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Car-sharing services may have taken a major hit since the COVID-19 pandemic broke, but for ekar, it is an opportunity to expand its business model. Now, the car-sharing operator is expanding its services to help fleet owners with excess capacity in the Gulf to technologically equip their spare vehicles and lease them out, according to founder Vilhelm Hedberg.
“One of the things we are seeing in the market is that there are a lot of car rental businesses and leasing companies that have excess capacity,” says Hedberg. “What we are doing is tech-enabling those vehicles and allowing those to be either leased or rented out per minute across the Gulf.”
Although coronavirus-induced movement restrictions have dealt a blow to ekar’s operations, the founder is bullish on the long-term outlook for the car-sharing industry if the pandemic has no second wave.
Hedberg cites the recovery of the car-sharing industry in China and some parts of Europe. “China has been at the forefront in demonstrating that a lot of people are moving away from ride-hailing and shared-mobility options such as buses and trams post COVID-19. They’d rather be in their own sterilised environment, like ekar.”
Prior to the onset of the coronavirus pandemic, ekar had been growing at a rate of 12 percent month-on-month for the past two years in the UAE. A business that began in the form of a car-sharing platform for cabin crew in 2016, ekar has expanded to service over 200,000 members across Dubai, Abu Dhabi, Sharjah and Riyadh.
Interview: Ekar Founder Vilhelm Hedberg
After launching in Saudi Arabia in November 2019, the ekar app grew at an average rate of 78 percent month-on-month in the Kingdom.
“When we launched in 2016, we were averaging 30 trips per day in the UAE. By 2017, this had grown to around 300. Right before COVID-19, we were doing a little over 3,000 trips per day. One of our biggest challenges today is to ensure we have enough vehicles to meet demand. But our trip counts and revenues reduced by 80 percent over the past few months,” Hedberg explained.
Although ekar works on a pay-per-minute model, it is also offering products like subscription sharing, which would allow for long-term leases of vehicles ranging from one to six months. For instance, if a member is not using the car over the weekend or going for a holiday, they can rent it back on the ekar platform and get credit in their e-wallet.
The pandemic has had a knock-on effect on UAE start-ups. The entrepreneur said that if an SME is focused on its fundamentals, has a strong grasp of its cash flow and has honest conversations with investors, it is likely to survive the tough market.
“If you have only two to three months’ worth of cash flow or less, I would consider closing down the business or radically slashing costs to ensure your survival. If you have more than 12 months of cash flow, then you are in a safe zone, even though revenues might be lesser than normal. It takes six months to raise capital in the Gulf. Raising money now is impossible. So you need a 12-month gap at least before you can raise money to sustain the business,” Hedberg said.
(Reporting by Disha N; editing by Seban Scaria)
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