Reviews and ratings: Review a trip, rate a customer.

Features for customers

  • Registration: Sign up for a customer account.
  • Personal profile: Update personal details and public profile.
  • Search: Access search portal and search cars for renting.
  • Filters: Apply different filter to refine the search results as per requirements.
  • Dashboard and booking system: Select a listing and request for booking. Also, cancel a booking on the requirement.
  • Navigation system: Use the navigation system to discover pick up location and assistance during the trip.
  • Chat: Chat with car owners.
  • Reviews and rating: Review a trip and rate a car listing as per trip experiences.

Features for Marketplace Admin

  • Site administration: Manage site and all other setups on the site.
  • User management: Analytics and management of the customers on the app/site.
  • Owner management: Analytics and management for all the car owners.
  • Listing management: Analytics and management for all the listings by the owners.
  • Revenue channels: Manage different revenue channels
  • Commission management: Analytics with features to manage commissions and payouts.
  • Block/Unblock: Ban users/owners from the marketplace
  • Chat/communication: Admin-Owners and customers-admin communication through chat or email.

Essential APIs and SDKs for the application

  • Map API for navigation
  • Payment Gateways
  • Push notifications tool
  • Email Marketing tool
  • CRM tool API for analytics
  • Content Delivery Network API

Challenges for car rental marketplace businesses

Car rental is not an easy business. Especially when it’s P2p, the challenges just multiply with the increase in the ROIs. Here are a few of the biggest challenges for starting a car rental business.

Safety concerns

It’s risky to let a stranger take your car on rent. Car owners are generally afraid of giving out their cars. You never know someone might just elope with your car. Apart from this, customers might not handle the car properly and create problems like meeting with an accident, legal actions, damage the car, tamper the accessories, etc.

To tackle these challenges different car rental services implement different safety assurance to the car owners:

  • Document and identity verification of the customers
  • Only experienced drivers are allowed to rent a car
  • Insurance from the marketplace against any damage
  • Compensation from the customers on damages
  • Refundable security deposits from the customers
  • Add certain customers with bad history to the “Do Not Rent” list

Supply chain and Chicken-egg problem

Car owners would sign up only on popular marketplaces with a good number of customers using their services. However, you can’t expect to get new customers until you have some cars listed. This creates a loop with chicken and egg problem where car owners don’t sign up if there are no customers, and customers do not sign up until there are cars to rent.

To tack this, car rental marketplaces work on developing both ends at the same time. At one end, they run lucrative promotions for the customers, while they also run dedicated campaigns for car owners. Customers get attracted by factors like free first ride and discount coupons. Whereas they entice car owners with better and lucrative incentives than other competitors.

This brings us to the next challenge.

Tough Competition

It’s a tough market to acquire. There are many popular names already ruling the sphere. You need an extremely unique and lucrative car rental business plan to acquire the customers. The best way to tackle this is by undertaking comprehensive competition research and coming up with fresh ideas.

For example, Turo offers equally great value to both customers and owners. It not only allows a customer to choose from a wide variety of cars but also lets owners earn from their cars instead of just keeping them in the garage. 

Another player that has gained a substantial market is Car2Go. Its USP is that customers need not pick up or drop a car at a specific point. Instead, they can leave the car anywhere at a legal parking spot after completing the trip. Similarly, other players offer the same service with different benefits such as free parking, Refund for refueling, no surge charges, no toll tax, etc.

How to build a P2P car rental marketplace?

Setting up a car rental business is a tough job, but not building an app for it. There were days when you have to spend not less than $50,000 to develop a car rental website. Considering cost as low as $50/hour, a car rental solution suite (website and mobile applications) will take at least 550 hours of development. So, if you also want mobile apps for Android and iOS then the cost would easily reach up to $100,000. This cost does not include the expenses required is purchasing different APIs and SDKs mentioned above in the article. 

Is there any cost-effective way to build a car rental marketplace?

Yes, of course. This is the era of clone scripts and readymade software solutions. Like every popular business idea, Shopygen can help you with this too.

You can simply use our turnkey rental marketplace software and set up your P2P car rental marketplace in just a few hours. The best part is, you don’t need to spend a single minute on coding anything. Everything is ready-made and coded by our developers. You just have to install the script on your web host and set up the site using a graphical user interface. The package comes with the following benefits:

  • Open-source code
  • Self-hosted
  • Full website Script
  • Android mobile app
  • iOS mobile app
  • Free Installation
  • Free Technical Support
  • Free Upgrades
  • One-time payment/no recurring fee

This script is capable of building any kind of peer-to-peer rental marketplaces. Not just setting up a car rental business, but you can use the same script to build other rental marketplaces such as homestays rental, boat rentals, hardware and equipment rentals, etc.

Trends to look out for starting a car rental business in 2019

The car rental marketplace is evolving and so are the revenue channels. What used to be a wonder a few years ago is now a common sight on the internet. If you intend on setting up a car rental business in 2019, you must consider the latest trends and happenings in the market. It doesn’t matter if you want to develop your solutions from scratch or use a turnkey rental marketplace software, make sure you have everything according to the latest trends in the market:

Flexible pick up and drop:

Traditionally customer either have to pick up the cars from a specified location or meet a person to collect the keys. It’s indeed a way to ensure the safety of the cars by giving the keys in person, but not according to the trends.

There are businesses which are using keyless access to eliminate pick up points or in-person delivery. The customer can now see a car’s location on the map. They can arrive at the car’s location and simply unlock a car by using a passcode from the smartphone app.

This allows owners to avoid delivery hassles, rent their cars more frequently, and make better money. On the other hand, customers find it more convenient and time-efficient to pick a car from the nearest parked location.


The advancement in telematics technology is a big breakthrough to the car rental business. It is being used to automate almost every aspect of the car rentals through long-distance data transmission. How?

There could be an array of application for telematics in the car rental marketplace industry. For instance, it can read fuel consumption with precise accuracy, which can be used by the marketplace to calculate the fuel charges correctly. Moreover, some special hardware can be utilized to report odometer reading and also any physical damage to the car. Ultimately, eliminating the need for manual inspection.

Electronic Vehicles

One of the major reasons for the boost in the vehicle rental market is the wide adoption of electronic vehicles. Unlike oil-run vehicles, EVs are easier to manage. They are perfect for automated marketplaces as it is not only easier to implement a keyless access system but also the telematics works well with them.

EVs would soon become a center of attraction, and in fact, governments in many countries are offering lucrative benefits to the businesses coming up with a business-related to EVs.

  • Cost-effective
  • Good for the environment
  • Businesses get tax benefits
  • No hassle of fuel theft

Did you find it?

Did you find what you are looking for? Any unique idea to start your car, bike, home, or even boat rental marketplace?

It’s time to pitch your idea to the investors. Define your core idea and identify your target audience, their pain points, and prepare a solution for that pain. We have got the development part covered for you.

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