[roy_libran]

Does anyone know how Pre-term termination of the lease contract by either party, work out? Would the Lessor bear all Risk and Consequences of such situation arising?

[DieselFan]

It looks like Zoomcar wants to make 30% of earnings just for their brand. All the risk seems to be pushed on to the lessor (you and me). if car ends up in accident or stolen or in a flood etc. then the returns would be negative. This is a no win situation for the lessor.

[D C]

The 3% minimum guarantee is an interesting factor that will cover the EMI. Though it looks very attractive, the responsibility of Insurance, Maintenance & Fuel is on the owner. I feel the insurance premium will be higher than a private car as the risk is higher. Also, the maintenance of a rental car will be expensive especially when it is a manual car and not an AT. The other benefit I see is that the maintenance may be lesser if these cars can be covered by extended warranty from manufacturers.

Since the car is registered in the name of Zoom car, this may also take the actual owner out of any legal hassle.

[sabby]

Attached additional FAQ and model spreadsheet from zoomcar.

[ashishy]

Zoomcar will provide a monthly minimum guarantee payment of 3% of the vehicle ex-showroom price to ensure a baseline level of repayment. (As per the email)

[Mistakenguy]

The minimum guarantee of 3 % monthly looks good,as that would cover the EMI for sure(after deduction of VAT). This would ensure that you do not make a loss on this business.

Service cost and resale values cannot be predicted very well due to the heavy abuse that these cars undergo.

Would like to see how many tbhpians are interested to invest in this.

[noirecayenne]

I was quite interested in their first mail but when I saw the revenue model, I understood that basically the car needs to have an utilisation rate of 57% (of the total time available/month) to break even in this model.

Does anyone here have any information on the average number of hours/month rented out for this segment of cars by Zoomcar?

[audioholic]

Originally Posted by noirecayenne

I was quite interested in their first mail but when I saw the revenue model, I understood that basically the car needs to have an utilisation rate of 57% (of the total time available/month) to break even in this model.

Does anyone here have any information on the average number of hours/month rented out for this segment of cars by Zoomcar?

If you see the spreadsheet that they have sent, they have estimated the utilization of the cars to be pretty less which I think is from their experience. Moreover, the small cars do have decent utilisation compared to the biggies which are used mostly on weekends or for short outings.

Personally am interested in this one, but currently dont have the time and bandwidth to sit and look into the fineprint and arrange a good amount of buffer cash due to work assignments. Maybe at a later part of the year I will consider leasing a Swift to them. If this concept kicks in well, I would be interested in giving them two cars with a six month to one year gap between the two.

[GTO]

The numbers sure look convincing (thanks sabby for posting!).

Let me get done with all the filings of the FY 2015-16. Then, I think I'll invest in a couple of cars at Zoomcar. Lets say 1 or 2 to start off with. If it works well, will increase. I'll pick the Swift over the Ritz as its resale will be much, much higher.

If I go ahead with it, you can expect a full thread with actual earnings, pros & cons .

Originally Posted by noirecayenne

I understood that basically the car needs to have an utilisation rate of 57% (of the total time available/month) to break even in this model.

How did you arrive at the 57% number?

[Eddy]

Originally Posted by GTO

If I go ahead with it, you can expect a full thread with actual earnings, pros & cons .

If nothing else, please invest at least one car only to give us these numbers

[SmartCat]

Originally Posted by GTO

Let me get done with all the filings of the FY 2015-16. Then, I think I'll invest in a couple of cars at Zoomcar. Lets say 1 or 2 to start off with.

Your investment in something as unconventional as this should not be more than 5% of your networth (financial assets + physical assets).

Along with watching your cash flows from the investment, one needs to keep an eye on how Zoomcar is doing financially. Ask for their P&L or get it from Registrar of Companies - especially if significant investment is involved. An investor should also keep an eye on the competition. If 10 players (backed by Private Equity obviously) get into the business, it will significantly affect Zoomcar.

Setting a Google Alerts for the keywords "Zoomcar" and "Self Drive India" is a must - to keep an eye on the company and the industry.

All this because there is a probability of an investor losing up to 20% of their capital (if invested without taking a loan). If an investor is taking a loan, then there is a risk of entire capital (and more) being wiped out.

From risk point of view, one should look at this investment as one would look at a safer version of Company Fixed Deposit. Your "deposit" with the company (Zoomcar) is backed by physical asset (car). If Zoomcar fails, an investor will have to liquidate the asset (car) and take a capital loss (because of depreciation).

[thoma]

As per the Ritz statistics, one has to invest just ~90.5k and get ~1.7lac in return (total at the end of 30 months) as per assumptions. And zoomcar's cut comes to 5.13lacs in 30 months.

Assumed that fuel price won't increase over 30 months, and more trips will be out of traffic to achieve a 16 kmpl (18 for Swift) average, 16 hrs per day every day, and you get a real 40% of price for resale! And prayers to keep the car away from serious downtime with the police/insurance.

No, I am not for or against, but just wondering.

[SmartCat]

Good points, thoma.

But..

Originally Posted by thoma

As per the Ritz statistics, one has to invest just ~90.5k and get ~1.7lac in return (total at the end of 30 months) as per assumptions.

Seems high only because of leverage (loan) factor involved. If you buy a stock worth Rs. 1 Lac (20k your money, 80k loan) and if stock goes up just 20% and you sell, you are actually doubling your money.

The Zoomcar spreadsheet is editable. Just change the loan from 90% to 1% (basically no loan). Then the IRR based on the above assumptions works out to be 20% - very decent and believable returns.

Assumed that fuel price won't increase over 30 months,

If avg fuel prices goes up 10%, expect Zoomcar to increase their fares by approx 10%. Fuel price increase can be easily passed on to the customers.

and more trips will be out of traffic to achieve a 16 kmpl (18 for Swift) average,

If your car is mostly being run in the city, you will be getting less mileage yes - but it won't be racking up 200 kms or 300 kms a day. Also, if your car is hired for city runs, it is likely to be returned back in 4,8 or 12 hrs.

Remember that Rs. 120/hr is the BLENDED hourly price. City runs (car returned back the same day) is likely to have a higher per hour charges than highway runs (car returned back after 2 or 3 days)

16 hrs per day every day, and you get a real 40% of price for resale!

These two factors are unlikely to be hyped up to look nice on a spreadsheet. They are very likely to be based on their experience (past data). And just think about it - both the numbers look reasonable.

[auto_enthusiast]

It's not that I'm against/for it, but a few points to consider from my end:

1) Since the annual road tax has to be paid every year, will we have to bear the Re-registration charges and the road tax once the car is out of contract or lease period?

2) w.r.t. the swift, 18 kmpl seems unrealistic cause being a small car, it will be mainly used for in-city commute. Also, when we expect the car to be abused at the hands of the (over enthusiastic) clients, we cannot assume the fuel economy to be more than 15 kmpl overall, considering some outstation trips as well.

3) Servicing and maintenance cost @ 0.80 seems quite low. Charges for tyre replacement at 40k kms will be approx 20,000/- for a set of 5 tyres, add to it the routine service charges at every 10k kms @ 6,000/-(synthetic oil as per owners manual). So, for every 40k kms, the routine service will be (6000x4) 24,000/- and 20,000 for tyres. This adds upto 44,000/- for every 40k kms. In addition to the routine maintenance, wear and tear parts, battery, seat covers etc will also add up to the cost of upkeep of the vehicle.

4) Swift being a small car and expected to run more for in-city commute, is the 475 hours/4275 kms realistic. It translates into approx usage of 16 hours/140 kms a day. Vehicle downtime (breakdown & routine maintenance) needs to be considered too.

5) Taking a loan for more than the lease period (30 months) may not be a wise decision, cause at the end of lease period, when you aren't generating revenue from the vehicle, the EMI will be a liability to the owner. If someone intends to sell the car immediately after the contract, they can take a loan for longer tenure and foreclose the loan.

Some positive points to consider as well:

1) Biggest being - Resale Value

2) Depreciation benefits, in case someone buys the car in his/her company's name and avail of tax benefits.

3) It sort of has a old gen Hero Honda tag line - BUY IT, LEASE IT, FORGET IT

Would like to hear fellow BHPians expert views as well.

[apachelongbow]

Interesting concept. However to maximize yields, one needs to provide a mix of vehicles to Zoom car. Reason being, each kind of model has a particular demand, based on the city, the season, and the current hiring charges. Ideally a mix of a hatch back, a small city sedan and a basic MUV/SUV should provide maximum returns to the owner. And yes there will be a particular utilization percent beyond which each car will start returning profits to the owner. Also remember to factor in the cost of funds, even if the potential owner self funds the entire exercise.
My suggestion is to make a spreadsheet with variables of type of car, the per km rate, cost of the car, cost of funds, the expected returns, expected km usage and sale price of car post 3 years. Add a couple of models, have a column to increase/decrease no of vehicles and one should arrive at an optimum mix.