Table of Contents

The concept of car rental dates back to 1904. There was a bicycle store in Minneapolis that offered cars for rent. The German company Sixt followed the pursuit and started with only three cars. Soon, the market started growing, and by 1950, the car rental market had some well-established names in different parts of the world, including the Saunders System and Avis. So, the car rental industry is almost a century old and looking at the present scenario. It won’t be wrong to say that it underwent a spectacular evolution. 

The good news is that this industry has kept up its glory and continues to grow even today, only a little differently. Today, we have car rental mobile applications that are helping people generate huge profits by offering tailored services to passengers for their convenience. You just need to download one, set up an account and book a ride. The rest is taken care of by the app. However, it would be wise to remember that the market has grown, and so has the competition. 

So before jumping on the bandwagon, a person first needs to study the market and think through things like the challenges, the technologies, revenue models, features and so on. This article is your comprehensive guide to car rental app development. We have tried to cover almost all the crucial factors which play a decisive role in the eventual success of your app and your business. Let’s get started. First things first, we take a quick look at the market forecasts that will help you to understand the prospect of this industry.

Market Statistics

    • The survey reports of Research and Market, one of the world’s largest market research stores, predict that the global car rental industry is projected to reach $120 billion by 2025 with a CAGR of 6.1%. Research and the Market assume that the return of global tourism and an increase in international travel is going to be the major drivers of this growth.
    • The research report from Allied Market Research forecasts that by 2027, the car rental industry is estimated to reach $214.04 billion, registering a CAGR of 10.7%.

Global Car Rental Market

Source: Allied Market Research

    • The reports from Statista project that the number of users in the car rental industry can be expected to reach 604.2 million users by 2026. It also predicts that 71% of the total revenue generated in this segment will be through online services.

The numbers send the message loud and clear that car rental software can be a profitable investment, given one does it the right way. Moving forward, we will now look at the crucial factors that contribute to the building of a robust, secure and productive car rental application, starting with the different types of car rental applications.

» Working Models of Car Renting Apps

The first one is deciding on the right type of working model. Every car rental app works on a specific model. For instance, Uber permits its users to book rides and pay the fare accordingly, while Zipcar allows customers have the car all to them by hiring for days or by hours. You need to decide on a model that looks promising to you. Enlisted below are the most common working models of car rental applications.

    1. Local Car Rental

This model is the most common one. It allows passengers to hire or book cabs anytime. It mostly works as a local taxi service only that here you get the travel details, driver details and payment information beforehand. Some rental apps based on this model also offer advance booking services, mostly a day ago or a few hours before the trip. Most local car rental apps have a review and rating system where both passengers and drivers can rate each other. Uber and Lyft are the best examples and also the most successful local car rental apps.

    1. Self-Driven Model

Self-driven is the next popular car rental, working model. In this, people hire cars from rental companies based on their personal requirements. It is beneficial for those who love to drive but don’t want the headache and expenses of car maintenance. People who have a driving license but don’t have their own car yet can also benefit from it. It comes in handy for car owners who need a temporary replacement for the unavailability of their own car for any reason. Europcar and Rentalcars are the leading examples of this model.

    1. Peer-to-Peer Car Sharing

This car rental model is almost similar to the above one except that instead of renting cars from companies, people rent cars from private owners. A peer-to-peer sharing app features a vibrant community of local car owners from where people can pick any car from an exclusive collection of cars. Customers choose their destination, pick a host and a car, agree on the terms and conditions and voila. While the hosts get to earn extra bucks, customers enjoy the comfort and luxury of well-maintained cars. Turo is one of the best examples of peer-to-peer sharing.

    1. Outstation Car Rental 

Outstation car rental manages car bookings of passengers for intercity and interstate travels. In this model, customers can avail of the rental services for travelling across different cities or states and pay the fare based on their travel duration. The outstation car rental model is advantageous for people who have to travel frequently as it helps them save extra expenses, including fuel and maintenance. inDriver is an ideal example of an outstation rental model.

    1. Corporate Rental

Corporate rental models are gaining pace as enterprises are embracing the concepts of car rental apps. In a corporate rental model, employees are offered rides for official purposes. Organizations hire rental services for pick-ups and drops. They can also assign private cabs to employees who might be simply visiting for a meeting. They can hire the ride for a day or multiple days, and the fare is incurred by organizations. Gett is a great example of a corporate rental model.

» The Must-Have Features For Car Rental App

A car rental app can have many features, and to an extent, that largely depends on the type of model you go for. But there are a few which make for the must-haves. Let’s have a look.

    1. Passenger-side Features

(a) Login Options and Verification – Provision for users to sign up and log in through email-password authentication or through a mobile number. In either case, verification through OTP should be done.

(b) Customizing Rides – Enable customers to schedule their trip and customize rides by setting preferred pick-up and drop locations, picking the car type, choosing from different pricing plans and selecting a suitable payment method.

(c) Algorithm for Ride Matching – Your car rental app should have an advanced algorithm that will find suitable rides that match the inputs from the customer.

 (d) Live Tracking – Once customers confirm the trip, they should be able to track the location of the assigned vehicle in real-time and also check its status like ‘Arrived’, ‘Trip Started’, ‘Reached Destination’, etc.

(e) Payment Gateways – Provide customers with multiple payment gateways and options like digital payment apps like Google Pay, debit and credit cards and Internet banking.

(f) Booking History – Provide users with the facility of tracking their booking records.

(g) Rating and Feedback – Allow customers to rate their trips and submit their feedback or give suggestions to improve rental services. In case of any grievance, a car rental app should also provide users with contact options like email and customer care number to get it sorted on an immediate basis.

(h) Messaging and Call Facilities – Customers should be able to seamlessly communicate with the drivers through texts and calls.

(i) Push Notifications – This feature is important to keep customers notified about the trip status, discounts, referral programs, system updates or other important information, even when the app isn’t in use.

(j) Share Rides – Apart from the facility to book their own cabs, customers should be able to switch to ride-sharing options in order to minimize ride fares.

(k) Booking Cancellation – Customers should have the option to cancel rides. A car rental app should also provide features to let customers state the reason for their cancellations. There could be a drop-down list of common reasons and a box to manually enter the reason (in case it’s not listed).

    1. Driver-side Features

(a) Login Options and Verification – The two-way authentication and login options are applicable for drivers too. In either case, an OTP verification option must be included.

(b) Documents and License Verification – Getting the driver's details is absolutely necessary as it ensures the safety of passengers. Business owners should know who they are working with. General documents and driver's license verification features, therefore, are a must.

 (c) Ride Management – Drivers should be able to manage their rides by updating trip status, sorting bookings, and confirming the orders or cancelling rides.

(d) Order History – Drivers should be able to track their order history as it will help them to know their total earnings and figure out the average number of rides they take in a day or a month.

(e) Route Optimizing Algorithm – For drivers, this feature is a must-have as it will help them evade roads with heavy traffic or take shorter routes to deliver their ride early.

(f) Push Notifications – Even when the app is not in use, drivers should stay informed and updated about new programs, achievements, general messages, instructions and so on via push notifications.

(g) Messaging and Call Facilities – Drivers should be able to drop messages or make calls to passengers.

(h) Rating and Review System – It is important to know that drivers are treated well by the customers as cases regularly surface where customers often harass drivers unnecessarily. Therefore, a rating and review system must be there for drivers too.

    1. Admin Features

Apart from having a separate set of features for passengers and drivers, a car rental app must have a different set of admin features for managers as they are the ones who supervise the passengers, the drivers and the rides.

(a) Dashboard – A neat and interactive dashboard is a crucial feature as this is the place where an admin views the assembled information like details about the vehicles, the ones which are in use and their trip details, drivers assigned to cars, etc.

(b) Authentication and Confirmation – Authentication ways should be incorporated for the admin. Managers should be able to upload driver details and their documents, and the algorithm should enable them to cross-check the documents via different departments.

(c) Manage Driver Information – Managers should be able to keep track of all the drivers and their details. They should be able to add new drivers, delete the ones who are no longer associated with the company, and track their performance, their earnings and their working duration.

(d) Manage Passenger Information – Managers should be able to see the names, numbers and other details (if any) of people who booked rides. They should be able to view the ratings and reviews given by the passengers so that they can assess the performance of the drivers.

(e) Track Revenues and Earning Programs – Managers can track the total revenue generated by the drivers and can offer them a commission and attractive earning programs and plans based on the revenues.

(f) Vehicle Management – Proper management of fleet vehicles is a vital task. That’s why car rental apps need to have a robust CMS that allows managers to smoothly handle all the operations related to vehicle management, like monitoring the physical conditions of the vehicles, tracking their insurance policies, keeping track of car servicing, and seeing which ones are in demand and so on.

(g) Send Push Notifications – Managers should be able to send push notifications to both drivers and passengers regarding important information and offers.

 (h) Advanced Analytics – The admin panel should have advanced analytics features so that managers can have access to imperative information like peak hours, most common drop-off locations, preferred choices for vehicles, payment methods used by consumers and the average number of bookings per day/per week/per month.

» Car Rental App: Revenue Model

The car rental apps basically have two revenue models, the fleet model and the commission-based model. However, there are other ways too to generate extra profits. Let’s have a look at them.

    1. Fleet Model

The fleet model is a profitable one, but it requires a big amount of investment. In this model, the companies buy their own cars and assign them to drivers. While the companies earn from the base fare paid by the customers, the drivers are paid either on a service basis (i.e. the more service they give, the more they are paid) or on a monthly basis.

    1. Commission-based Model

Commission-based model is an equally good model to generate profits through car rental apps. In this, the car owners register their vehicles under a rental service app and receive money based on the bookings. The app earns money by charging a certain amount from the total earnings of the registered owners. Another way of earning in this model is charging a certain commission from the customers as a service fee. The charges are modified by the admin, including cancellation fees, stopovers, routes taken and the vehicle type.

    1. Other Methods

In-surge pricing is a good way to generate some extra revenue, but here, transparency is of utmost importance. Customers are charged extra fares given the traffic conditions, weather conditions, holidays, and car availability. But in any of the cases, they should be informed ahead.

In-app advertising is also a good way to make profits. Car rental apps can partner with other apps or tie-up with service providers from other industries and charge them for advertising their services on their apps.

» Key Factors To Consider For A Car Rental App   

What we have seen till now are the building blocks of a car rental app. But developing and running a car rental app has more to it than meets the eye. Apart from the types, features and business models, there are other key factors which must be taken into consideration by any organization or individual who wishes to step into this industry. Here are the important ones.

    • Market Competition – Car rental apps are booming in app stores. Be it any country or city, and you have to keep in mind that your app is going to face tough market competition, especially from well-established ones. This industry goes big on trust, which is why most people are afraid to come out of their shells and try something new. So, you have to come up with new features, offers or programs that can entice customers and can at least tempt them to try your service.
    • Customer Safety – The safety of customers is of utmost priority. Even a single incident is good enough to damage your app’s reputation. It is absolutely vital that you must do a background check on your drivers and try to learn as much as possible about their driving history. Another fundamental thing here is to check the conditions of the vehicles and their maintenance. App owners need to see to it that the vehicles registered are in mint condition.
    • Data Security – Since both customers and drivers need to provide their personal emails, phone numbers and other important information, app owners need to ensure that the data is well protected and cannot be accessed except by authorized personnel. It must be well protected so that the information isn’t misused, especially customer information. 
    • Paperwork and Insurance – There are different policies associated with cars, like pollution papers, insurance policies, authorization letters, purchase details, etc. Whether the car rental works on a fleet model or is commission-based, app owners need to ensure that the paperwork is legal and everything is updated.
    • Speed Limit – A check on the speed limit is a priority as it ensures additional safety for both the drivers and the customers. They should make it a point to include it in the vehicle management feature where managers can check the speed of the cars as well.
    • Accident Policy – App owners should have a clear and strict accident and damage policy. In case of an accident, the sole responsibility should be borne by the driver and the car owner. They also have to incur the cost of damage or any injury caused to the customers.

» The Fundamental Phases of Car Rental App Development

The process of car rental app development is extensive and involves different phases. The development of a mobile application usually involves four basic steps that are:

    • Requirement analysis and planning
    • Designing
    • Development and testing
    • Deployment and maintenance

But, apart from the four basic steps, every industry comes with its own particular set of phases, and the car rental industry is no exception. Besides the common phases, the development of a car rental app includes a few more steps that are listed below.

    1. Technical Audit

You’re probably diving into a niche sector that already has its fair share of struggle. So the more numbers and facts you have, the better it will be for you to devise a strategy. So it is better to perform a thorough technical audit and carry out extensive research before going into the requirement analysis phase. For instance, car rental apps already in operation in your preferred location, the user base of each app, their total revenue, the pain points of the services, etc.

    1. Know the Technology Stack

A performant car rental application is built on more than one technology. It’s an amalgamation of the basic and the advanced technologies like geolocation services, CMS, databases, UI/UX frameworks, scalable backend technologies and analytical mechanisms like Machine Learning, and probably a few more. Learning about the technology stack will give you a good grasp on the internal functioning of your app so that when you encounter a problem, at least you’ll know where to start looking.

    1. Team Up with a Reliable Development Company

This phase is a crucial one, especially for non-technical individuals. A good application comes from a combination of experience and expertise, and that’s why it becomes important to find a reliable development partner. Do some extra research and find out about the established mobile app development companies.

Most of these companies offer comprehensive app development services and flexible engagement models. If you wish to go for a native application, then you can either hire iOS app developers or Android app developers from your chosen company.

» Total Cost of Car Rental App Development

Mobile application development is a volatile sector. It’s an ever-changing industry where technologies keep evolving. So, it’s hard to give the exact figure when it comes to the cost of development. The total cost of a car rental app depends vastly on the working model, the included features and technical parameters. For instance, the development of an eCommerce site similar to Amazon is definitely going to cost you more than an online store with only a handful of options.

However, considering the most basic features and hiring models of the companies, the development cost of a car rental app can vary between $18000 to $35000. The cost also depends on the selection of your development partner. If you team up with start-ups, then it is probably going to cost you lesser, but the less cost comes with a price. You won’t have the guarantee and certainty provided by the established names. But the choice is yours, after all.

» Wrapping Up

The business of car rental apps is booming, and there are enough facts to support it. But in order to get one built, a person must have basic knowledge about this field. Prospective investors must know about how the system works, including its benefits and challenges. The most viable solution, however, is to team up with a renowned and experienced development firm, as it will brighten their chances to have a productive car rental app. 

Author Bio: Albert Smith

Albert Smith is Digital Marketing Manager at Hidden Brains, a leading web & mobile development company specializing in mobile & web applications. He provides innovative ways to help tech companies, startups and large enterprises build their brand.

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