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Two Americans ditch MBAs, start car rental biz in India

business Updated: Jan 16, 2015 11:30 IST
Manu P Toms
Manu P Toms
Hindustan Times
Car Rental

We know of Indians founding dozens of startups in the Silicon Valley. We now have the opposite: Greg Moran and David Back left their MBA courses midway at the University of Southern California and Cambridge to Bangalore.​

Zoomcar, their company, is taking on multinationals such as world No. 2 Avis, which is present in 175 countries, and ORIX Auto Infrastructure Services, a unit of Japan’s ORIX Corp. While these giants focus substantially on corporate leasing of fleets and/or chauffeur driven pick-ups, Zoomcar positions itself exclusively as a self-drive car service. Global brand Hertz operates in India through a deal with ORIX.

Launched in February 2013, Zoomcar entered three cities including Pune and Delhi, and has expanded its fleet to 500 cars. It has so far raised $11 million (Rs 66 crore) from investors including former US treasury secretary Larry Summers and former Infosys board member Mohandas Pai.

Along the way, Zoom forged a tie-up with Ford for a car-sharing programme, built a strong technology backbone and is now planning to double its fleet size to 1,000 in the next four months. It is also looking to drive into new cities such as Chennai and Hyderabad.

“The demand is so huge that we turned away customers for 95 weeks in a row,” co-founder Back told HT.

And placing his bets on the untapped domestic self-driven car rental market, Back is looking to grow his fleet size to 50,000 cars in the lines of the $3.5-billion China Auto Rental (CAR), founded seven years ago.

Zoomcar’s rivals also include homegrown that has a self-drive service brand called Myles. Local player Udrive offers both chauffeur-driven cars and self-drives.

Zoomcar is aiming to rely on technology to stand out in a business in which it is something of a late starter. It is largely modelled on US-based Zipcar. Set up in 2000, Zipcar has a “hyper-local” model backed by internet and mobile apps. It forayed into UK, Canada, Spain, France and Austria before being bought over by Avis Budget Group for $500 million.

While emerging as a cool new-age venture in itself, Zipcar has also inspired a number of clones across the developing world. “We are a mutant now. We may become a completely new species altogether,” Back said, signalling that Zoomcar may have to tweak its business model. The aim appears to be to ride venture funds chasing disruptive technology-driven businesses, which often offer growth-driven valuations.

“When Greg and I were talking about this opportunity, e-Hi, a Zipcar mutant in China raised $215 million, it was a big trigger for us,” he added.

Zazcar forayed into Brazil around the same time that Zoomcar was set up in India. Socar in Korea and Carrot in Mexico were launched before that.

Self-driven car rentals are said to have the potential to offer freedom of mobility to many Indians who may find wholesale car purchase unaffordable or need more flexible services. Zoomcar’s fleet ranges from Ford Figo to BMW 3 Series and includes sedans, SUVs and electric cars. It follows a “hyper-local” model in over 75 locations across Bangalore, Pune, and Gurgaon. In the NCR, it started with Gurgaon and is now slowly expanding to other parts.

“If we reach a fleet size of 25,000, it will be a success,” Back said.