Now ‘Own’ a Car Without the Hassles Associated with it
Kochi: Automobile industry, like other segments, is going through a phase of technological disruption with the evolution of electric vehicles (EVs), autonomous vehicles and the like. The biggest casualty would be the traditional automobile dealership model as automakers the world over are in the process of transforming themselves into mobility and connectivity service providers as well. Leading players like Hyundai Motors and Mahindra & Mahindra have already announced subscription models wherein consumers can ‘buy’ a brand new car directly from the OEMs on a long-term subscription by paying monthly subscription fee for the entire duration of use of the vehicle, and hand it back when they are done with it. Globally, many start-ups – along the lines of Uber and Ola – have also come up with car subscription services as well. The customers here needn’t have to worry about the hassles involved in getting bank loans, managing debt or maintaining the vehicle. Consequently, vehicle sales will plummet as many will opt not to own vehicles.
Automobile dealer Indus Motors has forayed into rent-a-car business, based on the idea of mobility and transportation as a service
These waves of change are visible across Kerala, too. Six months ago, the Kerala-based Indus Motors – one among the largest automobile dealers in the country, especially of Maruti Suzuki, forayed into rent-a-car business in a big way. The brainchild of Afdhel Abdul Wahab, Director of Indus Motors, Indus GO also shares the idea of shared mobility and transportation as a service.
In an exclusive chat with Destination Kerala, Afdhel informed that Indus GO is considering launching a subscription model for purchasing brand new cars. Afdhel feels that a major shift is happening in the mindset of the people wherein they don’t want to hold on to assets, especially cars anymore.
“Owning cars used to be an element of social status. However, the trend is changing which is evident from the decline in car sales in cities like Bengaluru, Delhi, Mumbai and Kochi, among others. People there are adopting other modes of transport which is being leveraged by cab aggregators as well as car rental service companies.
Simply put, it is a sort of I-don’t-want-to-burden-myself-any-further kind of an approach. In India, automobile industry still has enormous potential as the per person penetration of vehicles in the country is still very low. However, given the transformation created by disruptive technologies, we really don’t know what will happen in the next decade or so. It appears that things are going towards shared mobility and optimum utilisation of vehicles, taking into consideration the looming environmental calamity. Hence, it’s important to be adaptive and stay relevant,” he says.
Afdhel’s concept is simple. Why do you want to buy a car when you can subscribe for it, and even earn decent revenue out of it? “For instance, consider a person who wants to use a car only on weekends. He can subscribe a car from me for a monthly fee. Whenever he is not using the car, he can give the vehicle to us for rent-a-car business. I will share a certain per cent of the revenue with him. And, we become sort of partners. Similarly, consider an NRI family which owns a car but is not able to use it for months. Instead of buying, subscription would be an option for them, too. When you buy one, you will be required to pay EMI, which is a liability. And, you have to take care of the maintenance and insurance renewal aspects. In the other option, one needs to just subscribe and we will take care of these things,” he informs.
Is it not contradicting your existing business model? “Yes, some people would say so. However, the whole concept of shared mobility is meant to bring down the car population and the world is moving towards it. We are actually going to where the market wants us to be. We also have to swim with the current,” he says.
Currently, Indus GO provides mobility services all over Kerala with a fleet of around 250 cars. Within a short period, Indus GO has managed to earn positive response from the public. Today, the firm is receiving a major share of its business from Kochi. “Rent-a-car has been a big business in Kerala but remains in the unorganised sector. Nobody has exact data on the number of players in the market. Roughly, there will be thousands of private players operating in the sector. This is the first time someone is doing it in an organised way through the effective utilisation of technology. There is complete transparency as customers can book the vehicle online. We have invested heavily in technology and hence, we developed systems wherein we can locate the driver, monitor his or her driving style on real-time basis and even assess how he/she uses the clutch, whether one is wearing seatbelt and the speed of the vehicle. If anything is found unacceptable or against the law, we have the option to even turn off the vehicle,” says Afdhel.
According to him, Kerala business is a pilot project and Indus GO is a pan-India project. “We have applied for licence in Chennai and Bengaluru. Soon, we will be expanding to other cities as well. Initially, we will start with a fleet of 100 cars each in Chennai and Bengaluru. We are also looking for Venture Capital funding for scaling up,” he says.
That the customer can drop the vehicles at a location of his or her choice makes Indus GO more user-friendly. Now, Afdhel’s plan is to widen the network of pick and drop points in Kerala.
“Currently, the options are limited to 20 locations across the State. Indus Motors has 100 touch points in Kerala and we would like to offer the service across all these locations. This will provide customers an experience almost similar to driving their own cars,” he adds.
Afdhel says the company’s initial research shows that subscription model would surely be an attraction for the first-time car buyers or the second-time buyers within the age group of 18 to 35 years. For the rent-a-car business, majority of our customers are 35-plus. The company has so far invested Rs. 35 crore for the project with the maximum share earmarked for marketing the product. However, Afdhel says, it is too early to comment on the profitability aspect.