Luxury car rental
An employee of a luxury car rental agency steps into a Maserati in Limassol, a coastal town in southern Cyprus February 19, 2013.Reuters

Car rental start-up Revv has launched OPEN, which promises a shakeup in personal mobility solutions space. Flush with funds after raising Rs 100 crore in August, the Hyundai-backed company hit the road on Wednesday in six metros offering nearly 25 models to the customers.

OPEN claims to be different from the regular car rental businesses in that it offers brand new self-drive cars for a specific period. The users pay a monthly subscription to get a brand new car with the tax and insurance payments already done. Revv claims its executives will deliver the car at the customer's doorstep, saving him or her the hassle of having to pick it up from the company's yard.

The user will keep the vehicle for the duration of 12 months to 48 months after which the Revv will reclaim it.

Analysts believe the subscription cost will be key to the service's success in a country like India, newspaper reports say. Long-term subscriptions would allow a consumer to escape hefty down payments as well as other liabilities like insurance, taxes, and maintenance, they point out.

A Revv executive said the subscription cost varies. A standard hatchback would cost up to Rs 20,000 a month while a mid-range model like Maruti Suzuki Swift would cost up to Rs 20,500 a month.

Cost and service efficiency

Some analysts point out that the total cost of subscription over three years for a Swift LXi would amount to Rs 7.4 lakh, which is nearly Rs 60,000 more than a new Swift LXi in New Delhi.

Revv has been into shorter-term car rental services through its Switch service. Revv co-founder and chief executive officer Anupam Agarwal told Business Standard that OPEN was a culmination of insights from the company's short-term car rental business.

"Two trends are obvious. People don't want to hold on to assets and they don't want to save a lot of money – it's going towards a consumption economy," the newspaper quoted Agarwal, a former McKinsey & Co associate partner, as saying.

Cost and service efficiency will matter the most as the self-drive car rental segment in India is getting crowded. Mahindra and Mahindra, India's third-largest carmaker, started a similar leasing service, offering monthly rentals at costs between Rs 13,499 and Rs 32,999. But the bells and whistles that OPEN offers could be the clincher for many Metro customers.

Car rental companies believe the lease option will become more and more attractive to urban executives because of the depreciation factor, which starts at 5 per cent in the first year and 20 per cent in the second year.