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Avis India plans to invest Rs 700 crore on operating lease

Car rental service provider Avis India recently launched ‘Chauffeur Driven Getaways with Family’ apart from offering cars on operating lease to corporates. Sunil Gupta, CEO Avis India, shares his plans with T3

What is the number of bookings per day by Avis India? What is the expected growth in revenue in 2012 compared to 2011 and what is your current market share in organised car rental segment in the country?

At 2000 booking per day, Avis in India has a market share of 20 per cent at approximately Rs 140 crore. We also have been growing at a constant rate of 30% and the same is expected this year as well. Our growth figures are double than that of the industry.

You have been promoting self drive packages in India. How is the response? What factors are preventing the self drive in India? IS it higher rental per day compared to other countries or some others factors?

We have seen a very good response to our self Drive promotions.  There is a clear sign for growth for Self Drive which though slow is now definitely on a growth path.  In India, Self Drive is at its infancy. Around 5 per cent of our turnover comes from Self Drive while in other parts of the world it’s a complete opposite. This is because due to surplus of manpower it becomes easy for us to hire drivers at lower cost as compared to the international scenario.

You also launched ‘Chauffeur Driven Getaways with Family’. Could you please explain about this service?

The Avis India Chauffeur Driven family Getaway provide a large spectrum of destinations to chose from. These packages have been designed understanding the importance of time of the corporate executive, for people who have just a day or two available to get away from the madness of work, take a short trip and unwind with their families and friends. These packages are available at Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Pune the pre designed packages include fuel, toll charges, service tax and driver retention.

What is the car leasing service all about and how do you see the growth potential in car leasing service segment in India?

The concept of operating lease has been growing in India and major MNC and Indian corporate houses are moving towards taking cars on operating lease instead of buying. This concept enables corporate houses to offer its executives the convenience of uninterrupted mobility coupled with a high degree of personalized service in a tax efficient manner without investing in assets not core to its business. Corporate houses purchase around 10 per cent of the total cars sold in the country and out of that, only 10 per cent of the cars are leased. So far only a fraction of the leasing potential in India has been exploited and the potential for growth is huge. Avis India plans to invest Rs 7 billion over the next 3-4 years in placing 7,000 vehicles on operating lease.

How has the growth rate been and what is it dependent on?

The Indian car rental scenario has seen many changes since the last decade. Largely ignored so far, this sector is now being recognized as an important component of the travel trade. This has not only led to improvement in services, but also seen diverse variants of the services being introduced for both the leisure and business traveller.

What is the volume of the car rental market in India and what is the breakup of the organised and unorganized sector?

The car rental market in India with all mobility put together, cars, taxis, corporate today stands at around US$3 billion.  80 per cent of the sector in India is still unorganised. This means that only 20 per cent is organized and growing YoY 15 per cent.  But this is a positive picture as it leaves a huge scope of growth for the industry. With the economic growth more and more multinationals are coming into India, Indian companies too are turning multinational. This has brought awareness among the corporate about that as our kind of business offers consistency, quality and IT support. This is slowly creating a migration of sorts among large corporate and multinationals.

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