Mehta Car Rentals“Drive The Luxury”

Mehta Car Rentals Overview

Overview• Indian Travel Industry is booming over the last decade, the Indian economy has grown consistently at

an average rate of 6-7% per annum1.• Convenience of travel arrangement using internet: Riding on the digital economy rise, travel portals

offering travel packages, hotel stays, etc., have eased the booking process for travel. This has ensured that there are competitive tourist friendly offerings available in the market.

Our

App

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The strategy would be to target: Young Urban population - prefer

independence over comfort Foreign Tourists - Safety, the biggest

concern NRI – Prefer travelling in high-end cars Corporates – Short on time and on

dynamic schedule

1: Source KPMG

Operational Specifications

Infrastructure Considerations

• Two Parkings with 35 cars capacity at Noida & Gurgaon

• One Head Office in Delhi• Regional offices at Jaipur and Amritsar

• Outsource the call centre for telebooking

Collaboration Considerations

• Purchase 50 sedan cars with average cost of Rs 7 lacs

• Tie Up with multiple independent car vendors for 200 sedans and 30 luxury cars

• Collaboration with Hotels, Resorts, Travel Agencies & Hospitals

Manpower Considerations Hire 30 drivers to get isolated cars back to Delhi

Car Rental Industry Five Force Analysis

Competitive Rivalry

Bargaining Power of Buyers

Bargaining Power of Suppliers

Threat of New Entrants

Threats to Substitute

Low• High Capital Requirement• High Economies of Scale

Required (Medium Margin-High Volume)• No major legal constraints• Slightly risk zone • Large Network required

• High Product to Product substitution• Several potential substitutes for product itself• Multiple factors such as convenience and

availability comes to play in travel domain

High

High

• Several players in the market• Limited cost differentiation

Low switching cost

Med

ium

• Dependence on external players for cars • Chances of suppliers

capturing the end- customers• The external partners in

the most cases are relatively small firms, with limited individual bargaining power

Resulting rivalry scenario• High competition in the over all travel industry

• First mover advantage • Focus on distribution channel optimization

Objective – Customer Profiling

Analyse the most viable age-group

population for LOCAL

POPULATION1

Customer Profiling – To define the customer segment for Mehta Car Rentals

Define target potential -

tourists coming to Delhi

FOREIGNERS & NRI

2

Analyse the new upcoming market

of

MEDICAL TOURISTS

3

• Total Population (Delhi)– 6222K• Age Group 25-40 (Approx. 25%) –

1555K• In this age group 10% hire cars

**= 10%• Out of this 5% will prefer to rent

cars without out drivers **• TARGET POPLUATION = 75,000 Hence 6000 Trips per month

• Total Annual Foreign Tourist in Delhi – 2 Million*

• Segment of tourist which prefer to hire cars (10%) = 2 lacs

• Segment which would prefer to hire luxury cars without drivers (25%)= 50,000

• Total number of cars =12,500• Total trips per month ~ 1000

• Total Medical Tourists visited Delhi = 0.1 Million 1

• Segment which will prefer to hire cars without drivers (10%)=10,000

• Total number of trips per month ~900

** Assumed for calculations * : Sans Medical Tourists 1: Census Data 2011

Pricing Strategy

Sedans (Indigo, Logan, Manza & Desire)

Pricing for SedansAverage full day price charged by local vendors = 2500*Number of cars planned to hire from local vendors = 180 Number of cars planned to be purchased = 50 Price to be paid to local vendors =2500-500=2000 (Cost of driver + diesel deducted)Cost to customers for hiring sedans = 2500

Pricing for Luxury CarThe fixed component of the pricing will depend on the type of car requested.The customer will be charged 10% extra from the market standard price in return of the independence and we will pay 10% less to the vendor deducting drivers fee and diesel cost.

Net Revenue: (500*180+2500*50+3000*30)*30 =9150000 /Month

Car Segment

Number of cars required for Delhi sector = 6000/30 = 200 cars

Number of cars required for Medical Tourist= 900/30~30

No. of Luxury Cars required for NRI + Foreigner = 1000/3~ 30

Luxury Cars/SUVs(Targeting Foreign tourists)

Type of CarsTotal number of cars

Target Cities

Jaipur • Tourist Attraction : Pink City. Other tourist points in close vicinity • Shopping Destination • Upcoming IT Hub • Range of luxury hotels and resorts

Agra• Taj Mahal alone gets minimum of 15,000 tourists daily• 848K – Foreign Tourists who stay overnight, 209 – Domestic, 1130K – One day visitors• Agra is a biggest centre of the footwear industry. • The hub of Leather industry• Emerging destination for IT based industry

Amritsar• Golden Temple & Waga Border • Local government working towards encouraging tourism through food festivals et al• Strong NRI community• Strong export based industry & upcoming luxury hotels

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Strategy to attract investors Cost Analysis

Initial Cost

Car Purchase Cost (50*700000)3500000

0Web Site Cost 200000

GPS one time cost (50*10000) 500000Other Cost 1000000

Total Cost3670000

0

OperatingCost- Per MonthCar Maintaince Contract Cost (50*5000/12) 20833.33

Car Serviceing Cost (50*10000) 500000Parking Cost 200000

Call Centre Outsourcing Cost 300000Office Setup Cost (in delhi) 300000

Office Setup Cost (in other three locatons) 300000Driver Expence (30 drivers, 6000 per month salary) 180000

GPS Cost (2000*250) 500000Marketing cost ( of all three media) 1000000

Total Cost 3300833

Total profit before tax (Revenue- Total Cost) 5849167Profit after tax 4094417

Break Even 8.963426 Months

Key Highlights • Break Even Cost

achieved in 9 months

• High profit bearing business

• Impressive future expansion plan

Marketing Strategies – STP Analysis

Positioning & Targeting

• The plan is to target two segments namely – Luxury segments & Young travel enthusiasts

• Some key points of its promotional campaigns are:

Type-I

NRI & Foreign National Tourists & Medical Tourists

As a safe alternative to travel

Convenience & flexibility of location

Opportunity to enjoy driving

Convenience to leave car

Positioning

Target Segment

Tier Type-II

Younger, College – going & travel enthusiasts

Flexibility to plan own trips

Better social status –for luxury segment

No overhead issues Sense of adventure Convenience

Type-III

Corporate Executives

Opportunity to plan sojourns between business trips

Ability to get better value of money- corporate discounts

The flexibility & convenience for tailor made trips & ability to leave cars anyplace will be highlighted throughout campaigns.

Marketing Strategies Communication Media

Promotions at IGI Airport Delhi • The booking stall will offer personalized services to the travelers by interacting

directly with them and understanding their individual needs.• IGI Airport has 23 million passengers footfall annually1

• Position strategically to attract foreign tourists at the airport by offering them free guidance to plan their trip in Delhi.

Internet Marketing Reach avid travelers through the medium on social media

o Facebook Page for the company & dedicated twitter handleso Spread awareness about the page and start trends on twitter by organizing competitions and posting

on famous travel pages such as lonely planet .

• Start a YouTube channel • To showcase travel experiences the customers had.

• Update various holiday destinations in and around Delhi

• Invest on personalized advertisement through Google and Yahoo.• Target bloggers & travel consultants such as MyGola to create awareness about the concept1: Source IGI Website

Marketing Strategies Communication Media

Collaboration • Tie-Ups with leading luxury hotels & resorts in Delhi, Jaipur & Amritsar.• Association with travel agencies such as MakeMyTrip, Expedia and local

agents to offer deals on the car rent.• Affiliate with leading hospitals such as Apollo and Fortis to offer specialised

services to the medical tourists.

ConclusionIt’s quite clear that by implementing this idea, we are not only reaching the breakeven within one year but also future expansion plan will make us more profitable.

Thank You