When Karim Kaddoura was growing his first startup — an online sales platform for auto dealers in Europe — he rented a lot of cars. “It was a nightmare,” he says, regarding the long lines and hassle to pick up a rental at a train station or airport. “It’s jaw-dropping that the method really hasn’t evolved in the past few years.”
As part of “the newer generation that expects services to be efficient and fast,” Kaddoura analyzed the transportation market to see if and how he could jump in with a new service that addressed the issue.
At the time, the shiny new things in mobility were ride-hailing and peer-to-peer (p2p) networks. Yet Kaddoura and business partner Thibault Chassagne didn’t see the need to start from scratch. Instead, they saw a green field in traditional car rental — offering daily roundtrip rentals for leisure and corporate customers using an owned fleet — but without the pain points and friction.
“[Car rental] is a huge market and very deep,” Kaddoura says. “We’re not saying that the business has to change. The needs are still the same, but the experience needs to be reinvented.”
Kaddoura went about creating the first daily car rental service in Europe “to have a 100% mobile-based experience.” Virtuo launched in Paris in 2016 and expanded to train stations and airports in other French cities. The service opened in two stations in Belgium in January 2018, and expanded into London in July.
Virtuo’s process may sound familiar: a smartphone app controls enrollment, verification, reservations, and access to a fleet of Mercedes A-Class or GLA models.
Yet while the service uses carsharing technology, Virtuo “is not an urban mobility provider, but more of an exurban mobility provider,” Kaddoura says. “We’re targeting different behaviors and customer segments — longer distances and residents or travelers who need a car for a day or more. In that sense we’re obviously competing against traditional car rental companies and peer-to-peer rental companies.”
Regarding p2p, Kaddoura sees growth limitations on both the demand and supply sides — particularly as vehicle ownership erodes and the inherent uncertainties of interacting with private owners. “[Users] want to know for sure that the car is there and that they’re not going to lose any time,” he says. “In peer-to-peer markets there is a lot of irregularity.”
Away from the Counter
Moving away from rental counters to an on-demand environment, “Density is important,” Kaddoura says. “We need to be as close as 15 minutes from where you live.”
Standardizing the fleet to two models streamlines processes. A bigger challenge, Kaddoura says, is anticipating demand and placing supply accordingly. For this, Virtuo turns to its “community partners” to move cars.
These partners perform vehicle inspections, cleaning, and fleet rebalancing from station to station. Many will recognize this new type of contractor from bike and e-scooter sharing schemes.
Rentals are picked up mostly in parking lots near train stations. Parking companies are eager to partner with Virtuo, Kaddoura says, as they seek new revenue sources in the face decreasing car ownership and the growth of alternative transportation modes.
Airports are tougher nuts to crack, owing to the traditionally bureaucratic nature of airport negotiations, minimum revenue guarantees, and the difficulties of new players to break through. Kaddoura is hoping that Virtuo’s partnership with Lyon/Saint-Exupery Airport will serve as a model.
Lyon is the third largest airport in France, but willing to test new services in allowing bids for new mobility options. “[Lyon Airport] realized that car rental numbers are going down as customers have been favoring ride-hailing solutions,” Kaddoura says. “They listened to what customers want, and what they want is more convenience.”
According to Kaddoura, this defines the path simply for traditional transportation modes to survive and new modes to flourish.
“Many of our customers tell us they used to be car rental users, and then they switched to ride-hailing, even though it didn’t fulfill their needs completely,” he says. “For a lot of customers, it’s a better option to have a car than using a taxi or ride-hailing service.”
“Simplicity and convenience is the name of the game.”