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How to Start a Car Rental Business in Kenya

Daisy Neema
Daisy Neema Business Ideas

Recently, many people are renting vehicles for business, weddings, road trips, and other leisure activities. This has made car rental business a profitable venture. Many people are making their living out of car rental business. Entrepreneurs who wish to reap can invest in the car rental industry. The success of rental car business depends on your managerial skills, marketing strategy, and persistence. 

Also Read: How to start profitable soap making business in Kenya.

This is how you can start a car rental business in Kenya.

Understand Car Hire Industry

An increase in the air and road travel has led to an increased demand for rental cars. Air travel and road travel are linked.

There is contract car hire and daily car hire. It is best to consider the type of car rental you want to operate when starting a car rental business. You also need to know that the car rental business is mostly segmented into two segments; the business and leisure.

Conduct Market Research

Conducting market research is essential to know your clients' needs and demographics. This will help you understand your target customers and the services they need most. They can be local or foreign tourists, corporate executives, working class, party-going teenagers, or field managers.

Also Read: How to start a profitable butchery business in Kenya. 

Decide on Your Car Rental Business Niche 

Most car rental businesses in Kenya offer general car hire services. They offer services based on the client's needs. These services can be for leisure, personal, or corporate. Your business can be quite rewarding if you choose a specific niche. Your customers will be aware that you specialize in a particular car hire service. Most profitable car rental companies specialize in specific niches and attract customers in need of those particular services.  

Write a Car Rental Business Plan

Writing a clear business plan is essential for the success of your rental car business. It will help you plan for your short term and long term goals, organize your finances and have future projections. Your car rental business plan should include your startup and operational costs and how you intend to raise capital, who your target customers are, your area of specialization, your pricing, and business insurance.

Car Hire Business Registration

It is compulsory to register any business you start in Kenya. Otherwise, you will be in constant conflict with the authorities. Business registration will also enable you to set up a business bank account. Business registration helps you to acquire loans since banks approve loan applications for registered businesses only. You will need to do business name registration online through the eCitizen portal.  

Obtain the Necessary Business Permits, and Licenses

You can acquire business permits and licenses from your county government. It is mandatory for all car hire businesses to get permits and licenses. You also need to get rental car business insurance. Seek advise from a professional insurance agent about the best car insurance.

Some insurance policies for your car hire business include; Liability Insurance, General Liability, and Personal Accident Coverage.

Read more: Business permits and licenses you need to operate a business in Kenya

Choose a Location for your Car Hire Business 

The success of your car hire business depends on your business location. You can rent an office space,  where your clients will be booking services. The area should be in a busy area, easily accessible and visible. 

Purchase or Subcontract Cars 

You can decide to buy cars for your business.. You will need huge startup capital. Alternatively, you can sub-contract cars. You can look for people who cars and are interested in making additional income. You will agree on amount you will be paying them at the end of the month. 

Also Read: How to start video games business in Kenya

Market your Business

Having an excellent marketing strategy will help your business get customers. You can use sponsored ads on social media platforms. You can also request your clients to help you market your car rental business. For every new client they bring, they get a discount. Additionally, you can distribute brochures, pamphlets, and posters in your local area.

Is Rental Car Business Profitable in Kenya?

The car hire business can fetch you between Ksh 35,000 and Ksh 40,000 every month. On the other hand, if you decide to operate the business by yourself, you can make between Ksh 40,000 and Ksh 90, 0000. It is, without a doubt, a great deal. Renting out luxurious cars for events like weddings can help you make more profits.

Pros of the Car Hire Business

  • Free time. The car hire business is one that can leave you with a lot of free time if your management is excellent. You do not have to drive your clients personally. You can get a driver or hire a management company to do the work for you.
  • Regular workflow. By marketing and networking, you can land on many car hire deals and have a regular workflow.

Cons of the Car Hire Business

High car Insurance costs. Before you renting out your car, you will need to get motor insurance. Unfortunately, insurance companies charge high premiums for rental cars. Since you cannot start a business without insuring your car, you will need to invest heavily in your rental car business.

High maintenance costs. Rental vehicles need regular servicing since clients. It is challenging to get clients to hire old vehicles.  

Frequent and expensive repairs. It is best if you handle the business yourself. You can also opt to hand over your vehicles to a fleet management company. Reckless handling of vehicles will cost you due to frequent repairs.

Conclusion

If you want to start and run a successful car hire business in Kenya, it is essential to understand your customers' needs. Also, get a good understanding of vehicles and their trends. The success and growth of your car rental business also depends on your marketing strategies. Market your business and offer quality customer services. 

Also read: Home-based business ideas that require small capital