A disruptive force in the form of a car-rental app (in addition to Grab and Uber) is set to change the car ownership industry in Malaysia.
The day has finally come when there is no necessity to own a car, at least in Malaysia, a country which has had aspirations to be the ‘Detroit of the East’ back in 1986. That title has now gone to Thailand while early this year, 49% of Proton, Malaysia’s homegrown car manufacturer has been divested to Gealy, a Chinese car company.
Since the past 2 years, Grab and Uber have dramatically transformed the car-ownership landscape in Malaysia. Many Millennials are saying that they do not need to own cars nowadays – partly because they can’t afford it (due to high car duties) compared with relatively low and stagnant salaries. Worse, those who actually bought find that they are stuck with nine-year car loans – possibly the longest-term car loan in the world.
That’s set to change now. With the two ridehailing services plus the completion of the MRT and LRT in the Klang Valley, it has become quite unnecessary to own your own car. To their credit, Grab and Uber are also constantly coming up with promotions which make it much more worthwhile to book them instead of driving yourself. It takes away the hassle of having to deal with traffic jams, parking and petrol, not to mention maintenance costs.
It even allows you to do other things while someone else is driving such as answering emails, messages, et cetera. It’s almost akin to having your own personal driver – as and when you need them, at a fraction of the cost. The best thing is some of the cars are premium cars the likes of Mercedes, Mazda 6, Peugeot, Honda and Toyota.
” We want to encourage car sharing among the communities, and alternative options are crucial to make that happen. – Cheah “
DRIVING YOURSELF
For those who might want more flexibility or who want to go out of town, hiring a car for the whole day is the best option. Thankfully, there is an app that allows this to be done easily. Introduced since May 2016, GoCar app allows you to book, unlock, and access a car easily. It is touted as an alternative to car ownership and traditional car rental services in Malaysia.
The GoCar app allows renters to rent a Nissan Almera at RM99 (inclusive of insurance) for 24 hours. You can also rent them by the hour, week, or even month.
All you need to do is to upload a valid driver’s license, a Malaysian phone number, your credit or debit card details, and pay a one-time RM50 membership fee.
You can pick up the car at any time of the day at over 50 locations in Klang Valley and Langkawi at selected airports, condominiums, petrol stations, Nissan and Toyota service centres, hotels, and commercial areas.
You can even drive all the way to Singapore by giving one week’s notice for the company to prepare the documentation. If there is a breakdown, there are tow trucks on 24-hour standby nationwide.
The service will eventually be available in Johor Bahru and Penang as well. The company is currently conducting research and development to test the one way drop off between various hubs, according to Alan Cheah, COO of GoCar.
“The primary concern will be the logistical obstacle; we are close to it and hopefully it will be fully activated when we expand to other urban communities,” he told Asian Property Review. That indeed will be a very convenient service as it allows renters to pick up the car from one location and drop off at another location.
EXPONENTIAL GROWTH
At the time of writing, there are about 7,000 registered GoCar members. Cheah says the number is growing every week. “This proves the community is definitely ready for the sharing economy.”
Renters are typically between 25 – 45 years old, tech-savvy working professionals, students and expatriates. Most are renting to travel within Malaysia for ‘Cuti Cuti Malaysia’ (holiday in Malaysia), for diving trips, groceries shopping, road trips, food trips, and travelling back to hometown.
The danger of breakdowns is quite minimal as all the cars are not more than 3 years old. The fleet, which consists of about 90 plus cars, comprises mainly mid-sized sedan Nissan Almera. However, the on-demand car rental startup also provides the 5-seater SUV crossover Nissan X-Gear and 7-seater Nissan Grand Livina as options.
Nissan cars are being used now simply because Tan Chong Group (distributor of Nissan cars in Malaysia) has invested in GoCar early last year and became its strategic partner, explains Cheah. Mayflower Car Rental, part of the Tan Chong Group, acquired 55% of GoCar for about US$109,000.
“With their existing fleet, it became a leverage to penetrate the market efficiently and effectively. Call it a helping hand to bring us up to speed in the market. Now, we are interested to work with other brands as well to bring variety and different pricing tiers to our users.”
He adds: “We want to encourage car sharing among the communities, and alternative options are crucial to make that happen. We are always keeping an open mind to see how we can leverage off existing resources and possible partnerships with other industry players to bring our vision to reality.”
When it comes to dealing with cars that are returned damaged, the startup has recourse to the usual options such as deducting from renters’ credit or debit cards. Failing that, it would report to the authorities. “But we hardly need to activate this because most of our users are quite a responsible bunch,” says Cheah.
What happens if the car was stolen? “The renter will be liable for the full cost of the vehicle if it was caused by the user’s negligence; otherwise, they will just need to reimburse the company up to the maximum amount as stated in the schedule to the car rental agreement. According to Cheah, the insurance doesn’t cover flood but special requests can be made if the destination is known to be a flood-prone area. “As for compensation, it is evaluated on a case-by-case basis taking negligence into consideration.”
OUTLOOK
This startup looks like it will eventually become the car rental equivalent to Grab or Uber – give it a few more months (or years). As the sharing economy becomes more common and widely utilised, apps such as these will become more popular. The bigger picture is what is the impact on the entire car ownership industry? Will car sales plunge – as people’s lifestyle start evolving into one that’s not into ownership of material things. It’s still early days but for sure, this disruption is a step in the right direction.