How to Start a Car Rental Agency

Becky Martin, writer

Published at 23/06/2019, Updated on 04/05/2022 , Reading time: 5 min

How to Start a Car Rental Agency — Photo © car-rental-agency.jpg

The car rental industry in the UK is booming and is expected to keep on growing. In fact, in 2018, the UK’s vehicle rental and leasing industry contributed around £49 billion to the UK economy (BVRLA). The report also indicated that the strong sector supports over 465,000 jobs and generates £7.6 billion in taxation each year.

Therefore, with there being such a lucrative industry at stake, why not start a car rental agency so you can capitalise on the high demand for vehicle renting.

Car rental or car leasing?

Car rental and leasing often get talked about together, as is demonstrated by the statistics we just discussed. But what is the difference? In simple terms, car leasing usually involves a longer-term commitment where a customer uses the vehicle regularly for personal use. On the other hand, car renting is usually classed as a smaller commitment. For instance, a customer might rent a car for a business trip, a holiday, an event or as a replacement car whilst their regular car undergoes maintenance.

This article will focus on car rental agencies and how to start one.

Why the car rental industry?

The growth in the car rental industry in the UK can be attributed to high demand from businesses and a rise in tourism. Of course, with many overseas visitors arriving by plane, there will be a demand for car rental services at the airport.

Established car rental businesses offer the brand familiarity, flexibility and convenience that customers search for when hiring a car. By offering a large range of cars, from minis to 4x4s, you should have the perfect car for every customer’s individual needs. Customers can also be assured that they are safe when driving, as vehicles are upgraded and serviced regularly.

Now, we’ve taken a more in-depth look at the car rental industry and why it’s an exciting investment opportunity, the next step is to think about how you would start your own. If you want to take a more straightforward, less risky route, you could choose to buy into a car rental franchise, such as Green Motion. However, if you have a clear vision and are financially capable of starting your own car rental agency, take a look below at some tips to consider.

How to Start a Car Rental Agency

1. Look out for a gap in the market.

You need to consider the purpose you are providing vehicles for, the type of customer you want to cater to and the type of vehicles you will offer. Let’s take a look at some potential niches so you can get an idea of how your car rental agency might materialise.

Helping customers on their holiday. You could provide cars to holidaymakers who want to explore the local area or get to their desired destination. Therefore, for this type of business venture, you will want to set up shop in a touristy area. Or, you could start a high-end car rental company where customers can rent expensive, premium vehicles for fun or special events like weddings and proms etc.
Transport purposes. You might provide vans for removals or transporting heavy goods.
For business. You could provide cars for people embarking on long commutes from city to city, to transport business personnel to important events, for business trips or to take people to and from airports.
Rent over buy. The last option is to provide vehicles for customers who would simply rather rent than buy their own vehicle, maybe because they prefer to get public transport and only need a car occasionally.

It’s important to conduct extensive market research so you make the decision that works best for you.

2. Develop a business plan

You can look online for a business plan template and fill it in. Take your time on this as it is essential in identifying any issues that may arise, as well as making financial predictions and plans for business growth.

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3. Decide on your prices

To do this, we recommend researching your competitors, considering your costs and thinking about your target customers.

4. Buy vehicles

The priciest part of this sort of business is buying the vehicles you are going to rent. You should buy these outright instead of leasing them. To save money, you could start with second-hand vehicles from eBay, Gumtree or a local dealership.

If you wish to start off with a larger fleet of cars, you could have a look at online used car wholesalers.

At this stage, it would be wise to have a look at other car rental agencies in the area and see what vehicles they are offering. If they’ve been in operation for many years, its more than likely they have a good idea of what customers want.

5. Research car rental regulations

You need to make sure that you adhere to product liability legislation under the Consumer Protection Act, which basically means checking that all your vehicles are safe to drive. Whilst the manufacturers are also responsible for this, it’s the law that you do your best to minimise any risk to the customer. This includes monitoring the vehicles’ safety, warning customers of any possible risks and solving safety issues when they arise.

On top of this, you need to abide by the regulations that come under the Consumer Rights Act, which is in place to ensure customers have a transparent and fair experience with traders. To achieve this, you need to make sure vehicles are of an adequate quality, accept the customers’ legal right to return their car and draft rental contracts that are fair.

You also need to look into self-drive hire insurance and other relevant insurance policies.

6. Name your car agency

Have some fun with it but remember that it will be one of you company’s most influential marketing tools, so it should indicate the services you offer and entice them to choose you over the competition.

7. Get your name out there

All that’s left now is to market your car rental agency. Write blogs and create a strong social media presence, a well-designed website and targeted adverts.