Possible reasons behind Zoomcar refund crisis - eNidhi India Travel Blog

Possible reasons behind Zoomcar refund crisis

Feb 2021 update:

This INC42 article suggests zoomcar is in huge loss and needs funds to sustain. Zoomcar spent 630 crores in 2020 just to earn 291 crores, or effectively spent 2.1 rupee to earn a single rupee. Obviously without fresh revenues or investor funding, company has no funds to refund customers and may soon default on salaries and other liabilities. Let us see how management recovers the company from this crisis.

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India's leading self drive Car rental company Zoomcar is facing a massive refund crisis. Every social media post of Zoomcar is being retaliated by angry customers about their unpaid refunds. Zoomcar's social media team doesn't have any solution or timeline for this and can only give some template replies. Zoomcar's CEO claims to be unaware of the crisis [Read Inc42 report] or underplaying it and even after few months since lockdown ended, Zoomcar is unable to give a reasonable explanation or respectable timeline to process refunds of thousands of customers.

What could be the reason? Since Zoomcar is not being honest with its customers and not revealing anything, I'm taking an effort to identify potential reasons for this crisis. While it is obvious that corona pandemic has affected travel industry the sheer volume of crisis at Zoomcar, lack of information and inability to resolve it even after multiple months demands some introspection and analysis.

Why Zoomcar is NOT refunding customer's money?

Possible reason 1: No investment on working capital: 

Zoomcar has raised millions of dollars of investments to grow its business. Zoomcar acquired Drivezy recently. Zoomcar has tied up with M&M and other companies but all these are probably used to grow business, not sustain. I mean, investor money is being put to buy new cars, expand operations to new cities etc. Money required to process refund request is probably expected to come in from next booking. With fresh bookings not happening due to lockdown, people reducing travel or being scared to use a vehicle used by someone else, Zoomcar doesn't have cash to process refund requests. With bookings being cancelled in bulk all over the country and new bookings not happening, Zoomcar is finding it impossible to process refunds. All existing cash is probably being spent to pay salaries, vehicle loans and other expenses like ads. Customer refund is least of the priorities.

Possible reason 2: Failed ZAP Subscribe concept.

Zoomcar tried to promote car subscription model under ZAP. However this looks like a failed model. Zoomcar claims over 9000 people have subscribed to their cars- this looks like nothing. Maruti Suzuki sells more than 1 lakh cars per month. All major manufacturers included more than 4-5 lakh new cars are sold every month. (and 10-15 lakh two wheelers, who are also potential customers for car subscription) Even if Zoomcar managed to convert 1-2% of these customers into ZAP subscriber, company should have got 10000 subscribers every month. But even after several years, ZAP has less than 10000 subscribers. Reasons could be as explained in this post.

Zoomcar expected ZAP subscribers to pay a massive monthly fee that would cover EMI of new cars while daily bookings generated additional revenue for other expenses. With ZAP not gaining traction and daily bookings gone, fund for refund is not coming up.

Existing ZAP customers are also affected as they are not earning from listed bookings due to both pandemic and because frustrated customers are not making any repeat bookings due to unpaid refunds.

Possible reason 3: Management disregard

May be Zoomcar has money but management wants to conserve it for something else. Refunding customers is not profitable and will drain cash reserve. Management knows that most customers will eventually give up after waiting for few months. For a small amount like 3000-5000 INR one may not hire a lawyer, file court case and wait for years- so it could be management strategy to ignore customer follow ups for refunds and make them wait. They could use existing cash to launch new promotions, marketing campaigns etc hoping to get new customers. But this tactic is backfiring as frustrated customers are venting their anger on social media, alerting other potential new customers, ruining Zoomcar's reputation, credibility and potential revenue. Existing customers who would have made fresh bookings are also holding back.

Possible reason 4: Company bankruptcy?

May be Zoomcar is looking to exit the market. They just have to sell their cars and pack up. Processing refund is waste of time and money. I hope this is not the case.

Zoomcar has fixed expense like car EMI, staff salary, rental etc even if no one is renting the cars. Obviously the industry and company are impacted by Corona and some impact is expected, but the level of problem seems worrying w.r.t zoomcar. (Number of customers, amount unpaid etc). But then, I do not see so much complain about Revv or Myles or other self drive rental companies on social media. What do you think could be the reason?

I don't have a solution for this, but I guess Zoomcar can sell off some of their cars, get some cash, refund customers. Most of India's startups are designed to run on loss- grow at any cost using investor money even if individual transactions are not profitable. This backfires heavily as customers pull back. Do you think investors will pump in more money just to support refund? I don't think so. With so much complaint, new customers will also be scared, causing even more damage. It is in Zoomcar's own interest to accept and inform what is going on, how and when they are likely to refund. Let us see how this evolves.

October 24 Update:

I realize that Zoomcar has no physical people handling their social media. We only get bot replies. Hope someone is still employed in this organization and is working to sort things out.


Related: Tips to avoid bad experience with Zoomcar

33 comments:

  1. Very bad service because in june month we have traveled through zoom cars from Hyderabad to vizag and once reached vizag we have submitted all details but not at received any refund amount Rs.5400/-from them when ever asking for it they are saying

    ReplyDelete
    Replies
    1. They are yet to refund me for the trips I made in December 2020. It's almost three months now. Total ~Rs 7200 pending. Worst is that there is no way to connect to their customercare.

      Delete
  2. Horrible situation. I have not got refund for more than 2 months, and there is no phone number to talk to. They simply do not care for customers. Around 20000 pending without any communication.

    ReplyDelete
  3. Same here, waiting for a refund around 18k, for two bookings..
    for two months. Now no option to call their cc, the call is not getting connected and no proper reply for emails.. really horrible situation.

    ReplyDelete
  4. Same here...waiting for refund of Rs 9000 Rs.

    ReplyDelete
    Replies
    1. whom do we complain to? how to raise this with consumer court? Signature camp? Letter to PMO?

      Delete
    2. Same here.... Waiting for refund of Rs.16000

      Delete
    3. Shit Service. I am waiting for my refund Rs.9000 since Nov and no clue until now.

      These guys cheated all us and stocked our hard-earned money. I am sure they will flip the board soon.

      Delete
  5. We have booked zoom car on Nov 27 and canceled and 720 pending refund from 16days please let how much time it will take

    ReplyDelete
    Replies
    1. Lucky your amount is 720 only.. Best luck for 2021...
      Meanwhile their social media team busy running offers and campaigns as if nothing is wrong

      Delete
  6. Hey! Everyone out there who haven't t received there refund from Zoomcar yet can try this simple trick which I have used twice to get my refund. Just call zoomcar customer care and ask them to convert your pending refund into coupon then after sometime means about an hour call them and ask to cancel the coupon and refund the money. Your amount will be returned in a week to your account Try it and help others too...

    ReplyDelete
  7. Waiting for refund for Rs 30,000+ :-(
    1. Unable to connect to the call center. It keeps saying number not recognized although i am calling from the registered mobile number only.
    2. Tried calling their zoom car subscription - no help from them either to provide an alternate contact # or any intention to help.
    3. No response to emails either.
    Its more than 40 days - reading various horror stories looks like i am in for a long wait - if at all i receive !

    If the company is out of funds, at least take the calls and let the customer know about the challenge and request for additional time for refund - instead they have blocked the ability for any customer to reach them ! Completely dishonest business practice !

    ReplyDelete
    Replies
    1. Agree. 2 months since I wrote this, issue remains

      Delete
    2. same happened for me to.. 4600 rs pending refund.. customer care dosent respond.
      2 months now..

      Delete
  8. Very disappointing. I have to get refund of almost 11,000/- . It been more than 90 days now. Unable to connect to any zoom executive . Such a pathetic setup. Atleast they need to provide an update .

    ReplyDelete
    Replies
    1. Well..i had 11k pending. Asked them to conver it to 2 coupons of 5500 each. They did it. Finally i redeemed 2 coupons. It works. They had coupon validity for 6 months. Ask them.

      Delete
  9. Very disappointing. I have to get refund of almost 11,000/- . It been more than 90 days now. Unable to connect to any zoom executive . Such a pathetic setup. Atleast they need to provide an update .

    ReplyDelete
  10. INR 21298 pending for more than a month. I think we should all book a car for a day and not return it back till our refunds are given. if people are ready for this pls contact me on 9884037033. We need to do this as a group only.

    ReplyDelete
  11. INR 6416 pending for more than a month contact me on 7740898118.

    ReplyDelete
  12. Anybody from above list stays in Hyderabad or Bangalore.
    lets visit to offices and get the refunds made with Interest amount.

    ReplyDelete
    Replies
    1. I live in Hyderabad. Let me know when to go. I am ready. Waiting since 2 months for refund.

      Delete
  13. Was anyone able to get through the customer care number ? I don’t think the listed once are in service. I have the same issue like many of you and was considering reaching out to CEO or head of product with the issue . Has anyone tried this?

    ReplyDelete
  14. Thanks for sharing your experience people. 3 months since I wrote this, there hasn't been any improvements...

    ReplyDelete
  15. I don't get my refund of 3700 this is fraud they are playing with us ...

    ReplyDelete
  16. I am a zoom associate I have my pending payment of INR 60k and its pending from last ten months. Just imagine if a company can behave so irresponsibly with its vendors how they will treat their customers??

    ReplyDelete
    Replies
    1. sad to know your experience. Yes things aren't going well at Zoomcar for an year + now

      Delete
  17. Today is exactly a year since I booked a Mahendra SUV 500, by paying 6695/=. Cancelled my booking due to lockdown. Made several requests for refund but no avail.

    ReplyDelete

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