PHASE 4
1. Pricing Strategy
As Zoomcar is a car rental service provider, to decide the pricing for the customers first
of all the company needs to consider the petrol and diesel prices. Therefore, the prices
considered are Rs. 65/litre and Rs. 53/litre for petrol and diesel respectively. The
pricing strategy has been prepared considering a hatchback and an SUV. For a
hatchback vehicle Maruti Swift has been considered and for an SUV Mahindra XUV
500 has been considered.
After deciding the vehicles, the most important part for deciding the price is their
mileage efficiency per kilometre. The efficiency for Maruti swift petrol variant is
20km/l and for the diesel variant is 25km/l. For Mahindra XUV petrol variant the
efficiency is 12km/l and for diesel variant is 15km/l. Therefore, considering the
distance covered by the vehicles per trip the fuel consumed by the Maruti Swift petrol
variant is 26 litres and for diesel variant is 20.8 litres. For Mahindra XUV petrol variant
is 43.33 litres and for diesel variant is 34.67 litres. The total fuel cost for Maruti Swift
petrol variant is Rs. 1690 and for diesel variant is Rs. 1102.4 whereas for Mahindra
XUV petrol variant is Rs. 2816.67 and for diesel variant is Rs 1837.33. After that the
cost of servicing and maintenance is considered. For Maruti Swift petrol version is Rs.
1000 and for diesel version is Rs. 800. For Mahindra XUV petrol version is Rs. 2000
and for diesel version is Rs. 1500. Now, totalling the costs incurred by Zoomcar for
Mahindra Swift petrol version is Rs. 2690 and for diesel version is Rs. 1902.4. For
Mahindra XUV petrol version is Rs. 4816.67 and for diesel version is Rs. 3337.33.
Now Looking at the fares charged to customers for Maruti Swift petrol is Rs. 5000 and
for diesel variant is Rs. 5200. For Mahindra XUV petrol variant is Rs. 8000 and Rs.
8400 for diesel variant. The refundable security deposit for Swift petrol variant is Rs.
2500 and for diesel variant is Rs. 2500. For Mahindra XUV petrol variant is Rs. 2500
and is the same for diesel variant. Along with that the doorstep delivery charges (if
applicable) will be Rs. 300 for both Maruti swift as well as for Mahindra XUV for
petrol and diesel variants. Totaling these charges it will be Rs. 7800 for Maruti Swift
petrol variant and Rs. 8000 for diesel variant. For Mahindra XUV the total comes to
Rs10800 for petrol variant and Rs. 11200 for diesel variant.
Now calculating the profit per trip for Maruti Swift petrol version it comes to Rs. 2610
and Rs. 3597.6 for diesel variant and the profit for Mahindra XUV for petrol variant is
Rs. 3483.33 and for diesel variant is Rs. 5362.67. Now to calculate total profit first of
all we have assumed the frequency of trips per year for Maruti Swift petrol variant as
70 and for diesel as 50. For Mahindra XUV petrol version is 40 and for diesel version is
30. Now considering the number of cars for Swift petrol version is 50 and for diesel
variant is 30. The number of cars of Mahindra XUV petrol variant is 20 and the diesel
variants are 10. Hence calculating them the total profit comes to Rs. 91.35,000 for
Maruti swift and for diesel is Rs. 53,96400. For Mahindra XUV petrol version it comes
to Rs. 27,86,667 and for diesel variant is Rs. 16,08,800. Adding all these profits it
comes to Rs 1,89,26,867.
Now considering the investments, the price for a new Maruti Swift petrol version is Rs.
5,50,000 and for diesel is 6,50,000. For Mahindra XUV petrol variant the cost of
buying is Rs. 13,50,000 and for diesel variant is Rs. 15,50,000. Adding these amount,
the total car price comes to Rs. 2,75,00,000 for swift petrol variant and for diesel
variant is Rs. 1,95,00,000. For Mahindra XUV petrol variant, the total amount comes to
Rs. 2,70,00,000 and for diesel variant it comes to Rs. 1,55,00,000.
After that the parking space cost for location is also calculated which comes to Rs.
1,00,000 for Both Swift and Mahindra XUV for petrol and diesel variants. The number
of locations assumed are 10 for each of them. Calculating them the total parking cost
comes to Rs. 10,00,000. The total cost (car purchases + Parking Space) comes to Rs.
9,05,00,000.
Assuming the resale value after 4 years for Maruti swift petrol is Rs. 2,00,000 and for
diesel variant is Rs. 3,00,000. For Mahindra XUV petrol variant is Rs. 6,50,000 and for
diesel variant is Rs. 8,00,000. The Break-even calculated is 4.86 years.
Calculation
Cost Analysis of Zoomcar in Delhi NCR
Petrol Price (Rs./l)
Diesel Price (Rs./l)
65
53
Distance (km)
520
520
Type of Car
Particulars
Hatchback
Petrol
Diesel
20
25
26
20.8
1690
1102.4
1000
800
Fuel Average (km/l)
Total Fuel Used for Trip (l)
Total Fuel Cost for Trip (Rs.)
Cost of service and maintenance
SUV
Petrol
12
43.33
2816.67
2000
Diesel
15
34.67
1837.33
1500
Total Cost incurred by Zoomcar
2690
1902.4
4816.67
3337.33
Fare Charged to customers
Refundable Security Deposit
Door Step Delivery (if applicable)
5000
2500
300
5200
2500
300
8000
2500
300
8400
2500
300
Total Charges
7800
8000
10800
11200
Profit per Trip
Assuming frequency of trips per year
No. of cars
2610
70
50
3597.6
50
30
3483.33
40
20
5362.67
30
10
Total Profit
9,135,000
5,396,400
2,786,667
1,608,800
Collective Profit
18,926,867
Car Price (Ex-Showroom ) Rs.
550,000
650,000
1,350,000
1,550,000
Total Car Price
27,500,000
19,500,000
27,000,000
15,500,000
Parking Space Cost per location
100,000
100,000
100,000
100,000
No. of locations
10
10
10
10
Total Parking Cost
1,000,000
Total Cost (Car Purchases + Parking space)
90,500,000
Assuming Resalable Value after 4 years
Break Even Expected
Assumptions
200000
4.86
300000
650000
800000
1. All calculation for hatchbacks have been done for Maruti Swift
2. All calculation for SUV have been done for Mahindra XUV 500
3. Cost of service and maintenance is half yearly cost and it is assumed that the cars are serviced once in 6 months
4. No. of cars and frequency of trips are assumed as it is purely dependent on availability of the cars
5. Ex - Showroom has been considered for car price but in actual the automobile companies offer lower prices to
Zoomcar
6. Parking Space Price is assumed to be constant for every location
7. For break-even calculation, the total ownership cost and parking space cost is assumed to increase @ 5% p.a.
2. Distribution Strategy
Zoomcars distribution strategy works in the principle i.e. making the process of renting
a car as hassle-free an experience as driving your own car. Zoomcar lets you rent any
cars in its fleet for a refundable deposit and the entire process is carried out online.
Zoomcar has focused on making the booking process smooth. There are no forms to fill
out. The entire booking process takes place online. The company requires your driving
licence, the booking amount and the security deposit in advance, but you can scan the
documents and send them via the Internet, and pay the money online.
Once your paperwork is completed, all you have to do is pick up the car and you can
drive off. You'll have to return the car at the same place and in the same condition you
collected. It is great deal for Zoomcar to provide cars at various locations so that the
customer does not have to travel a long distance in order to pick up his car. Initially
Zoomcar started out by renting spaces in malls, real estates, private garages, metro
parking where it parks its fleet of cars. Now seeing the problem faced by some of its
consumers regarding pickup and drop of cars it has introduced additional facility
wherein a Zoomcar employee will drop the car to your specified location for a fee of
Rs. 300 and will take it back from the same location. This has resulted in great
convenience for the customers as now they do not have to travel to the location where
the car is parked. With ZAP, Zoomcar allows individuals to purchase one or more
vehicles, lease the vehicle(s) to Zoomcar, and then share in the revenue as they run the
car on their platform over their standard operating period.
3. Improvements
a. Improve the pick-up and drop services
b. Expand to the tier B cities.
c. To increase the fleet of cars so that cars are available at all time to the customers
4. Suggestive Plan
a) Increase the limit of home pick and drop from 5 km to 10 km, and in continuation,
to that, the customer request where to drop the car off and charge them a per km
price, over and above the charge of returning the vehicle to the Zoomcar pickup
point.
b) Offer a Pick-Up/Drop Fee Reimbursement if the total value of booking exceeds Rs.
5,000 or Rs. 10,000.
c) If the booking comes from a regular customer, then to offer zero pickup and drop
fees.
d) Offer free Pick-Up and Drops if the booking location is within 1 or 2 km radius of
the zoom parking spot.
