OperatorsMicromobility: 8 reasons to launch a long-term rental model
April 14, 2022

Micromobility: 8 reasons to launch a long-term rental model

By Harry Maxwell
6raisons-choisir-vld.jpeg

As cities clamp down on ride-sharing with introduce tighter regulations, operators can stay competitive with a diversified strategy.

Long-term rental, or long-term leasing, is when a user rents a vehicle for a fixed monthly fee with all the benefits of ownership, and without any of the worry.

Today, cities only grant access to a handful of operators, meaning that tenders are getting harder to win. Restrictions on the number of vehicles each operator is allowed to have are also significantly limiting profitability. As a result, it has become even more of a challenge to cover an entire urban area.

It's time for a shake-up. Here are 8 reasons to launch a long-term rental (LTR) model.

Entering a new market…

1. Get your foot in the door

With the clampdown on the number of operators in a city, it’s getting harder and harder to win tenders.

Long-term rental is a gateway into a new city, with no authorisation required.

Today, you can launch a long-term rental business in a new city without winning a tender, but this might not always be the case.

Explore the possibilities of long-term rental

2. Guaranteed monthly revenue - higher LTV

One of the biggest challenges in micromobility is finding new ways to boost user retention.

There’s no telling how many mobility apps each user has on their phone, and you’re constantly battling for their attention. At any moment, they can stop using your service - either because they move house, subscribe to a competitor's service, or buy their own vehicle.

Long-term rental guarantees monthly recurring revenue, increasing lifetime value and building brand loyalty.

bloom RS-09 1 (1).jpgBloom launched a rental project with us in April 2021.

Would a rental scheme guarantee more revenue during the winter months?

3. Larger reach than ride-sharing

With a traditional sharing model, to run profitable operations, operators need to focus on getting the maximum number of rides per vehicle, per day. This is why they focus only on the city centres.

With no rebalancing or swapping, and significantly fewer repairs to carry out, rental doesn’t have to just be for those in the hub of the city. It can span across an entire region. Take Paris for example; the greater Paris region is connected with cycling highways that provide people with routes into the city centre, making leasing a lucrative business.

long-terme-leasing-network-paris-cycling 2 (1).jpgThe Paris region is spending €300m on a network of cycling highways to connect the the entire region of Ile de France.

4. An untapped market

Rental doesn’t just have a larger reach than sharing - it unlocks the possibility to cater for a completely new user persona.

Rental is much more convenient for people that need a reliable way to get in and out of town, such as commuters. You can also target freelance food delivery riders (Deliveroo, UberEats), who depend on their own vehicle.

5. Lower operating costs

Long-term rental schemes are significantly cheaper to run than traditional sharing schemes. From an operational perspective, there’s no rebalancing of the fleet, much less vandalism, no stations to invest in, and a constant flow of revenue coming in each month.

All that’s required is:

  • A warehouse for maintenance and storing incoming bikes
  • A small team for recovering stolen bikes and making on-site repairs for users (if included in your offer)
  • A marketing budget

Already running ride-sharing operations?

6. Achieve economies of scale

The opportunity here is two-fold. You can appeal to users in the city center who are yet to be persuaded by the simplicity of ride-sharing. Long-term rental is more likely to attract people that worry about the fleet availability and convenience of micromobility.

As mentioned before, however, there is a bigger opportunity to attract users that would usually be outside of your area of operations.

Reach a wider market without significantly increasing your costs.

7. Reach more users

Imagine you operate in a city. You already have:

  • The vehicles and spare parts
  • A warehouse and a dedicated team for maintenance
  • A marketing strategy and a brand presence

If you can leverage your existing assets to make the operational side of the rental model as cost-effective as possible, you will maximize profitability.

A bike designed for sharing and long-term leasing

We saved the best for last…

We saved the best for last…

A diversified business model gives you more of a chance of winning a tender, but also gives you reason to stay if you fail to win a renewal. Today, no tender is no problem for a rental model.

If sharing operations have to stop, you can cut your sunken costs in launching and training by shifting your model. This way, you have a reason to stay, a user base that you can continue to serve, and a city that you can continue to talk to for any potential opportunities in the future.

Launching a rental model

We've deployed long term rental projects with partners like Bloom, and are currently launching our own project in Bordeaux.

If you're considering diving into the world of long-term rental, don't hesitate to drop us a line, we'd be happy to help.

Interested in building a solid rental model?

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