We put Gaurav Aggarwal, Founder & CEO, Savaari Car Rentals, in the hot seat to quiz him about using big data and machine learning to conquer the Indian market, establishing the brand as a road-trip expert, and his entrepreneurial journey in the travel sector.
They say that the year 2021 marks the return of the classic road trip in India. We engaged Gaurav Aggarwal, Founder & CEO, Savaari Car Rentals, the man behind India’s leading chauffeur-driven car rentals company, in a candid conversation about getting funding for his transport services start-up, scaling up the business across India, and the government policies that are on his wish-list to support the vehicle rental sector.
Please describe key milestones and challenges in Savaari’s journey since 2006. The company began life at a time when few people used smartphones. How have top lines and bottom lines grown from then until today?
The story of Savaari dates back to 2004 when I was travelling to India and wanted to book a cab from Delhi to Roorkee while sitting in the US. I had been booking online car rentals in the US since 1999 and was astonished to find that even in 2004, there was no option of booking reliable and quality online car rentals in India. I sensed the need and scope of building a car rental company – a platform that would enable people to book car rentals online and simultaneously, provide reliability and trust in terms of quality service and fares.
This led to my launching the Savaari website in 2006. I kept my day job and moonlighted for the next four years! Having turned profitable as early as the second year since its launch, Savaari witnessed phenomenal growth during these four years. This prompted me to finally quit my well-cushioned job at Cisco in 2011 and move back to India in May to pursue Savaari full time. Within 10 months after my return, Savaari raised a Series A round from Inventus Capital Partners in March 2012 and in September 2013, raised Series B led by Intel Capital and participated in by Inventus Capital Partners.
Below are some of the key milestones that we achieved on the way:
- 2012: Incorporating the company and raising our series A. At this point, we were providing excellent chauffeur-driven car rentals in 53 cities across India offering Local Rentals and Intercity services.
- 2013: Growing our retail business 200% YoY and raising our series B.
- 2014: Building an efficient packing platform to be able to guarantee minimum monthly business to our vendor and driver partners. This was truly an industry first in India.
- 2016: Starting to sharply focus on Intercity business. Built a Recommendation Engine in our platform which matched the customer trip and requirements with the best car in terms of quality, seating configuration and carrier and the best driver in terms of trip route knowledge, language familiarity and service ratings.
- 2017: Expanding the coverage to 90 cities and transitioning to being the travel expert to customers taking trips with us and not just the Transport partner. Achieved industry best Net Promoter Score (NPS) and thus became the most reliable Car Rental service.
- 2018: Launching One-Way Intercity Services and expanding our services to 130 cities.
- 2019: Becoming cash-flow positive. FY19 being our first full year of profitability and FY20 being the second consecutive profitable year.
- 2020-so far: Becoming the biggest One-Way Intercity company with coverage in over 15,00,000 routes across India. The most satisfying aspect of all this is being able to help people with their emergency and essential travel during the COVID pandemic.
How have you evolved your business in keeping with the exponential growth in big data and machine learning?
Without attaching too much importance to the jargon accompanying big data and machine learning, our ethos at Savaari has been quite simple – Data enables powerful decision making towards customer-centricity. With over a decade of multi-channel data and a powerful automated decision-making backbone, we are constantly delivering higher value to our customers and driver-partners. Two broad areas that are the backbone of this ethos are:
- Using data and automated intelligence to provide the right car, with the right features, and the right driver to the customer. This is accomplished by our proprietary ‘Recommendation Engine’ that uses key machine learning interventions.
- Dynamic Pricing based on demand supply variables. Multiple leading and lagging variables determine the nature of pricing for a Savaari trip. A few of these variables include predictive demand, availability of supply, competition benchmarking etc. Savaari’s in-house ‘Pricing Engine’ is powered by large datasets and computational algorithms to determine the best pricing strategy for the customer.
How would you characterise the car rental market in India, vis-a-vis those in other markets globally – we have a disorganised market here. How does the rental market cohabit with ride-hailing apps on the one hand and self-driven rental car services on the other?
India’s car rental industry is conservatively estimated at $15B and is still dominated by the unorganised sector. This sector collectively enjoys a market dominance of upwards of 90 per cent. To elucidate how we differentiate ourselves from the competition, one has to understand the problems plaguing the unorganised sector (our primary competition) as well as the advantages that car rentals offer over other modes of transport (our secondary competition). Savaari’s business model blends intelligent use of technology with a healthy dose of operational capabilities. This has helped us differentiate ourselves by:
- Standing out in a service-led industry by consistently delivering industry high NPS (net promoter scores).
- Being road-trip experts. Right from the process of discovering Savaari, making a booking, to travelling with us, we consistently strive to make our customers fall in love with road travel. This is accomplished through our expert multi-modal content, highly trained chauffeurs and over a decade of road-trip experience.
- Ensuring affordability and high value for money through deep supplier relationships and a technology platform that unlocks pricing efficiencies.
- Offering customised services. Intercity travel is not a commoditised business, and involves multiple layers of customisations to suit customer needs. Through our:
- Custom itinerary definition determined by consumer travel behaviour and analytics that influences pricing and product definition.
- A 24×7 call center that incorporates a service- and expert-led mentality,
- Value-added services like the ability to book premium/economy cab variants, selecting carrier/non-carrier equipped cars and choosing drivers with a specific language proficiency.
Although the target market for car rental services is different from the shared vehicles in ride-hailing apps and self-drive rentals, Savaari offers some significant advantages to travellers when compared to them, especially in the current context of Covid:
- Unlike shared rentals, Savaari’s assets (car + driver) service a single customer during a day – drivers as well as customers are not in contact with multiple counterparts throughout the day. Utilisation of the asset is not extremely taxing like ride-hailing cabs (> 14 hrs/day) and this affords time and bandwidth for daily precautions.
- Not being a completely tech-driven/automated platform allows constant human interaction between Savaari and its driver partners. This yields positive service outcomes in battling COVID.
- Self-drive cars are hard assets that are not operated and moderated every day. The driver + cab model at Savaari adds a layer of ownership to ensure that the asset hygiene is maintained carefully and continuously.
- Self-drive car quality is heavily dependent on the customers who use it whereas the chauffeur driven cab quality is governed by the driver/owner.
- Chauffeur-driven cars through Savaari are moving assets that can be continuously monitored and metered for baseline hygiene requirements
- Moreover, chauffeur-driven cabs continue to offer a hassle-free travel advantage compared to self-drive cars (own/rented).
How is the corporate business performing for you? How do you plan to grow it, especially given the challenge of WFH? In this context, have you had to accord greater focus to leisure travel?
Corporate travel has resumed in India. In fact, the number of bookings we received in the month of August 2021 is the highest since the onset of Covid in March 2020. The recovery stands at 70 per cent compared to the pre-Covid numbers. With 50 per cent of the Indian population already administered at least one dose of vaccination, we don’t expect corporate travel to be hit as severely by the third wave if at all there is going to be one. As our corporate travel comprises primarily the intercity work trips (as opposed to the daily commute to work), we expect the demand to only increase in the upcoming months without being adversely impacted by the WFH situation.
Of course, our primary focus over the last year and a half has been intercity emergency/essential travel. Savaari scaled its one-way intercity services across 15 lakh routes in 2000+ cities and towns in India last year to facilitate essential travel of people in a hassle-free and affordable manner.
However, as the leisure travel and holiday season has begun in India with the monsoons in July and Ganesh Chaturthi, Navratri and Diwali in the upcoming months, we are expecting a huge surge in leisure travel demand.
Please describe the current composition of the Savaari managed fleet? What do you envisage it looking like five years down the line? Are you looking at electric cars or even transitioning to renting out minibuses?
The current Savaari fleet is a combination of Driver-Cum-Owners (DCOs) who own and operate their own car) and Travel Vendors (who own a few cars and hire drivers to operate them). The fleet also spans different fuel types – petrol, diesel and CNG cars. Savaari has consistently improved the fleet size of our CNG cabs over the last two years, in the context of being more environmentally conscious. A large part of our fleet in the metro cities – NCR, Mumbai and Bengaluru are CNG cabs and this number is expected to grow in the near future.
As far as electric vehicles are concerned, we are closely monitoring the EV landscape in the country – both from a policy standpoint as well as looking at manufacturers who have made progress in this space. We are poised to make a seamless transition to EVs as soon as the industry embraces this technology as a sustainable and affordable means of public transportation.
Apart from the traditional four- and six-seater cabs, we currently operate in the 12-seater Tempo Traveller (minivan) space as well. There are discussions on expanding to larger minivan segments like 16-, 18- and 20-seaters in the near future.
Are there as-yet unexplored niches in the vehicle rental market where you see an opportunity? If yes, how do you plan to target them?
Savaari views the chauffeur-driven car rental market strategically as a viable alternative to AC trains and buses. It is our firm belief that with the right focus on the scope and scale of a pan-India network, this dream is not unattainable. Towards realising this vision, we are consistently on the lookout for customer-led requirements in the chauffeur-driven rental segment and have been agile enough to roll out the necessary niche products over the last few years consistently.
On the policy side, what measures would you like to be put in place to support optimal growth in the car rental sector?
Due to the shift in travel preferences of people post-COVID, 2021 is dubbed as the year marking the return of the classic road trips in India. This will directly impact the demand for car rentals and contribute to a swift recovery of the sector. But the onus to make it a success is on the country’s road infrastructure that facilitates full-scale and last-mile connectivity. Moreover, if an economy aims at promoting domestic travel, its road connectivity plays a pivotal role.
- Investments in the road infrastructure, especially for the remote towns and villages would be a prudent choice to promote local tourism and the car rental industry while simultaneously ensuring risk-free travel. This would align well with the government’s vision to build a self-sustained economy, creating jobs in smaller towns thereby supporting the local travel and hospitality sector.
- The total expenditure on the Ministry of Road Transport and Highways for 2020-21 was approximately Rs 108,000 crore, growing at a healthy trend over the last five years. We would anticipate this to continue and hope that the allocation hit the Rs 120,000 crore mark in the next budget.
- The state tax collection at the border checkposts and toll booths is still chaotic. Standardisation or rationalisation of toll, state tax and parking charges across national and state highways by the government will go a long way in creating a hassle-free travel experience for travellers and car-rental service providers.
- As per CARE ratings, India stood 10th worldwide in terms of its annual spend on travel and tourism in the year 2019. In order to spur domestic tourism and make India a world-class tourist destination, we expect that the budgetary allocation is at least increased by 50 per cent to Rs 4,000 crore in the next financial year.
- Car rentals would transition to EVs as soon as the industry embraces this technology as a sustainable and affordable means of public transportation. To encourage this, the government needs to focus on the manufacture, infrastructure as well as adoption of electric vehicles in India. Addressing the major challenge faced by the electric vehicle manufacturers could be the solution – reconsidering the 18 per cent GST input on components/raw materials and providing attractive subsidies. Another bottleneck corresponding to the EV adoption is the lack of associated infrastructure such as charging and battery-swapping stations. With Tesla entering the Indian market, it is expected that the government will allocate funds for setting up EV infrastructure which will increase its adoption and penetration pan-India.