Udrive — the UAE’s first pay-per-minute car rental concept

How a cost-effective and short-term driving solution, where a customer will save up to 40 per cent depending on the car model, has emerged as a game-changer

The concept

Udrive is the UAE’s first pay-per-minute car rental concept that started in 2016 offering drivers in the UAE and recently the Kingdom of Saudi Arabia (KSA) as well, a cost-effective, short-term driving solution. Drivers can book a car for their journey via the Udrive app, find it at a location that’s convenient to them, and then simply drive. Cars are fitted with an Internet of Things (IoT) device that can remotely open, lock, monitor and disable car use.

Initially, Udrive was inspired by European technology, but later it was replaced with an in-house mechanism in 2019.

With free petrol, insurance included in the price, most public parking fees covered and with no hidden charges, all the user needs to do is drive. A customer will save up to 40 per cent depending on the car model.

Both tourists and residents can drive a car even if they need it only for a few minutes, rather than renting cars by the day from expensive car rental companies.

Challenges during the Covid-19 pandemic

“In 2020, one of our biggest challenges was funding. At the time we were operating a fleet of more than 570 vehicles, and we were in the midst of our Series A round. Millions of dollars had been committed to us but the round semi-collapsed when the pandemic struck. Additionally, the strict movement restrictions put in place really hurt our revenues.

My previous work experience taught me a lot about acting before it's too late. Revenues drop much faster than costs do so Hasib and I agreed that we either needed to fund the deficit (which we couldn’t as the funding round had stopped) or make some difficult decisions quickly. Once the 12-hour sterilisation periods began we shared letters to our suppliers explaining that the company may not be able to make some payments however we are readily available to talk and discuss solutions. This was a very successful strategy and we are happy to say today that 100 per cent of our pre-Covid-19 suppliers are our suppliers Post-Covid-19 with even more cars,” said Watson.

When cars sit idle for 2.5 months batteries die. “When we restarted services, we tracked cars down based on their last known location and returned each car to a usable state, including cleaning and sterilisation, jumpstarting the batteries and inflating the tyres.

We had to return a few to our suppliers and reduce the fleet to just 200 (two-thirds of what it was). It took six weeks to get the full fleet back on the road. While it was a hard four months, the experience and innovations we made during this time have made us a much better company,” he added.

Post-Covid-19 pandemic

Post-Covid-19 pandemic workplaces have engaged in hybrid work schemes, which leads to individuals considering the benefits of part-time car usership over ownership of one that sits idle for most of the week.

“We have seen areas that are not usually hotspots for Udrive increase in registrations.

Going contactless isn’t just about removing human interaction, it's about streamlining the customer journey. When a product or service does not rely on human interaction, it is effectively a quicker and more economical way of achieving your end goal. With Udrive, it takes no more than 10 seconds to book a car near your location once registered.

“Since launching Udrive, we have had our fair share of start-up experiences. Now, we’re near breakeven operations, achieving both positive unit economics and positive operating gross profit while working towards net profitability.

We have tripled our fleet since 2020 and are geared for triple-digit percentage growth and accelerated regional profitability over the next year.

Our largest demographic group is between the ages 23-32 and peak usage is recorded on weekdays during rush hours from 7-11 am, and 4-8 pm. We’re on our way to a 1,000-car fleet this year in the UAE and have recently expanded into KSA as well. There are 380,000 registered users and a total of 2 million trips since our launch,” Watson said.

“This year we also launched a first-of-its-kind product in the Dubai World Trade Centre (DWTC) area during GITEX Global 2022 known as Udrive Stations meant specifically for commuters to and from the area.

For Udrive our first three years were always designed to have negative unit economics, we were honest with ourselves and our investors. We focused on building the brand and experience that could be very difficult for incumbents or competitors to beat. This growth gave us a loyal customer base and viral acquisition of customers, this allowed us to negotiate with suppliers for better rates and reduce our unit costs. Effectively we became big enough to benefit from economies of scale and built trust with our suppliers,” he added.

Udrive secured $2.5 (Dh9.18) million in a seed round in 2020 and in January 2021, raised $1.3 (Dh4.77) million from Eureeca — the Dubai-based equity crowdfunding platform.

The start-up has supportive and strategic investors including Dubai SME Authority through Dubai Cultiv8, and Oman Holding International, who have significant experience in the car leasing market.

Altogether, Udrive has raised $10 (Dh36.73) million.

Future plans

“We plan to bring Udrive to more cities before 2026 with our strong board, leadership team, strategy and funding to achieve our goals. While the Udrive technology platform is currently applied to car sharing, it is extendable to similar other use cases — we are currently in talks with strategic investors on how to apply the tech and operational experience in other markets. We look forward to starting operations in more Gulf Cooperation Council (GCC) cities next year,” Watson said.

Around 60 per cent of the Middle East and North Africa (MENA) region’s population is under 25 and young people are the fastest-growing population here so we see a generational shift. More employees from the younger generation adopt usership and forgo ownership as they analyse their fixed costs more strategically.

Udrive’s customer base keeps growing with consumers receiving more financing facilities such as leasing.

Travel is an integral part of the on-demand economy, which has proved to be a game-changer over the years; it is set to reach $335 (Dh1,230.39) billion by 2025. Driven by instant gratification and quality user experience, tourists and expats alike are drawn to services like Udrive, which is simultaneously part of the sharing economy — an economy that is forecasted to grow by 2,133 per cent growth in 12 years. In 2020, global consultancy major, McKinsey, also revealed that more consumers are open to vehicle subscription services rather than car rentals.

What are the drivers of the mobility shift?

With rapid technology advancement, businesses can streamline customer experience in processes that traditionally required human intervention — customers are moving swiftly to this new way of purchasing products & services.

Automotive manufacturers now think of cars as ‘shared’ rather than singularly owned and this impacts the design, look and feel of how those cars will operate. Another global consultancy major KPMG estimates that half of the car owners today will no longer want to own a vehicle by 2025, indicating an increase in the trend of on-demand transportation services. As the sharing of automobiles continues to grow, we will see some different approaches to how those cars adopt technology to meet the demand of multiple users for one car.

Automotive apps like Udrive are a catalyst for change and, because they enable efficiency in renting, the likelihood is they will drive innovation in car rental. The innovation is in the business model and operational excellence of a car rental company. “While the apps accelerate the future, the culture and adoption of business innovation are where I see the future of car rental,” Watson added.

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