Car rental business

[wazedkhan]

In a hope of finding a good investment opportunity due to recent loss in my existing business, I was looking for some safe & secure business ideas even though I now know there is no such things called safe and secure in business.

However, I’ve been researching about car rental business for the last couple of weeks and found that it might be profitable if I get a place in an airport car rental area. After this I visited an airport car rental office, and talked to the manager but he said it’s already overcrowded and some of the big companies are struggling, so I can’t get any place there.

He also suggested that it will be difficult for individual business to start off like this because customers tend to prefer the companies who have flexible and different pick up and drop off locations, which I can’t provide. So he suggested for car rental franchise companies, who already have multiple locations.

After talking to him I’ve searched briefly and found that Green Motion would be the best option for me in terms of investment level and number of locations they operate. Does any one have any idea of this business or Green Motion franchise? Thanks in advance for your help.

 

[Ozzy]

Why do you think Green Motion would be any better than Hertz or others, at least the others are well known brands. I've personally never heard of them myself so would be unlikely to rent from a name I don't know.

Now that aside, I have a personal friend who runs a car rental business and he's always pulling his hair out as his clients smash up the cars, don't return them, leave them the other side of the country, he's got a running bill into the thousand upon thousands in parking fines. It's a nightmare for him.

 

[JEREMY HAWKE]

It would be an absolute nightmare Most of these business produce a fairly low return and are always part of a bigger business running other things along side it
My moto "Drive it like you rented it !"

 

[wazedkhan]

Why do you think Green Motion would be any better than Hertz or others, at least the others are well known brands. I've personally never heard of them myself so would be unlikely to rent from a name I don't know.

Now that aside, I have a personal friend who runs a car rental business and he's always pulling his hair out as his clients smash up the cars, don't return them, leave them the other side of the country, he's got a running bill into the thousand upon thousands in parking fines. It's a nightmare for him.

Hertz is expensive for both the franchise and customers. Opposite is true for Green Motion.

The problems your friend is facing are the main reasons I was looking for the franchise because I don’t have any experience in dealing with this kind of problem.

 

[Mark T Jones]

I'd reflect the above and ask:

1. Why do you believe car hire is a business that you are suited to?
2. Why have you picked this specific one against all the others?

If it's because they are selling the opportunity to you, I'd start running. Good franchisors don't sell to you, they interview and challenge you.

This is a tough business, and if they are any good they will need to know that you are up to it mentally and financially.

 

[Ozzy]

Firstly I'll say I'm not a fan of and don't really believe in the franchise concept or model in general. So you may take my comments with a pinch of salt, but ask yourself why go into a sector you know nothing about where you pay someone else for the user manual where you never own the IP or the business overall - where instead you can take whatever a franchise costs you and invest that into your own business you can own all of, and if you don't know all you need to now put some your money towards training.

 

[Mark T Jones]

Hertz is expensive for both the franchise and customers. Opposite is true for Green Motion.

The problems your friend is facing are the main reasons I was looking for the franchise because I don’t have any experience in dealing with this kind of problem.

So you are wanting to buy a cheap franchise at the budget end of the market?

Unlike @Ozzy I can see merit in franchises in certain situations - but you really need to understand what you are buying & what they are offering.

By it's nature, budget rental will come with more problems than premium. The franchise will give you systems, but you still have to resolve the problems.

 

[wazedkhan]

I'd reflect the above and ask:

1. Why do you believe car hire is a business that you are suited to?
2. Why have you picked this specific one against all the others?

If it's because they are selling the opportunity to you, I'd start running. Good franchisors don't sell to you, they interview and challenge you.

This is a tough business, and if they are any good they will need to know that you are up to it mentally and financially

I'd reflect the above and ask:

1. Why do you believe car hire is a business that you are suited to?
2. Why have you picked this specific one against all the others?

If it's because they are selling the opportunity to you, I'd start running. Good franchisors don't sell to you, they interview and challenge you.

This is a tough business, and if they are any good they will need to know that you are up to it mentally and financially.

To answer your Q1: I had a business which had failed due to cash flow problems and I’ve learned it the hard way how important cash flow is! There are other reasons to choose this business, but this is the major reason because customers pay upfront daily.

Q2: When I visited an airport rental park for several days consecutively I noticed the cheapest car rental are so popular that the premium ones didn’t get bookings one fourth of the budget one. The revenue of the budget one is far more than the premium one, at least double. Upon some initial research, I found Green Motion is the cheapest. Being the cheapest doesn’t mean their service is bad. If you read the premium car rental companies’ reviews on Trustpilot, you’ll find them the worst.

 

[JEREMY HAWKE]

The revenue of the budget one is far more than the premium one, at least double

It may appear this way but its the turn over vanity theory on this one
The luxury cars cost more to hire but they will produce more profit at the end of hire life as you will have cars that are much lower milage and saleable
This highlights a very important part of the hire business model that you have overlook on this thread

The profit made is not calculated on hire turn over alone
Your profit is made taking into account the purchase of a new vehicle and its resale value when you off fleet it combined with its hire sales.
The repair costs will always be higher than you anticipate . On a new vehicle I would budget for £200 a month
Insurance will kill you
Then you will have a yard/office and marketing with all the other business costs that everybody else has
If you are really going to force yourself into this situation then I would say take six months to do some in-depth research into the industry

Having hired vehicles every week for 30 years I ask myself everyday .How the hell do they make money.
Don't forget Hertz went bankrupt in America in 2020 .Its a tough life

 

[Scalloway]

Green Motion have a terrible reputation from hirers on Trip Adviser forums.

 

[wazedkhan]

The luxury cars cost more to hire but they will produce more profit at the end of hire life as you will have cars that are much lower milage and saleable

Having hired vehicles every week for 30 years I ask myself everyday .How the hell do they make money.
Don't forget Hertz went bankrupt in America in 2020 .Its a tough life

After calculating the return on investment, comparing Toyota Yaris and Audi A3, it’s undoubtedly clear that ROI is much better if anyone chooses Toyota.

They make money from other add on services like insurance, breakdown coverage, etc

 

[wazedkhan]

Green Motion have a terrible reputation from hirers on Trip Adviser forums.

It’s true Green Motion is not the best one, but Did you find any reputable companies in this sector as of yet? Before mentioning any name, just read their reviews.

 

[Mark T Jones]

I'm getting the sense that you are selling this opportunity to yourself - which is always a bad idea


Your reasons for wanting this business are tenuous at best.

Car hire is capital intensive, labour intensive and relatively stressful - you need to think about this very seriously indeed

 

[wazedkhan]

I'm getting the sense that you are selling this opportunity to yourself - which is always a bad idea

Agree with you. Really appreciate it

 

[fisicx]

The problems your friend is facing are the main reasons I was looking for the franchise because I don’t have any experience in dealing with this kind of problem.

The franchise gets you the branding and help setting up. After that everything is your responsibility. If a customer crashes a car and walks away, you have to arrange recovery and repair. The franchise won't be interested other than selling you a recovery service.

 

[BusterBloodvessel]

I knew I'd heard of Green Motion, so did some digging. Firm set up near me around 10 years ago, I remember reading about it in the paper. Google "Green Motion Bolton", and enjoy the 1 star reviews. Or look them up on companies house (Mercury Rental Limited). Dissolved in 2016. Accounts are there for viewing.

Make of the above what you will...

 

[Paul Kelly ICHYB]

DO NOT INVEST IN/START A BUSINESS YOU HAVE NO PRIOR KNOWLEDGE OR EXPERIENCE IN, ESPECIALLY SOMETHING LIKE CAR RENTAL UNLESS YOU ARE PREPARED (AND CAN AFFORD TO) LOSE YOUR MONEY!

Yes, I did just should that at the top of my voice. With my startup and growth advisor hat on, this is one of the most frequent ways to be separated from the kids' inheritance!