The car rental market in India is expected to be worth $1.5 billion by 2023, according to Statista, a German market research company. Luxury-mobility startup Hype says that it has achieved 10 times growth in just two years of its operations. The Bengaluru-based company plans to reach 25 cities by 2020 and also enter the yacht and private-jet rental space in the coming years.
Raghav Belavadi, founder and CEO, Hype, spoke to Fortune India about the luxury car rental space and why renting makes more sense during an economic slowdown. Edited excerpts:
Globally, the luxury car market is facing headwinds. How much has the impact been in India?
Yes, globally the luxury car market may be degrading. But not the rental market. Because if you don’t have the money, you can’t buy expensive cars. So, when there is a downturn, it’s actually good for us because people may stop buying, but the desire to drive a luxury car won’t die. So, they would still somehow want to drive the car. This is only in luxury cars. You see that people who buy luxury cars enjoy a certain kind of financial status, for the decision to buy may not affect them that much. The ones who are migrating to a slightly aspirational value, they would look for something like a premium economy kind of stuff. They will continue to rent. Their decision to buy might be postponed. It comes back to our core premise: Why buy when you can rent? So, when the economy is not doing well, it really doesn’t make much of a difference to the luxury industry.
You mean the luxury industry or the luxury rental industry?
I mean the whole industry. Luxury hotels and the use of luxury cars per say don’t suffer a big hit. I am not sure what part of the market takes the biggest hit. Like real estate and investment suffer for the long term. But rental business is short-term and based on your needs. So, I firmly believe that it doesn’t get affected that much. In fact it should actually grow. When people don’t have the money to buy cars, renting and subscription is a better option, and makes more sense.
Who is your core customer?
Our typical target audience is people who have disposable incomes. And have high aspiration. For example someone who wants to take out their partner on a special occasion or wants to give their family a weekend out. Or simply someone who has a deep desire of driving a super-luxury car. All they need is a reason and an excuse. Because luxury is all about flaunting, bragging and it given them an identity. So, the economy is going through a slowdown, it doesn’t affect their ambitions. What we look for in the market is not million customers but a few thousands who appreciate the experience and will diligently spread word about it to other people.
What are your most sought-after cars?
People mostly like Mercedes-Benz and BMW. And then people also like Jaguar. I think people go for cars which have a legendary lineage like Mercedes. It is probably the first innovator of a luxury car in the market. It has this huge brand value globally. Brands like Lamborghini which are very expensive have few takers. We rent it to customers for around ₹2 lakh per day. The good thing is if someone is looking for this segment, we’re the only one who gives all these cars. The cheapest car that we have would be a BMW or a Mercedes in the beginning segment which costs around ₹6,000 per day for self-drive and our range goes up to Ferrari which costs about ₹3.8 lakhs a day.
How is your company different from other self-drive providers like Zoomcar and Revv?
When we started, there was no self-drive. We started it as a chauffeur-driven. So, our vendors, back then, were not ready to give such expensive cars to somebody for self-drive. So, we had to really convince them. It was hard to do that. In Bengaluru, people are keen to take chances. So, one of the vendors gave us two cars to try it out. And we did very well which tempted him to push a few more cars. So, we managed through profiling. Without interviews we do not give out our cars unless our team speaks to you and understands why you need it. Everything is recorded. It goes through a lot of background checks and restrictions. We’re disrupting a market and when you do that, you’re at a forefront to set an example. Only the word ‘driving’ is same for us and other companies otherwise everything else is different. We are more in the want zone and not in the need zone.