How to Start Car Rental Business in Nigeria and Increase Sales
Did you know that the global car rental market is projected to reach $214.04 billion by 2027?
If you don’t know this, then you may also not know that the car rental business is one of the most lucrative businesses anyone can do in Nigeria today.
This is because it caters to tourists, business travellers, and locals who need temporary transportation.
And as long as these needs exist, the business is projected to keep growing.
In Nigeria, where public transport is challenging and owning a car is not always feasible for everyone, car rental services are in no doubt high in demand.
But do you even know how to start a car rental business in Nigeria?
That’s where this guide comes in handy.
If you are looking for a new business to start or you are a car lover who wants to turn your passion into profit, this guide will walk you through how to do that.
We’ll cover everything from how to create a business plan to marketing your services effectively.
How to Start a Car Rental Business in Nigeria
Aside from having your capital handy, some things need to be done and put in place to make your car rental service business a success.
You need to start from the planning stage to the executing stage.
And what do these stages look like? Read on to find out.
1. Create a Business Plan
Every successful journey begins with a map, and in business, that map is your business plan.
First, you have to decide on your focus.
Do you want to cater to short-term rentals for tourists and business travellers, or long-term rentals for expatriates and companies?
The truth is that each model has its pros and cons. Short-term rentals can bring in higher daily rates but may have more downtime.
Long-term rentals can bring in steady income but require less frequent turnover of vehicles.
You should also think beyond just handing over keys to your clients, you can consider offering them Airport pickups and drop-offs
Also, Chauffeur services for events or business meetings
More so, consider GPS navigation systems, child safety seats, and roadside assistance
The more value you add to your clients, the more you can charge and the more customers you’ll attract, and all of these need to be planned out.
However, you need to have a financial plan too.
How much capital do you need to start? Including the costs for vehicle acquisition, office setup, licenses, and insurance.
Also, you should consider how much you might be spending on vehicle maintenance, fuel, staff salaries, marketing, and overhead expenses.
To place a price tag on your service, you should research your competitors and set competitive rates according to the additional services you are offering.
You can take into consideration pricing for weekdays, weekends, peak seasons, and various vehicle types.
After planning all of these in your business plan and you are satisfied with it, then it’s time to move to the next stage.
2. Look into Legal Requirements
In any Nigerian business today, you can not escape legal requirements.
For each business, some legal documents and licenses must be provided for the smooth running of the business. The car rental business is not an exception.
The first thing to do is to register your business with the Corporate Affairs Commission (CAC).
Some agencies can help you register your business easily.
However, if you choose the DIY method, all you have to do is visit the CAC official website and reserve your business name
Once you have prepared all required documents like identification, address proof, etc, pay the registration fee, and submit your application
If your business is approved, you will receive your certificate of incorporation.
Aside from registering your business, you will need licenses and permits.
You should work with your lawyer to make the process easy. You will need:
- Business Premises Permit from your local government
- Vehicle Hire Service License from the Lagos State Ministry of Transportation (or equivalent in your state)
- Federal Road Safety Corps (FRSC) certification for your vehicles
Don’t forget insurance. It is very important for this kind of business as anything could come up.
Ensure to get all the needed vehicle insurance for each car
You will also need public liability insurance to protect against third-party claims.
As well as business insurance to cover your premises and assets.
3. Fleet Acquisition
Now to the heart of your business.
Many people learning how to start a car rental business in Nigeria usually skip some steps just to jump on this.
But they will miss the important information you will know today
First thing first, when it comes to buying cars for your business, don’t buy them because you like them or you have enough money to spend buying those cars.
You have to consider your target market when selecting vehicles. If you’re catering to budget-conscious travellers, you should consider economy cars like the Toyota Corolla or Honda Civic
However, if you are dealing with corporate clients or people who love luxury, consider SUVs like the Toyota Fortuner or sedans like the Mercedes-Benz E-Class.
In addition, for any car you are choosing, don’t forget fuel efficiency as it can affect your operating costs.
Also, you can consider buying or leasing vehicles.
When you buy them, you have full ownership, no mileage restrictions, potential for resale value
However, they may have higher upfront costs, responsible for all maintenance
Leasing has lower initial costs, and the ability to upgrade the fleet more frequently
However, it has mileage restrictions, ongoing payments
The truth is, that many successful car rental businesses in Nigeria start with a mix of owned and leased vehicles to balance cash flow and flexibility. You can try that too.
However, you need to regularly maintain the cars for longevity and customer satisfaction.
You can come up with a maintenance schedule for each vehicle, including regular oil changes, tyre rotations and replacements, brake inspections, and annual servicing
4. Location and Office Setup
What happens if you set up a business and your location is not where people who need your services can easily come?
Think about that.
When choosing a location for your car rental business, you need to consider
Proximity to airports or tourist centres. Ensure it is easily accessible with a large parking space.
Also, ensure it is visible from the main roads and the area is safe.
However, if you’re starting and want to minimize costs, you can consider operating from home for a start.
Many successful car rental businesses in Nigeria started this way. They use a home office and meet clients at agreed locations or their homes/hotels.
Moreover, whether you want to start from home or rent an office space, you’ll need to have computers with a reliable internet connection
Also, booking and fleet management software, comfortable seating for clients
As well as secure storage for keys and documents and Professional signage
You will also need an online presence. It is just as important as your physical location.
Get a professional, mobile-friendly website with online booking capabilities and active social media profiles (Facebook, Instagram, Twitter)
You can also list your business on popular travel and business directories.
5. Marketing Your Car Rental Business
Marketing is more than just designer flyers or word of mouth, you need to brand your business.
When talking about branding designs, it is more than just getting a logo design, it’s perceived as the personality of your business.
You will need to get a professional business logo that reflects your business values, a consistent colour scheme and typography
As well as a catchy tagline that describes your unique selling proposition
Meanwhile, you should consider two types of marketing efforts: traditional marketing strategies and online marketing strategies. For your kind of business, you will need both.
For online marketing, you need to have a business website that’s optimized for search engines (SEO) to appear in local searches
You should use Google My Business listing so that your business will appear in map searches
Consider running targeted ads on Google and social media platforms. And milk using TikTok to educate potential clients.
However, don’t forget to engage with your customers on your business social media pages. Sharing tips, promotions, and behind-the-scenes content.
Read our complete guide on how to get customers online
Word-of-mouth is also a powerful way to promote your business in Nigeria.
Partner with hotels, travel agencies, and event planners
Distribute flyers and brochures at airports and tourist information centres
You can also attend local business networking events as well as consider radio ads or billboards in high-traffic areas.
6. Render Good Customer Service
Marketing will bring customers, but how you treat them will determine whether they stay or not.
That’s why you need to invest in good customer service relations.
You are not your competitors who believe business is about being strict with customers, but there is a big difference between being strict and acting professional with your business.
For your new business, you should focus on prompt and friendly communication.
You also be flexible when it comes to meeting your customer’s needs.
Ensure your vehicle is clean, and well-maintained.
Don’t forget clear explanations of rental terms and conditions and be quick to resolve any issues or complaints
If you have to, train your staff to go above and beyond when attending to your customers. It speaks a lot about your personality and business.
You should put in place a system that gathers and acts on customer feedback. You can send follow-up emails after each rental asking for reviews
Also, use feedback forms in your office to monitor and respond to online reviews
Carrying out periodic customer satisfaction surveys will go a long way in helping your business, and then use their feedback to continually improve your services
Another thing is, that you can retain customers with loyalty programs which are often more cost-effective than acquiring new ones. You can use up a points system where customers earn towards free rental days, discounts for frequent renters
You can also special perks for loyal customers (e.g., free upgrades, priority booking) as well referral bonuses for customers who bring in new clients
One creative loyalty program you can employ is the “Rent 10 times, Get 1 Free Rent” deal, which encourages customers to choose the same company for all their car rental needs.
We have guides on other businesses you can do in Nigeria.
7. Learn Financial Management
Then lastly on how to start a car rental business in Nigeria.
You need to learn proper financial management for the longevity of your business.
Start by investing in accounting software like QuickBooks or Sage or hire a part-time accountant or bookkeeper
Also, keep detailed records of all income and expenses, and regularly review your financial statements to understand your business’s health
You can also try funding options like Bank loans, Microfinance institutions, Angel investors and Government grants for SME
Also, consider bringing in a partner to share costs and responsibilities
Once you start making profits, you should consider reinvesting in your business and building an emergency fund in case of unexpected expenses like major repairs.
What Next?
Success in this industry comes from a combination of strategic planning, quality service, and adaptability.
There are a lot of things to do, put in place and keep doing for the sustainability and profitability of your business.
That is why you should consider partnering with professionals who can help promote your business. This is where UGC Deck comes in.
UGC Deck is a professional agency specializing in branding, video editing, and social media management.
We understand the unique challenges and opportunities in the Nigerian market and have proven methods on how to grow your business in Nigeria.
We can help create a memorable brand identity that resonates with your target audience.
Also, we can create engaging video content showcasing your fleet, explaining your services, or sharing customer testimonials.
We also ensure your car rental business stays top-of-mind for potential customers by creating good content for your social media pages, responding to inquiries, and running targeted ad campaigns to boost your visibility among many other things we do to help your business grow.
Our team of professionals is ready to help you create a strong online presence, attract more customers, and grow your car business in the Nigerian market if you work with us.
You can reach us for a free consultation on WhatsApp or phone +2348063469469 and hey@ugcdeck.co for email contact.
We look forward to working with you and being a part of your success story.
UGC Deck is a marketing agency that not only connects brands to creators but also offers services like video editing, social media management, educational video production, creative ads creation and graphic design. Find out how our expert team can help your business increase its visibility and revenue. Send us a message on WhatsApp.