The car rental business is still in its infancy in Nepal despite some attempts made in the past that were not very successful. This concept becomes newer when it comes to self-drive vehicle rental services or renting vehicles without drivers. People today are attracted to this type of service as renting a vehicle can make travelling a lot more fun and easier.
“Although the concept of renting a vehicle with a driver was already there in Nepal, we are the first company to start the self-drive vehicle rental service,” says Bikrant Shrestha, founder of Yes Sir Vehicle Rental. "We noticed that people were looking for a self-drive vehicle rental service and that there was a big market demand for such services, " he adds.
Prior to establishing the company, Shrestha was a full-time academic. After 2015, he started focusing on the company and worked as a part-time lecturer at a college. Shrestha started the vehicle rental service with his own driver. After around six months, he says that he came up with the new concept. Initially, his company used to rent vehicles to people based on their citizenship certificates. But he soon found this an unfeasible way of renting out vehicles.
“We soon realised that renting vehicles to people based on their citizenship certificates wouldn't be sufficient to cover any losses due to cases of theft and accidents and started taking cash deposits of Rs 25,000 to Rs 100,000 per rental," says Shrestha, adding, "Even these amounts were insufficient to minimise the financial risks associated with car renting. In case of accidents, the expense would be around Rs 400,000 to Rs 500,000. But taking cash deposits in such huge amounts from customers was not possible."
The company then started taking bank cheques from customers as collateral. Once the customer returns the vehicle, the cheque is also returned. “We did this so that if anything happens, we can have financial coverage and settle it legally,” mentions Shrestha. Along with the cheque, customers are also required to provide copies of citizenship certificates, and passports if the customers are foreigners and the vehicle a rental charge.
The company’s rental charge inside the Kathmandu valley starts at Rs 4,000 per day but can be different in other parts of the country, depending on the terrain. “This rate differs according to place, vehicle type and the number of days for rent,” he says. According to him, renting a car for a longer period of time works out cheaper for the customer.
Investment and Growth
For starting any business or implementing an idea, financial management always plays a big part. But Shrestha thinks this is not the only important part. He soon realised that he had to add more vehicles in order to provide services to more people. At the time he thought of buying more vehicles or using vehicles that belonged to other people. “If the company had to financially grow, I felt it was better to use other people's vehicles as well. So I came up with the idea of leasing vehicles from other people,” he shares.
He convinced his friends and relatives to lease him vehicles that they did not use often. "I assured them that they would get a certain amount in return per month, based on the type of vehicle. Now 90 percent of the vehicles we have are on lease and we own only 10 percent of them,” he says.
When starting the company in 2016, Shrestha invested only around Rs 50,000. Apart from the company registration, he used most of the money to promote the business. Initially, he did social media marketing. Later, word-of-mouth worked, and people started asking for the company's services. Likewise, they also held meetings with travel agencies which further worked as another marketing tool.
Yes Sir Vehicle Rental which Shrestha started with one vehicle now has 30 to 35 vehicles. According to Shrestha, a vehicle can generate transactions of Rs 60,000 to 70,000 per month. “In total, we have transactions of about Rs 2 million to Rs 2.5 million,” he says.
Likewise, the size of the company has also grown. The business which started off from a room now has its own space in Kathmandu. In addition, they have also expanded services to Pokhara.
Besides rental services, the company has also started services like car wash, dent paint, reconditioning, and buying and selling of used vehicles. Similarly, the company also provides a service called ‘call a driver’ where people can ask for specific drivers.
Shrestha started the business on his own. After five years, he added shareholders to the company. He has now started the process of welcoming his employees as partners. In this process, along with Shrestha, there will be four partners in the company. Besides, there are 15 full-time employees working for the company at the moment.
As a self-drive vehicle rental company was a new concept in Nepal, there was a high risk of losing vehicles to incidents such as theft and accidents. Covering up that expense would be very costly for the company. He says that there was no tracking system in the country when he started. "But with technological advancements such as GPS tracking system, it has become easier for us to track each vehicle plying on the roads," he says.
Like any other startup, customer acceptance of a new type of service was another challenge for the company in the beginning. Shrestha also says that, at first, his parents weren't convinced by his sudden decision to leave his steady academic job to start a business on his own.
He observes that there is huge potential for the company to grow in the future. He shares a recent example of such potential. “We opened our vehicle rental booking during the Dashain festivities this year and were fully booked within a day," he mentions.
Shrestha's company initially targeted people who did not own their own vehicles. But the company's client base expanded over time. At the moment, expatriate Nepalis who are on vacation in Nepal are also among their customers. Moreover, people who are into the real estate business also seek the company's services.
Shrestha used to think that most of the company's customers used the vehicles for travelling or tourism purposes. But after the Covid-19 pandemic, they realised that only 30 percent of customers used them for such purposes, while a whopping 70 percent used the vehicles for everyday personal use.
The tourism sector was the most affected by the pandemic, but the company's business operation was not halted apart from the lockdown days. “Although the pandemic affected every sector of business, thankfully our business kept running,” says Shrestha. According to him, Yes Sir Vehicle Rental has plans to increase the number of vehicles to around 60 and expand services to different cities of the country.