Auto Manufacturers Threatened by Massive Car Rental Boom in Moscow
February 13, 2019
In North America, Europe and parts of Asia, the car-rental industry has been enjoying a steady increase for years. But that growth is nothing compared to the leasing frenzy taking place in Moscow these days.
For the past five years, car rentals in the Russian capital have jumped to the point where revenue charts display almost a full-blown vertical spike. With a combined fleet of 16,500 rental vehicles, a figure predicted to grow annually the next few years, Russia has more vehicles in service than the rest of Europe combined. And in a city of roughly 12 million people, the number of bookings each year exceeds 23 million.
What’s even more unusual is that you won’t find any of the big market players benefiting from all of the action. All the participants taking advantage of the Moscow boom are local. And with that type of market share, automakers with rental services such as BMW, Daimler and Volkswagen – who opted to concentrate all their marketing efforts in Europe – are kicking themselves for not jumping at the chance to exploit the boom.
One of the biggest companies is Yandex Drive, a car rental service set up by a search engine website. The company started in 2018 with a fleet of 7,000 cars, renting out the vehicles for only five rubles (about eight cents) to lowball the market. Today, they’re jockeying for market shares with Muscovite counterparts like BelkaCar and Delimobil.
A closer look at what local consumers have to deal with bear out a lot of reasons why short-term car rentals is the way to go. For openers, Moscow is very heavily congested in terms of traffic, making it tough to get around town and downright expensive for those who own a vehicle. And while gas is relatively cheap in Russia, costs of auto maintenance, insurance and other expenses make it tough to justify owning a four-wheel money pit. Add in parking costs, which are roughly $30 daily and it’s little wonder why people decide to rent.
For openers, renting is cheap at roughly $35 a day and steady customers can benefit from annual discounts totaling around $400. It’s also easy to book, especially for smartphone users with the right app. And the automobile model selection isn’t restricted to economy vehicles. Consumers can choose from such lines as Kia and Renault to more luxurious brands like BMW and Porsche.
Visitors to Moscow wanting to rent a vehicle in the city only need a passport and a driver’s license as well as a credit card deposit against any potential damage not covered by mandatory insurance, which is already covered in the rental price. Be advised that some companies won’t allow customers to drive any of their fleet out of Russia. As well, most agencies won’t rent to anyone younger than 21 with less than a year of driving experience.
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