Expert Speak Digital Frontiers
Published on Feb 19, 2020
Is India ready for ‘peer to peer car rental’ segment?


India is witnessing a profound change in the shared mobility sector which makes a good case for the government to reform its policy for ‘peer-to-peer (“P2P”) car renting’ or ‘Airbnb for car’ segment. Presently, the regulatory framework for shared mobility and vehicles in India is governed under the Motor Vehicles Act, 1988 (the “Act”), which does not permit sub-rental of private vehicles (‘vehicles possessing private number plate’). The following legal challenges can be faced in sub-renting of a private vehicle: 1) under Section 66 of the Act, the government requires car owners to get a permit from the regional or state transport authority for the use of private vehicle as a transport vehicle for passengers. Since leasing out of private vehicle to a stranger in exchange for money would be construed as a commercial activity, the government expects you to pay relevant taxes and get a black commercial license plate with yellow numbers emboldened – as the car would be leased out for self-drive rental purpose. 2) under Section 147 of the Act, the insurance companies are not required to cover any contractual liability while giving out their private package policy for cars. This permits insurance companies to cover only private use of vehicle by the owner or a person known to the owner. Any third person driving the car who is not known to the car owner is not covered under the policy. Due to the above restrictions, peer to peer car renting becomes unlawful and extremely risky for private car owners in India. However, with growing change in consumer behavior and rise in preference for shared means of mobility such as Uber, Ola and self-drive rental cars from companies such as Zoomcar, and opting for lease and subscription model over buying a car – makes a compelling case for the government to regulate the highly promising P2P car rental segment.

What is ‘P2P car renting’?

The concept of P2P car renting is simple and revolutionary. It allows car owners to make extra money on days when they are not using their car. Just like an Airbnb, the car owner decides the rent of the car, the number of kilometers to be driven and the time period between which one can rent the car. How does it work for the renters? Instead of going to a traditional car rental agency, which will have limited car options and expensive rates due to parking fee/airport fees/shop rental, renters can rent a car near to their residence or anywhere in the city at a lesser price for specific number of hours. With this arrangement, the car owners can rent the car subject to their own availability and usage, and generate passive income on the days they are not using the car. This system works really well for the renters as it eliminates the hassle of dealing with car rental agencies and connect them directly with the car owners, thereby, avoiding all the tedious paperwork and creating a sustainable environment for car renting virtually operable through a mobile app. 

How will ‘P2P car rental’ companies and renters operate in India?

The core operational model for future P2P car rental companies and renters in India should remain similar to other countries where this model is prevalent. The P2P car rental companies in India would first require renter to register their credentials on company’s app such as a valid driver’s license, Aadhar card and payment details. Second step would involve company processing renter’s documents, followed by its verification, and finally validation of renter’s account. Once registered with the company, the renters will be able to select the preferred area of the city from where they would like to rent, then select a car and make required transaction for it. On the day of trip, the renters will be required to reach the pickup location 15 minutes prior to the requested time of the trip and unlock car through their app (keyless entry). Also, before starting the trip the renters would be required to take certain pictures of the car such as of fuel level, kilometers, dents, etc., to be uploaded on the app so as to avoid any future disputes with the car owner. Renters will further be given flexibility to rent from a minimum of 8 hours to some number of days or months, subject to availability by the car owner. It will also be mandatory for renters to purchase insurance along with the price of sub-rental, as it will protect both renters and car owners from any unforeseen damage/loss of property.

Future of P2P car renting in India

P2P car rental segment promises millions of Indian citizens to get a car anytime from near their residence on a need-per-se-basis and at the same time offer an opportunity to the car owners to make passive money from their unused car, also, contributing towards shared economy of the country. This segment can also help India tackle some of its major concern related to traffic conditions and pollution by promoting concept of sharing cars and thus, having less number of cars on road. This segment further promises to create an opportunity for unemployed, elderly and differently abled people owning cars to make money and become self-dependent. Overall, it can assist government in generating more revenue through taxes and boost the insurance sector by creating more jobs. With so many modes of shared mobility making their successful way into India such as Uber (ride-hailing), Zoomcar (self -drive rental), Bla-Bla cars (carpooling) etc., it can be deduced that Indian car owners and renters would be interested in trying this mode of shared mobility as well.

Companies in India such as Drivezy and Ridengine already allow individuals to peer rent car  through their platform. Though, majority of the car owners renting through this platform are tour operators and individuals doing peer renting as a full time business with commercial license plate and not regular car owners.

‘P2P car rental’ segment in other economies 

It is now estimated that almost 2.9 million people in North America avail services of this segment. Leading P2P car rental companies of US such as Turo and its rival Getaround have grown big enough in size to challenge the $30 billion strong US traditional car rental industry there. Traditional car rental industry of the US argue that the companies operating under P2P car rental segment should be governed under same rules and regulations as are applicable to the car rental industry. However, P2P car rental companies maintain that they do come under the same category as the traditional car rental companies as they consider themselves merely a service provider (like Uber), acting as an intermediary between renters and the car owners. Legislators in 34 US states have now started to consider making a legislation to regulate the P2P car rental segment and bring it at par with the traditional car rental industry. It will be now interesting to see if in the coming time P2P car rental companies are classified under the same category as a traditional car rental company?

In Europe, the P2P car rental segment have been blooming as well. In UK, leading companies in this segment such as Drivy (now Getaround) and Hiyacar have been able to curb 72% of their subscribers from owning a car. These companies claim that 65 percent of their subscribers used to own one or more cars before they started using their services. Just like Indian cities, London has a heavy congestion and pollution problem. Research indicates that the Londoners now refrain from owning a car and are increasingly relying on P2P car rental model. It is now estimated that there are 2.6 million users of P2P car rental users in London alone. The companies operating in this segment are also helping London city to reduce the number of stationary cars on the road, which in effect is helping the city curb its pollution and carbon emission level. P2P car rental companies have also increased their use of electric vehicles, which is proving to be a permanent fixture to make the London city green. This segment is further tackling similar problems in European countries such as Germany, Belgium, Italy, France, Finland and Belgium as well.

P2P car rental segment has arrived fairly recently in South-East Asia region. It is estimated that 25% of all millennials in South-East Asia have unpaid car loans and they are leasing their car to strangers through P2P model to generate extra passive income, which in turn help them towards paying back their car loan. In Singapore, P2P car sharing platform is completely new and the Land Transport Authority of Singapore has recently approved a company called ‘Drive Lah’ to run a year-long trial capped at 500 cars starting from 1st October, 2019. Singapore plans to review the trial after six months and see if the model is viable for their country. In Thailand, Drivemate is one of the leading P2P car sharing companies trying to solve increasing traffic problem and pollution of the country. Malaysia by far is at the forefront of P2P car rental services in South-East Asia, and companies like Moovby and Kwikcar are trying to get stationary cars moving in an economy where 93% of all the households own a car.


Unlike western countries where car is considered an utility, owning a car in India is still seen as a status symbol. In the past few years, aggregators such as Uber and Ola have radically changed how people commute. Market in the FY 2019 saw unprecedented change in consumer behavior, and therefore, a sluggish growth in passenger vehicle demand. Consumers are now refraining themselves from buying cars and opting for alternate modes of commutation, including public transport and shared mobility with Uber, Ola and shuttle services. Problems such as congestion, inadequate parking, rising fuel prices, poor credit history and high insurance premium have further derailed prospective buyers from heading towards car showrooms.

Once government decides to regulate this segment, entrepreneurs and leading players around the world would want to tap on this opportunity at the earliest, as India time and again has proven to be a favorable battleground for startups and innovative models of shared mobility. The future players trying to get in this segment will have to come up with radical ideas to cater specific needs of Indian car owners and renters. In USA, hiring car can cost up to 47% more when hiring from a traditional car agency when compared to Turo or Getaround. This cost difference can be further reduced in India with availability of cheap labor and affordable cars. Peer-to-peer car renting is not only for an average car owner, but it also promises exotic/old car collectors to make money and create unique experiences for enthusiastic renters. This model can also serve as a business with people owning multiple cars to generate more income. This model will be most suitable for people who do not want to buy a car or cannot afford a car, but require it from time to time to suit their needs. With this model, an average Indian will be able to get a car in future without having to worry about credit score and paying EMIs. Whether people will really benefit from this segment will only be known in the time to come depending upon government’s policy to regulate this segment.’s-startup,-drivemate-raises-us$2-2-million-in-series-a-funding

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