Make your car rental profitable

The revenue of a car rental company varies depending on several parameters: the number of vehicles offered for rental, the range of cars or whether the agency is franchised or not. To be able to make projections about the revenue of your car rental company, first estimate the number of vehicles you will rent out. In this article, we will teach you how to make a rental car profitable. If you want to open a  Rafay car rental agency , read our article on this subject.

  Makes a car rental profitableOptimize the occupancy rate of your vehicle fleet

Between maintenance, insurance, gas, etc., your car expenses are going to be high. To make a car rental profitable , you need to limit the purchase costs and expenses. However, you can develop techniques to make a car rental profitable.

   Here is a list of things you can do to increase your income:

  • Collect positive reviews on reference sites
  • Offer additional services such as GPS, baby seat rental, etc.
  • Launch an online booking system
  • Offer the “unlimited mileage” offer
  • Rent electric vehicles
  • Develop a mobile application to facilitate your customers' experience
  • Create offers for companies to manage their fleet
  • Develop a platform that details your rates precisely
  • Create a loyalty program with gifts and discounts
  • Offer luxury car rental or a “prestige” range
  • Relocate your agency to a better location
  • Work on your brand's SEO with search engines
  • Using Google Ads and Facebook Ads
  • Offer cheaper deals available on weekends

How to calculate the profitability of a car rental?

Your car rental company generates profits if the total revenue is greater than the recurring expenses. Typically, the net margin of a car rental agency is between 5% and 16% of the revenue generated.

You will be able to accurately estimate the profitability of a car rental by referring to the financial model adapted to vehicle rental. The latter allows you to vary the assumptions, analyze the weight of each expense on the break-even point and evaluate the profits generated by your business.

In addition, to ensure the profitability of renting your car, it is best to go through a website specializing in car rental. The latter charges a commission on the transaction, but this guarantees the depreciation of your vehicle and gives you peace of mind.

Have you thought about renting out your car as an advertising medium?

Your vehicle can be used as an advertising medium for a brand. The agency offers to put stickers or posters on the rental car. However, this concept involves some conditions. Also, if you drive little, you are not necessarily profitable for the advertiser since you will have less chance of attracting them. Advertising rhymes with visibility.

Moreover, the profitability of renting an advertising car varies depending on the format of the ad, the duration of the advertising campaign and the car model.

Bonus Complementary Strategy

To get the most out of a car rental, you can also use a concierge service. The concierge service will be able to offer their customers car rentals. A margin that can often be very comfortable in view of the ever-increasing demand.