Sixt sense

Car rental firm Sixt expects a rapid market conversion to organised sector services.

When Sunjay Kapur senses a business opportunity, he moves fast. The chief executive of the Rs 800-crore Sona group that supplies steering systems to car-makers has moved into India's car rental market by bringing in Sixt, Germany's leading car rental, leasing and fleet management company, as its master franchisee.

And it's never too late. The car rental industry is on a roll. It is estimated at Rs 9,000 crore annually, round-the-corner services included, but a huge chunk of opportunity is up for grabs.

"We realised there was a great opportunity to grow and innovate in this services sector, 96 per cent of which is unorganised," says Kapur, referring to the unroganised part of the market as "virgin territory" for Sixt.

With an initial investment of $15 million, Sixt India launched its operations in Delhi about a month ago with 50 cars, and hopes to expand to 7,000 cars in the rental business and 15,000 cars in the leasing space by 2010.

From Delhi, the service is to make its way to Jaipur, Agra, Amritsar and Chandigarh "" four northern cities that get swarms of visitors from overseas "" and then on to other high-potential places.

Running a global quality rental service is not easy in India, given how hard it is to control operations. For now, Sixt is focusing on the training of its chauffeurs.

"Every driver goes through a fortnight of attitudinal as well skill training," says Kapur, who supervised the training module himself.

Unlike overseas, rental firms in India rarely allow an individual to take the car on his own, which effectively places them in competition with private cab services. Still, demand is high. "All our 50 cars are on the roads," says Kapur, in boastful tones.

To ensure a high-quality service experience, Sixt claims to have tied up with some

FMCG companies, hotels, travel houses and corporates, and is in the process of roping in BPOs as well (call coordination matters; Gurgaon's 1929 service excels in speed of response, for instance).

Overall, the business is highly fragmented, with market leader Hertz (through its licencee Carzonrent India) among the few brands looking at an all-India road presence.

But then, though it's early days yet, even Hertz has not taken much business away from the unorganised sector. With a fleet of 850 cars across 25 locations, Hertz CEO Rajiv K Vij claims a monthly revenue of Rs 6 crore, with a profit margin as thin as 10-12 per cent.

Does the entry of players like Sixt worry Hertz? "Certainly not," says Vij, "In fact, we're very happy that quality players are getting into this business which will only help the market mature."

So, can Sixt and Hertz convert India's vast car rental market to organised services?

It will happen much sooner than sceptics think, says Vij, projecting a 40-45 per cent market share for the top three players in a few years once the big plans have achieved full roll-out.

Sixt's Kapur is equally if not more gung-ho on the Indian car rental market's conversion prospects.

But so long as self-driven cars are not let out, market observers may be forgiven for wondering if the optimism is based on anything more convincing than ambition and a hunch.