Various studies and research have concluded that most of the commuters will not prefer public transport for travelling once the situation becomes normal post COVID-19. Rather, a lot of people will either buy their own personal vehicle new or old, or will prefer short term methods like subscription and leasing, limiting their liability of vehicle ownership. We have seen this trend among expats who are here in India for a limited period or business-class people who keep moving from one city to another.
To understand this trend better, we got in touch with Greg Moran, CEO and Co-Founder at ZoomCar Mobility Services. Here's our conversation:
Tell us about the importance of Subscription model in Post COVID world
COVID-19 has changed the dynamics of our economy indeed. What used to be the norm till last year may well become obsolete in the coming weeks. Therefore, each industry needs to adapt itself to the new normal. The car rental industry, to that end, is well-equipped and prepared to serve its customers. There is an exponential spike in demand expected for car subscriptions, especially considering the current recession, car subscriptions can prove to be a better option that ride-hailing and also as a more affordable and quicker way of acquiring a car, delivering a safe personal mobility replacement. We have multiple options for subscription but the shift in demand has been towards one, three, and six months, car subscriptions for intercity usage will see an upward trend.
We are already seeing a 400% rise in demand and we expect this to settle down at 200-300% over the next few months. People are now looking for shorter term mobility options as opposed to a long term expense of owning a car. I believe that the necessity of a mobility service like Zoomcar has become more pertinent than ever before. As people would avoid public transport to keep themselves safe from the virus, self-drive cars are the safest option for commuting and traveling. The prime reason is that car ownership does not come hassle-free. One has to incur maintenance expenses and problems along the lines of inadequate parking space, volatile fuel prices, and rising insurance premiums amongst others. All these inconveniences are rooted in the minds of people who entertain buying a new car and are put off by the same.
As such, the craze over purchasing news cars has been declining in recent times. With an ever-increasing populace across urban spaces, a shared mobility solution emerges as the only logical step towards a sustainable model. Additionally, the pandemic has resulted in several people losing their jobs, putting a strain on their income, and limiting it to essentials such as food and pharmaceuticals. With shorter lock-in periods and nominal pricing, subscription models are an easier option. Moreover, the needle has now moved from ownership to the experience. Subscribing a car allows one to have a seamless and safe experience. Also, for those who like to experiment with cars and prefer variety, subscription-based models are the perfect choice since you needn’t stick to one car for a long period of time.
What is more beneficial – Buying, or Subscription/ Short Term Rental?
I think this is an interesting time for our business because everyone is in a constant state of evolution. At Zoomcar, we have always been focused towards personal mobility and one of the important points that people always forget is that personal mobility solutions like Self-drive for cars for four wheelers and also for two wheelers is much more affordable. Especially in a time like Covid-19 where a lot of folks are laid off, unemployment rates are sky rocketing and not many are talking about the actual true unemployment level where people with disposable incomes have been majorly hit.
In the macro economy level it actually plays really well for our type of solution, because you are able to deliver something well which is sanitised, clean, personalised, private as well as something which is affordable. So that in a nutshell is one of the macro tails winds which is really helping as we emerge from the pandemic. Car subscription is increasingly becoming popular, especially with the millennial population in the country who look for convenient experiences that don’t come with owning a vehicle. With brands offering flexible subscriptions that range between 1-36 months and are affordable since they do not include the maintenance cost, more and more customers are gravitating towards the subscription model. Another important reason for the shift in consumer behavior is undoubtedly the safety of subscription models.
Brands are now ensuring that customers get best-in-class experiences at reasonable costs and safety is at the top of the priority list. Taking a more tech-driven approach, players in the car rental industry are using technology to offer customers an impeccable experience by providing them real-time updates on the sanitization of the vehicle, their subscription plans, and more. With the growing affinity of consumers towards shared mobility and digital technology, subscription models are surely turning the automotive industry upside down.
What is Zoomcar Mobility Services?
Zoomcar Mobility Services (ZMS) is Zoomcar’s B2B SaaS offering providing a full-stack of mobility software solutions across vehicle segments. With the launch of ZMS, Zoomcar will now provide access to its state-of-the-art, proprietary tech stack which focuses on reducing operating costs, enhancing safety, increasing vehicle monetization, and improving customer engagement. This B2B Saas offering is a more diversified approach to complement our existing B2C business where we are going direct to consumers on the rental and subscription side.
ZMS is more of an extension of what we have been using ourselves and expanding that and diversifying to a broader medium. We expect ZMS to constitute about 25-30% of our overall revenue within the next 6 months. ZMS comprises of two primary software offerings: IoT as a service combined with subscription as a service. The ZMS platform solution is geography agnostic and will help drive Zoomcar’s international footprint while serving customers across 3 continents within the next year.
Apart from IoT as a service, the other primary software vertical of ZMS is subscription as a service. This offering builds on Zoomcar’s own direct to consumer subscription business and allows OEMs and dealers to leverage Zoomcar APIs to directly sell vehicles on subscription to customers. As part of the offering, Zoomcar provides an end-to-end white-label experience for its OEM partners and includes a 360-degree mobile experience for the vehicle subscriber. Moreover, ZMS integrates its existing IoT as a service capability on the white-labelled mobile app to create a bundled offering to the OEM and the end subscriber.
As part of its India-based offering, Zoomcar will also allow the OEM’s customers to ‘share back’ the vehicle on Zoomcar’s short-term rental platform to help reduce the monthly subscription obligation, thereby dramatically reducing the cost of personal vehicle access in India. While our first offerings are here in India, this is really a global product. In the coming weeks and months we will be announcing several key partnerships with operating partners and OEM partners abroad and not just in India. ZMS reflects the gross margin profile of typical enterprise Saas businesses and will contribute meaningfully to the company’s stated profitability targets within this fiscal year.
How has Covid-19 changed the transportation in India?
The challenge for us has been to rethink the business model that provides a steady stream of revenue to mitigate business risk under Covid constraints, to understand how the consumer behaviour will change post Covid and how to manage costs in the absence of business continuity. It also gave us an opportunity to reflect on our business model, technology infrastructure and understand our customers deeply. COVID-19 has changed the dynamics of our economy indeed. What used to be the norm till last year may well become obsolete in the coming weeks.
Therefore, each industry needs to adapt itself to the new normal. The car rental industry, to that end, is well-equipped and prepared to serve its customers. We are already seeing a 400% rise in demand and we expect this to settle down at 200-300% over the next few months. People are now looking for shorter term mobility access as opposed to a long-term investment. We have seen a rise in demand for cars for personal work and emergency use cases. Rentals for intercity travel are up and a lot of people are opting for one-way travel.
The notion of owning a car amidst such an intensifying emphasis on social distance may have taken the backseat. Still, the necessity of a mobility service remains as relevant as before. As people would avoid public transport to keep themselves safe from contracting the virus, the need for rental cars will only go up. We are looking at various car subscription models to serve the needs of the customers. We also see more demand for in-city trips compared to outstation ones and a strong focus on shorter term subscriptions. Our focus will be to diversify on this front and ensure we are covering all cities.
Tell us about the importance of technology like IoT and AI in automobiles
Zoomcar has always been at the cutting-edge of tech-enabled mobility solutions. Artificial intelligence and IoT are the two pillars on which our experience works and Covid-19 has brought their importance into even sharper focus. As an example, app-enabled Keyless Entry technology minimizes human contact which is critical in these times of viral spread. Our entire tech stack and operations have already evolved to ensure that every car is thoroughly sanitized before and after each drive.
We use AI for vehicle monitoring and predictive maintenance, for e.g. our models can detect patterns in Engine temperatures and coolant levels to predict engine seizures before they happen and guide customers safely to a stop before an emergency situation occurs. We also have models which predict the optimum replacement times for batteries and clutches thus minimizing breakdowns. Last year, we captured almost a 100 billion vehicle-related data points like speed, distance, RPM, clutch, brake-times.
Our unique Driver Score technology encourages customers to drive cautiously and will have far-reaching consequences on the safety and longevity of our cars. The Zoomcar app, of course, allows customers to reach out at any time in case of a query through emails, messages and chatbots. In short, by using technology Zoomcar is prioritizing safety, hygiene and customer experience, thus making its cars future-ready and COVID-19 safe.