Owning a car today is considered a liability rather than an asset due to its high purchase value and depreciable nature. Then there are the added burdens of paperwork, taxes, deposits, EMIs, and vehicle improvement costs.
That’s why a growing number of people, especially millennials and Gen Z, prefer to drive their car of choice on a subscription model, without the hassle of ownership and maintenance. Under the subscription model, all users have to pay an all-inclusive monthly fee, while everything else is taken care of by the service provider.
According to Mordor Intelligence, the global used car market was valued at $260 billion in 2021 and is expected to reach $460 billion in 2027, growing at a CAGR of 10%. The Indian used car market was $32.14 billion in 2021 and is projected to reach $74.70 billion in 2027 growing at a CAGR of 15%.
According to Allied Market Research, Global Automotive Subscription Market was valued at USD 3,550.4 Million in 2019 and is projected to reach USD 12,090.6 Million by 2027, growing at a CAGR of 23% between 2020 and 2027.
Driving in the Emerging Subscription and Rental Car Space is Powered by Gurugramwhich promises to make the experience hassle-free and economical with its range of used cars available on subscription and leasing models.
“Used car subscriptions are seeing huge demand from millennials as they want to switch cars frequently,” says Tarun Lawadia, Founder and CEO of PumPumPum. “Our vision is to make car ownership hassle-free, in which customers drive subscribed cars as their own and leave the hassle of car ownership to us.”
PumPumPum, which was started by Tarun Lawadia and Samir Kalra in 2018, offers more than 100 used cars of various brands, from economy models to ultra-luxury models.
Besides retail customers, to whom a subscription plan is offered, the company also targets businesses with the leasing model. Retail subscription fees range from Rs 8,000 to Rs 40,000 per month, while corporate rent ranges from Rs 15,000 to Rs 3,00,000 per month.
How it works?
Customers can, in just a few steps, with minimal paperwork, bring home the car of their choice, according to the company.
First, the customer selects the car. Then, their credit eligibility is checked. Finally, the vehicle is handed over to the customer.
Retail customers need to make a security payment for one or two months, while there is no security payment in the corporate sector.
PumPumPum has an asset-light model and does not hold any inventory. Instead, it features its dealer and partner inventory on its website, which is pre-approved and certified. “If the car is not redeployed within a month, we get rid of it,” says Tarun.
The startup says it takes care of all the operational and legal hassles related to rentals. “It gives companies the comfort of opening our leasing program to all employees,” says Tarun.
Business segment cars can be leased from 6 months to 24 months. In some cases, if the cars are relatively new, they can be leased for 36 months. The rental plan includes end-to-end service, insurance, maintenance, and other vehicle-related matters.
According to the company, all cars are equipped with an IoT device that tracks vehicle performance and driver behavior to ensure user safety. “We fix problems up front rather than spending a lot of money on vehicle maintenance later,” says Tarun. “In case of emergency or vehicle breakdown, SOS can be triggered to emergency numbers and it becomes easier for us to track the vehicle and reach the user quickly.”
The company has over 750 subscribers, 25% of which are retail subscribers.
“Millennials and Gen Z make up 40% of our retail subscribers. We observed a pattern in which a car upgrade occurs on average every 1.4 years,” Tarun explains.
PumPumPum’s offerings are available directly in Delhi-NCR and Bengaluru and through its dealer network in over 55 cities including Leh, Jammu, Madurai, Coimbatore, Jaipur, Guwahati, Kolkata, Pune, Mumbai, Hospet, Bhagalpur, Lucknow and Kanpur. The startup works with 250 dealers and partners across India.
Its corporate clients include Safe Express, McDonald’sBira, and and startups such as , and .,
In the corporate sector, PumPumPum’s cars are mainly used by employees for personal travel. Some cars are used for employee transportation and business needs.
The company competes with, , , and .
PumPumPum was launched with an investment of Rs 25 lakh from the founders’ personal savings and Rs 40 lakh from loans from friends and family and debt from the bank.
Tarun is a second-time entrepreneur; his first venture was an on-demand drug delivery startup called Plus App. His previous assignments were withand .
PumPumPum co-founder Sameer has over two decades of experience in the car leasing industry. He was previously a consultant forand . His other assignments were at Clix Capital Services, Leaseplan India and Avis India.
The PumPumPum team has over 50 members in Delhi-NCR and Bengaluru.
It’s all in the name
Tarun says the inspiration for the company name came from the song Mannu Bhai Engine Chali Pum Pum from hindi movie Phool Khile Hain Gulshan Gulshan. When the founders were thinking about possible names, they realized that all companies sounded the same, with the word “car” associated with the name: CarDekho, Carwale, Cars24, Cartrade. “Everyone was using ‘car’, and using the same thing wouldn’t have differentiated us. That’s how we decided on the name PumPumPum,” says Tarun.
The growth so far
The company earns a contribution margin or gross profit margin of 25-30% per vehicle.
According to the company, PumPumPum earned between Rs 10 crore and Rs 12 crore in 2021-22. It has recorded an 80% loyalty rate in the B2B and B2C segments.
In June 2022, PumPumPum raised $2 million in venture capital debt funding from investors including LC Nueva Investment Partners, LetsVenture and Founder’s Room Capital.
The road ahead
The startup plans to expand to over 15 Tier 1 and 2 cities in India over the next two years. It aims to achieve revenues of Rs 2 crore per month by the end of September 2022 and targets revenues of Rs 24 crore in 2022-23.