While the headline may sound like clickbait, it is actually not. Bengaluru-based startup Prorata Car is offering people the chance to own premium cars like Mahindra Thar, Ranger Rover, and Audi Q3 at a fraction of the cost.
How do they plan to do it? How could you apply for it? Are these used cars? To find the answers to all these questions we sat down with the company’s founder and CEO Sanjeev Jain. Here are the excerpts from the interview.
Prorata Car- The Company
“Prorata is a fractional car ownership platform. And the idea is basically you have your own car for your daily commute. And you need a second car for your occasional need. So we are basically your second car,” this is how Jain defines the company.
Jain further explained that people get a brand new car and not a second-hand or a used car. “It’s a brand new white plate car. Purchased directly from the showroom, and owned by 4 to 12 people, managed by the Prorata platform. This is the car, which is 5 times better than whatever you are currently owning at just one-eighth of the original cost.”
The Idea
When asked about how the idea of the company came about, Jain answered with a question of his own What is your dream car?
“If you ask anyone, what’s your dream car? Everyone will say, my dream car is a premium luxury segment or an off-road car. Nobody will say, my dream car is Maruti, Hyundai or Tata which is basically a daily commute car, right?
Now, if you see the sales data in India, 98% of sales are of these cars that are priced at less than ₹10 lakhs. Only 2% of sales are the premium segment car over and above say ₹20 lakhs.
But Indian people are aspirational. Culturally we also have that desire to show off. So the aspiration is there and the demand is also there. But the pricing of these cars is very costly.”
This is where Jain believes the idea of fractional car ownership comes in.
“Prorata means in equal proportion suppose whatever the percentage you have in the car, you will get to use the car in that proportion and the cost will also be divided in that proportion. So, if you have 8.3% ownership you will be able to use the car for 30 days per year,” he added.
How Does It Work?
Now, a logical question, would be that how do all the logistics work? Who owns the car legally? Who pays for the maintenance/ repairs?
Jain explains that the car is owned through a Limited Liability Partnership. Anybody own who joins in becomes a contributing partner and the car is registered under the LLP. Prorata does not own the cars but works as an asset management company.
“So we manage the entire hassles of the car co-ownership. Which includes premium payment, parking costs, car wash, and car transfer from one partner to another partner. Then, in accidental issues, we have the accidental policy covered by the insurance. We protect one partner from the other partner, with the legal instrument and the technology that we have in place,” Jain further explained.
The car can be owned by four to 12 people living nearby within a radius of five KMs. The car is placed under a facility and then when you reserve the car, “you will get the car and then whenever your reservation ends, the company will take the car sanitise it and give it to the other partner.” In return for all this service, the customer pays an annual fee.
The Market
Since fractional car ownership is a fairly new concept, we asked Jain if he thought the market was big enough and whether there was enough demand. Jain agrees that since it’s a very new business model it is difficult to ascertain a correct market market size number.
But he adds that based on internal research they have tried to answer the question.
“So, there are around 40 million people in India, having their primary car to commute. Out of 40 million people, if we assume even one million onboard our platform and use the platform for their secondary car options, that’s a huge market opportunity.
Imagine a million people paying say ₹20,000 as an annual maintenance charge, that is a ₹2,000 crore top line for us. “
The Funding
Funding has been one of the sticky points for upcoming startups in the past few years. Since the funding winter dawned, many early-stage, as well as late-stage startups, have found it difficult to raise funds. So we asked Jain, how has the fundraising journey been.
“We have already raised $125,000 last year from our friends and family and car showroom industries guys. Now, we are raising another close to $500k US to $1 million. So the current round is in progress and we are getting enough interest from the investors. So after this round, there will be a proper institution round of larger funds once we get our hundred cards on the road.”
The Road Ahead
“So we already have 1.80 lakh app downloads in just the last six months. We also have a long waitlist of around 7,000 to 8,000 people from 350 cities in India. People basically join the waitlist by paying ₹99 on our platform. The payment is a filter for us to gauge if the person is serious. We have also managed to facilitate the first car owners group through our platform and we have around four cars which we are rolling out this month.”
Jain further explains that since Prorata is just a year-old startup, a lot of their initial time was spent doing market research and honing the business model and now they have started rolling out cars. The startup plans to rapidly ramp up the rollout and achieve the 100 cars-on-road number by September 2023.
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