How to Start a Car Rental Business?

Updated on :June 19, 2024
By :Krishna Charan

The car rental business is the most popular after taxis, and this sector has existed for decades. This sector first gained a foothold in developing countries where the cost of owning a vehicle is too high. For example, people in Asian and Middle-eastern countries prefer car rental to have their vehicle due to reasons like no maintenance, portability, ease of use, and liberty to choose different cars.

In developed countries, due to traffic problems, cars were often damaged in traffic, leaving the owner red-faced. This also prompted them to go for car rental platforms. 

Why is App Development Important for Car Rental Business?

Traditional Car Rental 

At one point in time, car rental evolved as a full-fledged business for many. Fleets of different vehicles were bought for this purpose. Luxury vehicles were also bought to serve people who like to use such cars.

The traditional car rental industry is now making revenues in billions of dollars every year. Also, cost-conscious millennials are more interested in renting a car than owning one.

On-Demand App-Based Car Rental

During the start of the past decade, the internet and cheap data disrupted the way services were provided. Since then, many traditional services adopted the online model; car rental was no different. Cars were rented and booked with a tap on a smartphone.

At the same time, another model emerged under online car rental booking. It is an on-demand app-based booking. It is an online marketplace to list services.

A person need not own a fleet to rent them; instead, an online marketplace platform can be launched so that interested car owners can list their cars; customers use the marketplace to find and rent a car. The commission is generated for each booking.

There are multiple revenue models present, which depend on the scope of innovation of the operator.

How Does the On-Demand App-Based Car Rental Work

  • The customer downloads the app and searches for the desired car from a specific location. Other details like destination, budget are entered and searched.
  • If the user finds a suitable car and is okay with the fare, a request is sent to the car owner. 
  • The car owner accepts or rejects the request. After the request is accepted, the car location is shared for the user to pick up.
  • After the ride is completed, the car is returned to the owner. The owner checks the car and informs about any major change in the vehicle.
  • The final invoice is generated, and the user pays the amount along with the extra charges claimed by the owner.
  • Both the car owner and the user shall claim discrepancies regarding any event to the admin.

On-Demand Cab Rental app

Why is the Car Rental Platform a Great Business Idea?

Car rental platforms are easy to launch. The only important part is the app solution that can be provided by experienced app developers. These are two ways to build the app solution for this startup idea. One is to gather all resources and start from scratch.

Another is to get pre-built solutions from experienced app developers. The former method is not recommended unless you have all the resources and time; more important of all is to be technically proficient in undertaking future changes.

Purchasing the readymade solution is highly recommended because of the quick turnaround time and flexibility to modify. There are excellent car rental software solutions too. But do check the reviews before you select one.

The idea of an on-demand car rental platform using a pre-built solution is the best combination.

Facts About the On-Demand Car Rental Market

  • The global car rental market is growing at an annual growth rate of 8%. This rate is expected to increase much more in 2020 because more than 50% of millennials will come into the workforce.
  • America and Asia region will see double-digit growth in car rental adoption by the population. Investors and VCs are interested more than ever in the car rental market. Most of the investors are fed up with the taxi booking model because of the profitability issue.
  • Hence, new startups can be more confident about getting funds provided the business model is excellent.
  • The average revenue per user currently stands at the US $230. In 2021, 270 million riders will be using the car rental platform, and this is a drastic increase from the present numbers.

Key Market Indicators for Car Rental Business

Below are the key market factors that drive the car rental platform business. These data can be used to get a broad overview of where to start this model and what changes need to be made to sustain the startup.

Consumer Spending

The consumer spending ceiling is the best factor you can use to gauge the demand and sustainability of your startup. But, in the coming years, this won’t be of much use because of fewer savings among the younger generation.

Internet Penetration

More than internet penetration, it is the quality of a network that is vital for app usage. Anything above 3G is good for app usage. If the speed is below it, better develop a beta app that consumes fewer data and gives optimum performance.

Population Density

It is desirable to launch your startup in a place where the population density is even. Also, a high population is a must; often, people living in densely populated areas are frustrated about traffic.

Leading Companies in the Market


Zoomcar is the first self-drive car rental platform based out of Asia. They launched when mobile apps were getting popular. After a lot of trial and error, they are now running a corrected business model. Multiple revenue pathways are utilized to make money and be sustainable. Several rounds of funding went into Zoomcar because of its promising business model.


This American company has the largest market share in car rental. Under this brand, around 70,000 cars are available for rental. It started as a traditional car rental and soon transformed into an app-based company.


ZipCar comes second after Enterprise in terms of market share. This brand is available in the US and Europe. Here it is even possible to rent cars even for an hour or one day. With just three steps, it is possible to list the car anytime.

Future of On-Demand Car Rental

  • Due to an increase in car prices and fuel prices, people are moving to car rental, and therefore you can expect a steady increase in demand.
  • Free rides, offers, discounts, and coupons motivate people to list their cars for rental. This happens to riders also.
  • The carpooling concept is fast spreading in tier 2 and tier 3 cities because of increased awareness of socializing and climate change.
  • Earlier said stats about car rental is promising, and embracing new technologies is said to be the key to sustaining.

App Solution for On-Demand Car Rental Startup Model

So far, we talked about how the car rental business flourished and graduated to the on-demand model. We will now dive deeper into the app solution used in the on-demand car rental startup model.

For someone who is planning to get into the car rental business because of its growth and prospects, it is imperative to have a deeper understanding of the app solution. App solution is the one area that connects the startup operator with the customer; hence it must be resilient.

Interfaces in the App Solution

  1. Customer’s Mobile App

The customer’s mobile app is generally built for both iOS and Android. The customer’s app should be user-friendly. User interface and user experience are the topmost priorities while building this interface.

  1. Car Owner’s App

The car owner, whose vehicle is listed in the app, shall control all the transactions from this app solution. Unlike the customer app, this interface has a dashboard to oversee past and active bookings. It is also available on both iOS and Android.

  1. Admin Web App

This is a web-based app used by the admin if the startup is an online marketplace. The admin panel consists of several dashboards for varied purposes. The car owner and customers can have two-way communication with the admin.

Radio Cab Rental Business

Functionality in Each Interface

Customer’s app

Account Setup Panel: With just three details, the customer can register their account. After registration, the customer can enter the app with one touch. 

Real-Time Notifications: For each step starting from booking a car until the car is delivered after the ride is over, the customer will get notifications. The frequency of notifications can be controlled from the settings.

Car Selection: The customer has the liberty to choose the car types by giving different factors like model, color, seating, amenities, mileage, and many more. 

Advanced Booking: Apart from instant booking, the customer can make the scheduled bookings by giving a future date and time. The scheduled booking is synced with the calendar so that it notifies the customer.

Modular Hompage: The homepage presents the list of all highly rated rentals to cut short the work of the customers. This function helps the customer with a quick booking.

Car Owner’s App

Vehicle Tracking: The car owner can track the vehicle while the customer is using it. The Google map in the owner app gives a real-time picture of the location of the vehicle.

Rental Request Management: Multiple cars can be added, and each of them is managed from the centralized rental management panel

Notifications & Emails: Apart from notifications, emails are sent to the car owner with detailed information.

Interactive Dashboard: The dashboard for the car owner is interactive and easy to navigate. Any kind of information related to transactions and rides can be accessed.

Social Media Login: Car owners can use social media accounts to log in to the app. Their car listing can be shared on social media sites to get more visibility.

Admin Web Panel

Digital Stats: Statistics related to the business operations like cars booked, cars registered, active bookings, earnings per day/month/quarter, total customers, and many more.

Transaction Management: A list of transactions is displayed. Both past active transaction details are listed in a specific order.

Verification of New Users: Verification of new car owners is done meticulously with all the uploaded documents displayed in the admin web panel.

Review Management: Reviews and ratings are managed effortlessly from the admin dashboard. Any review can be sent to the car owner to get their response.

Customer Management: The admin has the liberty to add or remove any car owners or debar customer accounts.

The Technology Stack of the Car Rental App Development

For Mobile App

Swift is used for iOS mobile app development, Java for Android. Flutter, Kotlin, PHP, Codeigniter, MongoDB, etc., are the major technology stack used for mobile solution development.

For Web App

Laravel, Nodejs, Expressjs, MySQL, PHP, HTML 5, CSS, and many more are some of the technology stacks used for web technology.

Types of Car Rental App Development Solutions

With the right use of technology, it is possible to build solutions efficiently and effectively. Now, there are two popular ways to build car rental apps, depending on the time, resource, and skill set available. 

In-House Development From Scratch

As the name suggests, the complete solution is built inside using a team of developers and designers from scratch. Everything from design, shape, features, functionality, and framework architecture is done freshly. The time required to develop in such a way is longer; constant testing and revision take place until the solution reaches a perfect state.

The skillset required to manage this process is very high because of the multiple interfaces involved in the solution. Individuals who are not technically sound are not recommended to use the in-house development process.

Advantages of Purchasing Pre-Built Solution

If you want a solution with quality and performance on par with Uber and Foodpanda, then with a nominal cost, you can purchase the car rental software solution. Here are the benefits of purchasing pre-built free and open-source car rental software.

Extendibility: The app solution can be extended in the future to accompany new features and functions that are relevant. This is done without affecting the core of the solution. 

Support & Maintenance: This one reason is enough to choose this method. When associated with an experienced software firm, they provide support in business analysis, designing, and development maintenance.

Turnaround Time: Total time is taken from customization until deployment is less than three days. So you can launch your car rental platform in a matter of days.        

Wrapping Up!

Launching a car rental startup online is the best thing you can do in 2020. Both the business models I explained above have good potential. Take a good time to find the apt model for you.

Next is selecting the type of app development, whether to develop from scratch or get a pre-built solution and customize it depends on your skillset and resources at your disposal.

If you are opting for a pre-built solution, don’t forget to check the features of the top car rental software on GoodFirms, including Car Rental Solution, Speed Car Rental Software, MyRent, Easy Rent Pro, etc. And, after you have tried car rental software, do come back to post a review here!  

Krishna Charan
Krishna Charan

Krishna Charan works as Business Head at Uplogic Technologies Pvt Ltd. Uplogic Technologies is a leading producer of mobile and web app development solutions in the market. They serve many entrepreneurs in their business globally to reach their dreams into reality. Their primary focus is developing android apps, iPhone/iPad apps, and cross-platform apps for on-demand business models like Uber, UberEats and other industries that come under the on-demand sector. Their top selling products are SpotnRides and SpotnEats and we have planned to launch more products in the upcoming months.

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