Team-BHP - Will Zoom Car survive? I don't think so

It is pretty evident that Zoomcar is a sinking ship, with the current covid situation making the matters worse. I remember somewhere around late April they were giving 50% off + 50% cashback in the form of Zoomcar credits and an option to reschedule it as well without any extra charges. Sure it was appealing but it showed how desperate they were to get bookings.

I've used them in the past but I've stayed away from them since the last 2+ years after I started hearing numerous complaints from people about their pathetic service and dilapidated condition of their cars. I frankly believe India is still not fit for self-drive cars as a major chunk of people consider the cars like trash which is one of the major reason for their poor state. It is hard to recover money when there is a mechanical damage on the car unlike visible body damages.

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Originally Posted by Cessna182 (Post 4874899)

Zoom was innovative, but after they charged me for damage I did not cause, I stopped using them.

This keeps happening with a lot of people. As most of the mechanical damages/failures are not visible, the customer who does the damage gets away with it and the burden falls on the next customer. Zoomcar needs to find a solution for this!

So - how could have Zoom Cars been reasonably profitable after say, year 3?

1: Invested in rental space in fewer places near strategic zones - airports, railway stations, high density areas of work and residential.

2: Restricted rentals to drivers over 25. Strict penalties for damage and non nominated driver, if you cannot dare to bear the liability - take insurance - another profit centre

3: Be strict on vehicle condition - reasonable dirt fine but not filthy with half a rotten prawn sandwich in the back!

4: Proper contactless interface, it never worked, everyone ends up fumbling with call centres

5: Buy sensible cars -the BMW's and Mercedes got trashed in weeks. Stick to tried and trusted cars.

6: Restrict use to areas with good roads. In Spiti - every 3rd car was a Zoom car on its 4th trip in a month. Either allocate certain hardy cars or apply a surcharge + close inspection of cars that have been to such areas. Remember in Germany, you are toast if your rental sports cars has been near the Nurburgring.

7: Avoid taking deposits, instead, reserve an amount on the credit card which can be exercised based on the damage.

8: Brim to brim fuel charges or charge car + full tank.

9: Apply data analytics to assess behavioural usage and tweak policies accordingly

10: Reward trouble free drivers

I think the answer to this question would depend on how generous the VCs funding Zoomcar are feeling. But given what a body blow Covid has been to the travel and hospitality industry, it doesn't seem very promising.

Regardless, I feel India isn't ready for something like Zoomcar. And the biggest reason isn't anything but our mentality. When we can't use what's not ours with the same respect and care that we would our own, any shared product is bound to suffer.

Next, I feel several of Zoomcar's policies have been their own undoing. Most urban population is aware of the rental concept through their travels to the West. That has also made them aware of what to expect in a rental car: cars not too old, not run too long, maintained very well and always very clean.

Indians got none of that with Zoomcar and I don't think that's an area people will be forgiving with.

I feel Zoomcar missed their first mover advantage; the self-driving rental business could have really ticked up in India, the way Uber/Ola have.

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Originally Posted by ajmat (Post 4875250)

7: Avoid taking deposits, instead, reserve an amount on the credit card which can be exercised based on the damage.

I'd be very vary. In the absence of consumer protection laws and proper customer service, this would have been a nightmare.

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Originally Posted by libranof1987 (Post 4875324)

...

Regardless, I feel India isn't ready for something like Zoomcar. And the biggest reason isn't anything but our mentality. When we can't use what's not ours with the same respect and care that we would our own, any shared product is bound to suffer..

Au contraire, the evidence of both thier fleet condition and customer service practices suggests Zoomcar actively counted on that mindset, even integrated it into their own practices because they knew the vast majority of their customers won't care, not to the extent of walking away from bookings, so they didn't care for a minority that expects a base standard of service.

We can blame Indian mindsets towards shared resources all we want, often justifiably so, but that does nothing to take away from the situation that Zoomcar's business model appeared to be 'buy cars in bulk for cheap, run them into the ground, repeat'.

Anyone willing to hand over a machine with obvious mechanical and safety issues to a paying customer, does not deserve the benefit of doubt.

No, Zoomcar will not survive this pandemic and their mistakes.
I had been a happy customer of zoomcar in the past, but my last booking with them was in 2015. Their services did not come close to what I wanted and most of the time ended up using my own car or even going for a competitor when the need arise.

They have raised $151M as of this year. This includes debt funding which unlike equity funding, needs to serviced just like a debt involving interests and regular payments.
Their last fund raise was in Jan 2020 for $30M which should have been sufficient to tide over the crisis, but the lack of focus on customer satisfaction and the ongoing refund crisis will ensure this money will be quickly used up.
They don't have any marquee VC investors who have funded a similar organisation which leaves them unattractive for a merger/acquisition. None of the other investors including Mahindra and Ford will be looking at sinking any more funds in them.

Zoomcar is not an asset lite model. They have the largest fleet of all self drive rental companies most of which is bought, which is capital spent on depreciating assets which do not fetch any value in the used market as they are often abused.

Their customer acquisition cost is too high. It has gone on a marketing blitz post pandemic offering huge discounts including 50% cashback on bookings which shows utter desperation by Zoomcar to bring in customers. Of course, with the recent issues faced by many customers in getting their deposit back. None of these customers will be a repeat customers of Zoomcar and most may not even look at self drive rentals in the future.

Also their employee base is quite high, with over 800 employees. This does not include ground operations folks at the sites who are all outsourced. Cost of such a workforce is quite high. I know of many folks who are desperately looking out. Quite a lot of senior folks have quit or in plans to move out as they do not see a brighter future in the organisation.

Zoomcar has only themselves to blame for the failures. They grew too fast in the market which put customer acquisition and other novelty metrics ahead of customer satisfaction and providing quality cars. They brought in subscription service which is India does not makes sense as we are not keen on paying money for an asset which is not owned. The Zap program is a failure as well, many people burnt money with this program, highly one sided and offered absolutely no value or returns to the subscriber.

All in all, lots of mistakes and emphasis on quantity over quality did them in. It will take a miracle for zoomcar to pull through. Even if a vaccine for coronavirus is available tomorrow, the survival of zoomcar is unlikely.

The whole fleet / car rental / taxi market is flawed in this country. With rates so low, it's a miracle anyone's even surviving.

We have some cars that run in Uber. To be honest the only time you make decent money is when you sell off the car. Let me give you an example. You buy a car on loan with say 1L down payment. Run it for 3-4 years, and sell off for 2-2.5L. So you make 1-1.5L. This is after deducting all maintenance, taxes, insurance, driver's salary and fuel costs. If you run the car in 2 shifts you might make decent money, but that's rarely the case.

Now, of all the expenses on running a taxi, the driver's salary is a tidy sum. Zoom Car tried to eliminate this and it could have worked provided they had a system to penalize bad drivers. They do reward good drivers (refer my earlier post on this), but with the absence of a penalty on bad drivers, the cars ended up being in a bad state in no time. So, they spend more time fixing cars than renting out the cars. A local chap I know who exclusively fixes Zoom Cars in Vashi, told me that his business is doing good thanks to the drivers who have a license but no driving skills.

Thirdly, Zoom Car is just one of the many businesses that is simply burning VC money. This trend is alarming. Not only are they wasting the money, they are also preventing other start-ups (which could be far better in terms of returns) from getting this VC money. If they didn't make profit on the first 10 cars they started with, there is no way they are going to with the 1000s they now have.

Voted No. Have always been highly suspect of Zoomcar( and any self drive rentals) and that was not because of anything Zoomcar did. It was just the default nature of treating others property shabbily and unfortunately Zoomcar did not have any controls built in for the same.

I somehow could not bring myself to trust a self drive rental. Have used them only a couple of times for small local trips. For long distance, always prefer own car and even on a non driving holiday have preferred hiring cabs at the destination.

Unless they refresh their fleet and figure out a way to maintain it properly, I don't see them sustaining for long.

Sad to see Zoomcar in this state, considering that they had introduced the self drive model to India on a National scale.

I've had multiple trips using their cars in the period 2014-17 and the cars were well maintained, quick refund process and accessible customer support. Once when we were stopped at a police checkpost in Maharashtra where the SI was asking us to pay the fine for driving a taxi without a uniform, their call centre folks intervened and spoke with the SI for almost half an hour to make him understand the difference between taxi and self drive and helped us walk away without paying a dime.

Fast forward to 2019 when we had to hire a zoomcar, the car was dirty and smelling, the clutch was a pain to operate, delivery and drop off process was a nightmare and we had to chase their team for a couple of months regarding return of the deposit and even then had some 1000 deducted for some stupid reason. Also, their cars were limited to a speed of 80kmph. I understand a 100/120kmph speed limited but 80kmph was extremely aggressive. That was when we shifted to local cab providers who undercut ola on prices as well as are more considerate towards the passenger requests.

Voted NO

Zoomcar was pioneer of the self-drving start up in india, but it looks like some of their policies backfired majorly causing them to slowly crumble. I think the one that would have hurt the most would be their cap on the damages which was kept to 10K in the begining. Indian consumers took full adavantage of that taking cars for carefree ride and most of them became trash within 2 years. This must have costed a bomb as they had to keep refreshing their fleet sooner than expected.

Then they moved to third party ownership model in past few years and their consumers also realized how difficult was to earn money by attaching your car into the zoomcar fleet. This move turned out to be bust.

In order to gain initial footing in the market they lost a lot of capital and COVID is the final nail in the coffin it seems. I think the zoomcar merger or acquisition is not far in the future.

Voted "No".
The issue is not just with Zoomcar but almost all of these so-called "Unicorn" startups. The insane amount of VC funding has totally corrupted the startup model. Their valuations have almost no relation to reality.
The ideal process should have been the startup testing their business model to see if it is viable and profitable. However the unlimited money on tap allows them to push through with their business model without any reality checks.
With Zoomcar, the problem is even bigger as they have to buy/lease operate and maintain physical assests.
Another example is the spectacular implosion of WeWork. More such startups will shutdown. (Look at PayTM next)
This pandemic has acceleraed the fall but it was always coming.

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Originally Posted by poloman (Post 4874772)

The entire travel and transport sector is plagued by refund complaints. Are airlines issuing full refund? In US some airlines have gone to court arguing the refund under these circumstances are applicable only if the airline cancel the flight.

So let us be more uncharitable to such companies. They should ideally give an option for deferred refunds or bookings.

Agreed but I don't think it is an apple to apple comparision. However, Airlines and Zoomcar has different refund policies and Zoomcar is violating its policy & that is the concern here.

I voted "Yes" !

Of course, I am one of those members whose money is still stuck with the Zoom and I have also mindlessly taken the Supermiler membership (before I knew about the scam) costing 1000 for a year as I recently sold off my car.

Now it may be 'the one who thinks he will get his money back' thinking, but I guess the zoom car will see some light with the lifting of lockdown restrictions.

People who work in other places where they can not own car ( like me) and need to travel places would not risk taking public transport, would be inclined to hire a Zoom - especially between interstate and longer routes where public transportation would neither be safe nor comfortable and with proper motivation and advertising, I think Zoom can draw some new customers.

Though the price is a bit on higher side, I think some offers do give a VFM deals .

I am looking forward to have some bookings with the Zoom (without fuel, to avoid the refund problem )

Quality of service matters a lot in these businesses. There is only so long you can survive on first mover's advantage. You can keep growing by increasing reach but at some point you will start losing share.

Their inability to execute will sadly slow down the rental can industry growth in India. Some investors may see their failure as proof that this concept may not work in India. Some may even put blame on indian consumers that they cannot be trusted with rental cars.

While this may be an issue there are ways to mitigate this risk. You can penalize 'bad consumers' through processes and throughness in your operations.

Lets hope we get other big players in the space.

Finally this is an operations focused business and from top down focus has to be on quality of service. Vijay Mallya thought Airlines was a glamour business while it is an business built on operational excellence which likes of Indigo have mastered.