How To Start A Car Rental Company In India?

. 7 min read
How To Start A Car Rental Company In India?

Table of Contents:

1. Starting A Rental Car Business

2. Car Rental Business Plan

3. Steps In Starting A Rental Car Business In India.

4. Car Rental Business Plan- Costings

5. Tips To Run A Car Rental Company In India

1. Starting A Rental Car Business

As India makes enormous strides, one can innumerable new business ideas thanks to the advancement of technology and science. Remember when you had to commute to work in crowded buses and needed to hail a cab or a rickshaw to get to the nearest grocery store in the middle of the summer? Even though the number of people who own cars is increasing, public transit modes such as buses and cars are declining as more people opt to hire a car for a more convenient and secure journey.

One of the best small business ideas is Starting A Rental Car Business. Both in small towns or metropolises, people want to travel in comfort and luxury. Simply book a taxi online using your cell phone, and you'll be sitting in a comfortable air-conditioned car in minutes, away from the traffic and heat of the outside world.

2. Car Rental Business Plan

In India, these digital taxi services are becoming more common. Such car-rental businesses and cabs cater to everyone, from the middle-class to the super-rich. Apart from the well-known Uber and Ola cabs, only a few Audis and Limos are sold to the incredibly wealthy by luxury car rental companies. It is the best business to start.

First, you must explore the business model, as car rental companies are undergoing a transition that will continue to develop over time. There are basically two business models for car hire: regular rental and contract rental. Customers can hire your car on a daily basis. Travellers, business managers, and those with vehicle problems will be your main customers in this form of car rental business plan. Clients in the second category will rent your vehicle for a certain number of counts. In this scenario, the target clients could include businesses, people celebrating marriages, anniversaries, and other important events. The type of car or vehicle you buy will be determined by your business models and target customers.

What is a car rental agency, exactly? A car hiring service is a company that rents cars for limited periods, from a few minutes to several days. They have a number of locations where customers may take and return rental vehicles, as well as online platforms that allow for online bookings with prepayment options. Auto rental companies provide people with vehicles for a limited time. Tourists in a place who have their personal cars that have been damaged; you'll need specific instructions on how to start an exotic car rental business if you have a new business idea.

3. Steps In Starting A Rental Car Business In India.

In today’s India, car hiring is a dynamic industry. Even so, knowing what steps to take to maximise the chances of success before developing an official website can be highly beneficial and fruitful.

Step 1: Conduct a thorough Review and carefully Consider the various Options Available

Good study, proper preparation, and far-sightedness can be extremely beneficial to reduce the dangers. You have to study the resources you require, as well as the approvals and permits you will need, the business dynamics to focus on, as well as the challenges your rivals will face in this industry. You have to do extensive research on most of the available car hire options and make an effort to learn with the experience.

Step 2: Choose a Business Strategy for Car Rentals

Following a detailed review, you’ll have to decide what kind of rental business you need to run. Clients who borrow cars on a contractual basis do so for a fixed period, whereas daily hire clients borrow cars for a shorter period. You'll have to decide whether to partner with a major or go it alone, like Ola and Uber, as well as whether to go online and start operating with an online platform or both.

sign with arrow to rent a car service at airport for passenger who want a car for travel

Step 3: Establish Your Firm

The next crucial move is to begin growing your company. You'll have to build up your taxi fleet. The most crucial decision would be whether or not to buy anything of your cars or lease them for a specific period of time. Your next task will be to keep the cars in good working order and hire experienced drivers.

The control of daily activities is also crucial. Previously, it was popular to keep notes and activity books. Although this method could function in the short term, the disadvantages of a scripted approach would make the company inefficient. In order to be competitive in the twenty-first century, an advanced management solution and a responsive website are needed.

Step 4: Create an account for your business as a car rental company

So as a public entity, the company must be licenced in India. This could be accomplished by incorporating it as a single owner, limited liability company, or private company. This action also entails the following: establishing contractual contracts between aggregators demanding registration for taxes, like GST registration on car rental company providers, and filing for a patent for your name.

Step 5: Register with the Internal Revenue Service

You must register your business with the appropriate tax authorities at both the state and national levels. Certain taxes can be paid by the company as an employee. Sometimes, It would be necessary to deduct tax from their earnings, which you must remit to the state tax authority if you hire employees. Otherwise, it will be considered tax evasion. Of course, this has legal ramifications.

Step 6: Create a company account

Your business must have its own bank account. If you already have a personal bank account you will have to get a company account, with a new business account to deposit all of your earnings. You will also have to handle all of the company’s financial transactions. This makes you more accountable. Obtaining bank loans would be simpler for you all when necessary. Having a bank account also makes planning the accounting for the accountant's records at the store much easier.

Step 7: Fill out the insurance questionnaire

Finally, the most important step in launching a car rental business is to apply for and obtain insurance.

Operating a car rental company without adequate and proper insurance is extremely risky. In the event of an accident, your liability could force you to sell not only your business but also your other properties. Insurance may appear to be an additional expense, but it is still recommended that all vehicles be fully insured. You will sell the insurance to your customers in addition to your own insurance premium for leasing your car. In other words, you have the choice of providing car rental with or without protection. Collision damage waiver, additional liability insurance, personal injury insurance, and personal belongings coverage were all standard coach rental insurance policies.

4. Car Rental Business Plan- Costings

Employee wages, a fleet of vehicles, an office, computers, printers, high-speed internet, membership fees, company and automobile insurance, vehicle service tools, a closed-circuit camera system, and marketing efforts are all needed.

Man pushing a start button with the word rent

5. Tips To Run A Car Rental Company In India

Wages and pensions for employees, utilities, benefits, adding new vehicles to the fleet, fleet repairs, office/parking lot rental, high-speed Internet, marketing, and web creation are all recurring costs. The lowest-paid employees will be paid between Rs. 592.76 and Rs. 889.15 per hour. A year's salary for an on-site mechanic should be between Rs. 2593342.50 and Rs. 5186685.

You should expect to pay a marketing professional between Rs. 2222865 and Rs. 4816207.50 per year if you recruit one. A web designer and an accountant are also paid at the same time. Both your business and your vehicles need insurance coverage. This is a monthly expenditure that should be budgeted for between Rs. 37047.75 and Rs. 74095.50.


You will need a couple of employees to start a car rental company. It would be beneficial to have someone answer the phone to take reservations and answer questions. Following the steps outlined above, anyone can easily start a car rental company. At some point, the company would need the services of a marketing expert, an accountant, and an administrator. But, with a lot of hard work and dedication, the company will reach new heights and make long-term profits.

Also read:

1) How to Start a Car Detailing Business?
2) Start a car cleaning business and make handsome profits!
3) Where Do the Best Business Ideas Come From?
4) Best Career Opportunities In 2020

5) OkCredit: All you need to know about OkCredit & how it works.

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Q. How much does it cost to start a car rental business?

Ans. In general, renting a car is a pricey business to start. Only one or two vehicles can cost more than Rs. 37 lakhs and a mid-to-large business can cost anything from Rs. 3700 lakhs to Rs. 150 million. Business registration and licenses are most important.

Q. How much do car rental owners make?

Ans. If you have a good spot, a diverse fleet of vehicles, and affordable rates, your car rental company will make a lot of money. In the first couple of years, you could earn Rs.3700000 to Rs.7410000. If you keep your company, you'll eventually hit the mid-six figure mark.

Q. Can you run a car dealership from home?

Ans. Wholesale dealers are not required to get a commercial office or ‘car lot’ in order to operate their business. Some wholesalers collaborate with a retail partner.