Build a small car rental business in South Africa + (Ready-to-use car rental business planning templates)
Starting a car rental business is an exciting opportunity in a vibrant, growing market. If you’re here, you’ve likely started your research or you are close to launching your business. You’re in the right place.
💡 Great businesses start with a strong foundation. This means a well thought out business plan before you launch.
In this guide, we’ll cover everything you need to start and run a successful car rental business. We’ll go through each step in detail, so by the end, you’ll be fully equipped to launch your own business with confidence.
3 templates to help you kickstart and grow your car rental business.
Download templateIf you can’t wait, skip to the end to download the tools. You can bookmark this page or come back to it anytime.
Table of content
Choosing the right cars.
The cars you choose to buy and how you buy these cars are the most important decision you can make. Because theoretically you can buy any car, that doesn’t mean it’ll get rented.
Before you buy the cars, take your time to know and understand your target customer.
💡 Who do you want to rent your car?
- Business travelers in your city for work? An economical car is ideal—think a 4-door sedan light on petrol, easy to zip around the city and park easily.
- Vacationers? A few choices present themselves here. A convertible to explore the coast and see the winelands or an SUV to explore the mountains.
Now you know your target customer, find out what type of cars they need. If you have an existing business and customer base, look at what they are renting or what cars they request. You’ll find out that the cars rented more often are the cars that fit the location you live in.
💡What do your customers need?
- Does it rain a lot where you live? If so, a convertible isn’t the best.
- If you live close to the mountain, your customers don’t want to drive a small coupe. A SUV, or crossover with a high clearance will be preferable.
- The best practice is to look around at what people are driving where you live, that’s the type of car they’ll rent from you.
Should you buy a new or used car?
This is a very important question that could make or break your car rental business.
💡Before we dive in, picture this scenario: You have the chance to invest a big sum in a promising stock, but there’s a catch—you’d lose 20-25% of it right off the bat. Now, imagine a second stock with just as much potential, but with no initial loss.
Which one would you go for?
Option 2 is obviously the better deal.
The same applies to buying a car. A new car loses 20-25% of its value as soon as it leaves the lot. The depreciation will kill your profit before you have started your car rental business. You don’t want that.
Buy your cars when depreciation has slowed and the value is leveling out. Just as important, plan to sell when maintenance and repair costs start rising steeply. For us, this is after 4-5 years.
To stay profitable, aim to ensure that the combined income from renting and the eventual sale price is more than what you initially paid for the car plus any operating costs.
To get this right, aim to buy your cars at a discount to the actual market value. A 10 – 15% discount is a healthy range to increase profitability.
Where can you buy cars for your rental business?
Online marketplaces like autotrader.co.za, gumtree.co.za, Facebook marketplace and cars.co.za are good options when you’re starting out.
Before you start sending out messages, do a simple market research to understand the average price of the make, model and year you want.
Look at the advertised price of the same make and model across multiple listings to get an idea what the fair market price is.
At the end of your research you should understand the lowest possible price for the make and model you want. Never go higher than this price.
Search for cars and send messages to sellers daily.
💡You can save yourself a lot of time by creating a templated message to copy and paste to them.
💡Use Google sheet to stay organised and track who you have reached out to.
Buying below market price is key to making a profit. Getting a car at 10-15% under market value can boost your returns by as much as 30%.
Whatever you do, avoid paying above market value—that will cut into your profits. That’s why we steer clear of dealerships, where it’s nearly impossible to find cars below market value.
Instead, buy from private sellers. With some patience, you can find great deals, especially from sellers in a hurry to sell. They’re often willing to sell to the first cash buyer they find.
Inspection and Test driving
Now that you’ve found the cars you’re interested in buying, it’s time to go out and inspect them. Before meeting up, it’s best to check the car’s service history first.
Ask the sellers for the service booklets or a photo of the license disc. A trustworthy seller should be willing to provide this information; if not, that might be a red flag. When you get the booklet, look for maintenance stamps from an authorised workshop.
Next, run a VIN check on sites like Vindoc or SAIA vin lookup. This report will show if the car has been in accidents or has had major repairs. If the report says “Salvage”, walk away immediately. Reports from Vindoc might cost around R359 per report, but it’s totally worth it.
Compare the report’s mileage with the car’s current mileage, look for discrepancies.
For the inspection itself, bring a mechanic with you if possible. If not, at least have someone else with you.
You can use an inspection checklist like this one from Popular Mechanics, or check out Carinspect’s checklist.
💡Some of the few things to check are;
- Inspect the car in a well lit area.
- Look at the body for dents and irregularities.
- Look at the painting, is there a slight variation in color on different parts of the body?
- If you don’t have a mechanic with you, buy or rent a scan tool or drive the car to a workshop that can help you do a check.
- When you open the engine bay, does the paint there look like it has gotten a new coat? This could be a red flag and could mean the vehicle has been worked on and the seller is trying to hide that fact. You should investigate a bit more.
- Do you notice any knocking sound or weird out of place sound in the engine, do you notice any sound during gear shift?
- Does the car respond naturally when you accelerate? Don’t hesitate to floor the pedal during the test drive.
- Does the car drive in a straight line? Does the car break in a straight line? If it doesn’t, this could be a sign of a steering or braking problem.
- Pull out the engine oil dipstick and put a few drops on a white piece of cloth or paper, does it have a clear consistency?
Getting this right will save you from big headaches—and thousands of rands in repairs—in the long run.
Operations
Let’s talk about operations. Running a car rental business involves several core operational activities. To ensure good service delivery and customer satisfaction, you want to have a clear plan for these activities.
Here are the operational elements to plan for at the beginning;
Insurance
Accidents, damage and theft are unavoidable in a car rental business so it’s important to get a comprehensive insurance policy on your cars. This will help protect you and your business in cases of;
- Accident damage.
- Theft & damage from attempted theft.
- Hijacking & damages from attempted hijack.
- Fire damage.
- Explosion.
- Hail, storm, wind and flood.
- Medical expenses in the event of an accident.
- Cost of securing and towing a vehicle after an accident.
- Third party liability.
These expenses, if not insured could harm the profitability of your business.
💡Insurance premiums for car rental can be very costly, but here are ways you can reduce it.
- Speak to a reputable broker.
- Have a risk management plan in place to help reduce your perceived risk. This could include;
- Encouraging your renters to maintain proper road safety practices,
- Installing tracking devices on your fleet,
- Having a system to validate your renters driver’s license,
- Avoid filing claims for minor scratches, dents and repairs.
The insurance industry is a competitive market. There are shady insurance brokers that take advantage of this by offering low premiums and disputing every claim. So, before you get a commercial insurance, do your research on the insurance providers.
Disclaimer: We’re not a financial service provider and none of the advice given above counts as expert advice. Please speak to a registered and trusted financial provider about your insurance needs to get sound insurance advice for your business. Everything shared on this blog post is purely anecdotal. Some providers to consider are Auto and General, Miway and Outsurance.
Maintenance and repairs
Keeping up with your vehicle maintenance can boost your customer satisfaction and help your cars retain their value over time.
- oil changes,
- tire rotations,
- brake replacements,
- cleaning and disinfecting after each rental.
- Fixing dents and dings.
Make sure you have plans in place for unexpected repairs, such as:
- Mechanical issues
- Breakdowns
- Repairs from accidents
Regular maintenance pays off by creating loyal customers, who will keep coming back for more rentals. Plus, keeping your vehicle in top shape helps it retain a higher resale value when you’re ready to sell.
For larger rental businesses, having an in-house workshop and a dedicated mechanic can help control costs. Washing cars in-house is another way to reduce expenses and boost profits.
If an in-house setup isn’t feasible, consider partnering with a reliable workshop for maintenance discounts. This can be mutually beneficial: you get reduced rates, while the workshop gains steady business as your fleet grows.
💡Do it yourself:
Maintenance is an unavoidable part of running a rental business, so you should learn as much as you can about cars. This doesn’t mean doing everything yourself, but you can cut a lot of overhead costs and save money on labour by learning to do your own oil change, or learning to change the tires yourself, learning to pull out a dent on the bumper or change your brakes and suspensions.
These costs add up and depending on the cars in your fleet and how often they need maintenance done, could lead to very low or negative profit margins. You can learn a lot on YouTube.
How to market your car rental business
How and where you market your fleet is crucial to your success, so take time to plan it carefully.
Before you acquire your fleet, spend a few weeks developing a solid marketing strategy that targets the right audience and highlights what makes your cars stand out.
This upfront planning will help you attract more customers and maximize your fleet’s potential from day one.
Building business relationships
One effective marketing strategy is to offer your cars to companies for staff travel or long-distance trips. You could also partner with businesses like travel agencies, hotels, bars, and restaurants—any business that already serves your ideal clients. These partnerships can help you expand your reach.
Building these relationships may be challenging, though, as many of these businesses already have established partnerships with larger rental providers. They may be hesitant to switch to a new rental company.
However, with the right approach and value proposition, you can still break into these partnerships and create a mutually beneficial arrangement.
Car rental marketplaces
Just as marketplaces exist for buying and selling cars, there are also platforms designed for renting cars. While this model is still emerging in South Africa, it’s already well-established globally, with Turo being the largest and most well-known car rental marketplace in the world.
In South Africa, Tarlen is leading the way by offering a platform where individuals can rent out their cars. This platform provides new and established rental agencies with an opportunity to tap into an active and growing market.
By using Tarlen, agencies can save time, money, and effort, while reducing the risks typically associated with traditional rental models.
Digital Marketing
This is the easiest way to find clients, and it’s so accessible that almost every business, even the bad ones, have access to it. This means you need to stand out and do it right. The digital space is loud, and if you don’t stand out, you’ll get lost in the noise.
💡At Tarlen, we’re putting together a digital marketing mastermind that will help both new and seasoned entrepreneurs master digital marketing and grow their businesses. Send us an email if you would like to get early access when it’s ready. hello@tarlen.co.za
Here are the key things you should consider when starting out with digital marketing:
Your website
Your website is the first impression many potential customers will have of your business. How it looks, what it communicates, and how easy it is to navigate can make or break your success.
Yet, we often see rental agencies treating their websites as an afterthought—neglecting its importance—and then wondering why they’re not getting traffic or bookings.
💡Navigation: Is your website easy to navigate. Your website’s design plays a critical role in your business’s success. It should be easy to navigate and mobile responsive, ensuring customers can easily browse and book on any device.
💡Your business information: Is your company’s phone number and address visible on your website? Do you have a terms of use and privacy policy page?
Make sure your contact information—phone number and address—are easily visible. Don’t forget to include a terms of use and privacy policy page to build trust with your visitors.
💡Your message: Beyond functionality, think about the message your website conveys. Are you positioning yourself as different and memorable, or are you falling into the trap of generic claims like “service excellence” or “cheap car rentals”, “best car rental in South Africa”?
Marketing yourself as the cheapest option is a mistake that often attracts customers who aren’t loyal and may hurt your margins. Instead, emphasize what makes your business stand out. What’s unique about your approach? What gap does your service fill in the market? When done right, this will attract not just customers, but a loyal audience.
💡Website speed: Website speed matters too. Slow loading times can drive customers away before they even get to your booking form. Use tools like Google’s PageSpeed Insights to test and optimize your website speed. This might require the help of a developer or webmaster.
💡Technical SEO: Next, focus on technical SEO. Structure your site to make it easy for Google to crawl and index your pages. This includes properly formatted title tags, meta descriptions, and using clear headings and subheadings.
💡Booking system: An effective booking system will help convert more visitors into customers. If you don’t have one, make sure it’s easy for potential clients to request quotes.
💡Retargeting and email marketing: Keep in mind that only 1-3% of visitors typically convert on a website. New websites may even see conversion rates as low as 0.1-0.5%. To combat this, use retargeting strategies and email marketing to capture potential customer’s contact info and stay in touch until they’re ready to book.
Your Google business profile.
A Google my business profile is a must have for every business. It’s simple to set up and you might need to verify your business name and address.
Read this guide from Google to learn how to set up your Google my business profile.
Getting discovered through SEO.
Using SEO to grow your business is a long-term growth strategy. When done right, it can have a snowball effect, leading to immense growth.
Using SEO to grow involves creating helpful content on your website around keywords related to your business.
💡Keyword research: Your SEO journey starts with keyword research.If you already know who your customer is, the next step is understanding what they search for.
How does your target market behave, and how do they find the services they use? Not just your service, but other services as well.
For example, if your customer is planning a trip, they’re not only renting cars. They’re also booking a hotel or an Airbnb, and searching for the best places to visit in your city.
This process involves a lot of research.
And if you’ve noticed, research will be a crucial part of your business.
There are many keyword research tools in the market.
- Google keywords planner.
- Semrush.com.
- Moz.com
- keywordtool.io
- Ahref.
- Screaming spider.
Some of these tools are free, like Google Keyword Planner. Others offer a limited free trial version that you can use when starting out, with the option to upgrade to a paid version as your business grows.
Some tools are perfect for planning, while others are great for tracking your performance. Some help you see how you rank for specific keywords and provide recommendations to improve your ranking.
There are also tools for technical SEO that show you broken links and your website’s health score.
No tool is 100% perfect, so it’s important to test different tools to see which combination works best for your business.
If you’re a new business, your website will struggle to rank above older businesses on Google.
So target keywords with low competition to build up your domain reputation in the first 1 – 2years.
Don’t rush this process, it could take a while to get there. And you can drive a high website traffic without high competition keywords.
Pay attention to search intent while planning your keywords. No two keywords are created equal. Different keywords have different intentions behind them:
💡 Keywords might be used to look for information like “how-tos,” “guides,” “best ways,” or “benefits of.” These keywords have Informational Intent.
💡 Other keywords are used by customers to find a specific brand or website. These keywords have Navigational Intent. They are used when the customer already knows about your brand and needs a direct path to your site.
💡 There are keywords used when the customer is exploring their options in the market but isn’t ready to buy. They are looking to compare products or services and are seeking reviews. These keywords are said to have Commercial Intent. An example of this is: “Car rental vs. ride-share for tourists.”
💡 When a customer is ready to take action—whether to make a purchase, book a rental, or subscribe—the keywords they use have Transactional Intent. Keywords with transactional intent usually include “buy,” “rent,” “order,” and “sign up.” An example of this is “Rent a car in Cape Town” or “Book a car rental for a weekend trip.”
When you do your keywords research, map out the main topics around car rentals that align with your customer’s interests, pain points, and needs.
Don’t make the mistake of targeting only keywords with transactional intent. You will miss out on keyword opportunities that way.
Building your SEO strategy to meet different customer intent is the most effective way to grow with SEO.
Informational Content: Write blog articles, FAQs, guides, or tutorials that answer questions and provide insights into your industry. Include keywords like “how-to” and “guide” to target these customers.
This content type should not focus on your business. Instead, it should answer questions your potential customers have about topics related to your market. Providing answers through your website positions you as an expert in the field.
Navigational Content: Create dedicated landing pages for brand-specific searches. Optimize these pages for your business keywords to provide a clear navigation path to your website.
As your business grows, you may find your competitors trying to rank for your brand name. To prevent this, you’ll need to continually optimize your website content.
Commercial Content: To meet commercial intent, write comparison articles, pros and cons content, and show customer reviews.
Target middle-of-funnel keywords that indicate users are considering renting cars or taking a trip.
Transactional Content: Content for transactional intent should be action-oriented for users who are ready to take action or make a decision.
Your vehicle page should be designed with clear CTAs (call-to-action) buttons that encourage renting, booking, or requesting a quote.
Make the booking experience seamless. Transactional pages should include simple navigation, easy booking forms, clear pricing, and trust signals (such as reviews, ratings, and guarantees).
When you start creating website content, use free tools like Google Analytics and Google Search Console to track your performance.
You should track your impressions, clicks, click-through rates (CTR), and conversions to understand how well your content is meeting customer intent and your marketing goals.
Remember to keep optimizing your content based on the insights you gather.
Paid Ads
In the 21st century, you need no introduction to paid ads. If you scrolled through your social media feed today, you likely came across a couple of ads. Paid advertising helps businesses increase visibility and attract customers.
Paid ads are a powerful way to kickstart growth in your business because they help you find customers quickly.
On Google, you can run ads targeting specific keywords, demographics, or locations. If your customer is searching on Google and matches those keyword criteria, your ads are displayed at the top of the search results.
Learn how to set up your Google Ads campaign with this video tutorial.
Accounting (expenses, earnings, profit, taxes)
To run and grow a successful rental business, you need to understand the numbers and how they work. Use Tarlen’s Financial Planner to plan your finances before launching your business.
Start with the purchase amount and your rental price to build your own 5-year business plan. Factor in your operational costs to align with your business needs and expenses.
Download the Car rental business planning kit. It includes:
- A car inspection checklist,
- Web content planner and,
- A financial planning template.
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