How to Start a Car Rental Business
Car rentals have been a popular model in the US for numerous years. The impact on the industry during the pandemic was worrying, with rentals being slashed, but since the end of the Covid-19 pandemic, there has been a surge in growth, and the industry is expected to grow significantly as cars become more expensive to run. So now is a great time to learn how to start a car rental business, which we will discuss in this article.
Why Start a Car Rental Business?
There are numerous reasons why you would want to start a car rental business. For one, you can make it easier for people to use a car regularly while you get a regular income. Plus it would be easier to get the customer to return to your business, especially if they had a good experience with you.
And there are ways that you can improve your profitability. A car, for instance, that you rent out for five years for $500 a month, will earn you $30,000 during that time. Then you can sell the car for a reduced price because it is second-hand. Even $5,000 means that one car has earned you $35,000. When selling the car, you might have only earned between $20,000 and $25,000.
In addition, you can earn a subsidiary income. You can get affiliate commissions from insurance, car services, and more.
And you always own the property, therefore if a customer doesn’t pay, you can claim the car back, and then use it again.
And you can also choose between different niches. You can cater to the tourist market, or you can cater to longer-term rental markets.
Car Rental Market Statistics
Here are some of the key statistics that are available for you to help you design and build your successful car rental business.
- The US Market accounts for 37% of the total car rental market in the world.
- The global car rental market could double by 2031, being worth $121.1 billion.
- The luxury car rental market will triple by 2022, seeing an annual growth CAGR of 20%.
- The US car rental market generated $56.3 billion (2022).
- Car rental prices have increased 76% in some areas and 278% in tourist areas.
- More than half of car rental brands service domestic customers.
- Two-million economy-class vehicles are being rented in the USA.
- Private car ownership has dropped by 80% among millennials across the world.
- In 2024, it is expected that there will be three times the demand for long-term vehicle leasing compared to 2022.
- There will be 602 million car renters across the world in 2026 (nearly one in ten people).
How to Start a Car Rental Business
Here are the instructions on how to start a car rental business. These instructions are great for those who are building a business to last.
Step 1 – Choose your Niche
The first thing that you need to decide upon is what niche you’re going to serve. There are numerous types of niches within car rental that you can work within. You could service the general public, offering them an alternative to car ownership offering them a rented car where they don’t have to worry about issues such as servicing, the massive outlay to purchase a vehicle, or other factors.
Alternatively, you could service the corporate clients, offering senior executives a business car. These are normally a perk of being a high-ranking or traveled member of a business. You can charge a good amount for these customers.
Another option is for you to service the tourist market. You can get some good prices for this. But you need to be in a good tourist spot and ensure that you have the best spot.
Step 2 – Choose a Business Name
Now you need to choose a good name for your new car rental business. Choose a name that is unique, relevant to the business, and something that can attract the audience. There are lots of considerations for this and it will depend on the niche that you’re targeting.
There are lots of ways that you can come up with a business name, but it is highly recommended to use a business name generator for you to make the process quicker. You also need to ensure that your business name is unique. So check on Google, and social media and do a business name search.
Step 3 – Register Your Business
The next step is to register your business. You need to do a state business register. You will want to do this in the states where you want to operate in. There is going to be a cost to this and it can take some time. Be sure that you also get the permits that you need to run the business. This will depend on the state that you operate in.
At the same time, you should register your business domain name, social media accounts, and any merchant sites that you would like to run.
Step 4 – Build a Website
Now you need to build a website. A website can take between one day and three months to build. It highly depends on the platform that you would like to use on how long it takes. You can use a platform like WordPress, Shopify, Wix or Squarespace. These platforms allow you to build a strong platform that can take rental instructions online, freeing up your time.
You will need to ensure that you build a website with good SEO. You might need an SEO app/plugin or consultant to help you.
Step 5 – Marketing
Now you need to market your new car rental business. Remember that marketing is about
reaching the right audience and using the explanation for why they should rent a car. It shouldn’t be that challenging. There are numerous benefits. You should be using lots of different channels, like blogging, social media, and email to help you reach a wider audience.
Blogging is very important. Those that blog will generate 70% more business than those that don’t.
Final Word: How to Start a Car Rental Business
If you want to know how to start a car rental business, then the above steps will help you. The market is prime for opportunities across the world, but especially in the developed world like the USA, UK, and EU. Not only can you rely on tourists, but you can also have long-term lease contracts.