BENGALURU: Vehicle rental platform Drivezy plans to liquidate around 30% of its 15,000-strong two-wheeler portfolio and a part of its four-wheeler fleet due to rising debt amid a slump in demand following the pandemic and the ensuing lockdown which has hit urban mobility.
To sell off its assets in the second-hand market, Drivezy has launched a pre-owned vehicles buying and selling platform.
It also plans to gradually add a fleet of electric vehicles (EVs) by setting up a joint venture with an OEM, Ankur Sengupta, head of business operations, Drivezy said in an interview.
This follows the decision of other two-wheeler rental firms, including Bounce and VOGO, to sell off vehicle assets to shore up funds to invest in other businesses.
Mobility startups who had invested in acquiring vehicles, especially two-wheelers, are now forced to cut down on both capital and operational costs since covid-19 has led to demand nearly halving.
Sengupta said over the last three months, Drivezy has witnessed a 40% fall in demand forcing it to liquidate a part of its vehicle fleet. Vehicle rental players usually see maximum demand during weekends, but this has changed now given muted travel appetite.
Prior to the lockdown, initiated late March, Drivezy had a significant demand from delivery workers in Swiggy, Zomato, Dunzo, and others. But this has also taken a hit now.
“Demand from consumer side has been the main source of revenue for the mobility and vehicle rental sector, but covid has changed that. Drivezy is now repositioning its business strategy to offer a full-stack mobility platform by offering both short to long-term vehicle rentals, as well as a new platform to buy or rent brand new vehicles directly from manufacturers," Sengupta added.
In 2015, Drivezy had launched as an aggregator, buying vehicles directly on its balance sheet either through equity money or through financing options from banks and other lending institutions. However, as it began to scale, the company had pivoted to newer models in order to bring down capital expenditure on procuring vehicles.
Last year, Drivezy turned to a full franchisee model, allowing private owners — individuals, fleet operators, dealers, etc— to list on the platform. With this, Drivezy had managed to remove the cost of procuring vehicles.
It has so far raised over $40 million in equity financing from investors such as Das Capital, Y Combinator, and White Unicorn Ventures. It had raised $100 million in an asset financing deal, which is parked in a special purpose entity, Harbourfront Capital, set up in collaboration with AnyPay in November 2018.
Just weeks before the lockdown Mint had reported that Drivezy and its closest competitor Zoomcar had cut short their funding rounds.
Drivezy was in the market to raise around $100 million, but cut it short to almost half in March 2020. Zoomcar, which was expected to raise up to $500 million for its Series D round, also trimmed it to $100 million.
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