Supercar hire business...thoughts...

[DAbusinessconsultant]

Figured I would post this here as I know a few guys on here are traders etc and may know a bit more than me about this aspect of the trade.

Basically I am looking at starting up a 'Super car experience' type venture and was wondering about a few aspects of it. It appears quite lucrative and my plan would be along the lines of:

Aston Martin V8 Vantage (circa 45k)
Deposit - 10k
Finance - 35k over 5 years = £900 a month.
Insurance (personal insurance = £2000 a year)

So very roughly hiring out for 3 days a month would cover the cost of the finance, insurance, tax, and anything else would be profit. There would be loads of clauses as per the rest of the companies doing this like mileage allowance and extra is £££, big security deposits that cover off all eventualities etc etc.

There is a market for it where I am, most of the experiences are in London and have £££ delivery charges to this area - marketing will be fine, weddings, events, birthdays, corporate taxi/hospitality, but the main aspect I was wondering about is the insurance element.

I am thinking the easiest way of doing it would for me to have it insured to me as a personal and business commuting use, and then when leasing it out I have the customer arrange for the day insurance and me provide them with a host of sites. That way they can ensure they have the most competitive cost rather than being tied into mine which may not be the most cost effective for them although I would lose potential referral costs. I would then have to make sure they provide the insurance certificate showing that they are fully, comprehensively covered.

Would also be set up as a limited company, something that I can use as a holding company for any other ventures I would embark on and possibly incorporate my shisha lounge under as well although it's a tad small for that status at the moment and would be something I would have to talk to an accountant about.

Anyway, has anyone set something like this up before or know someone that has that can offer any pearls of wisdom? or even experiences with such companies. Feel free to PM if easier, don't want to go into too much detail on here.

 

[Experiencedays]

We are in a similar line of business and yes it can be lucrative however there any many many pitfalls:

What if someone crashes it then you will lose clients until the insurance is sorted.

Insurance to allow other people to drive it will be more around £20,000 per year

What if someone just decides to steal it, you will need tracker systems and a watertight insurance policy.

Average excess on a supercar insurance policy is £5,000, you will need to have that on hand.

Servicing and maintenance of a supercar can cost thousands a year.

Any insurance company will require a full detailed business plan before providing insurance (its not like private insurance where you get a quote and just pay it).

In the end we changed our business plan to suit the insurance needs.

good luck

 

[DAbusinessconsultant]

Thanks for the reply, very helpful - added a few replies that I have thought of so far...again its the insurance side of things that is my bug bear...

We are in a similar line of business and yes it can be lucrative however there any many many pitfalls:

What if someone crashes it then you will lose clients until the insurance is sorted.

There is a seperate company that I know of that leases supercars which you can then sublease, I would be looking at arranging some sort of 'partnership' with a company like this to have a back up plan.

Insurance to allow other people to drive it will be more around £20,000 per year.

I was thinking of having customers arrange their own insurance policy through a 1 day supplier etc. They would they have to have bring proof of comprensive insurance/email to me before they can drive it, otherwise they would lose their booking fee.

What if someone just decides to steal it, you will need tracker systems and a watertight insurance policy.

Will be having a tracker installed as well as one that can monitor speed etc so that if anyone does do something stupid I can nail them.

Average excess on a supercar insurance policy is £5,000, you will need to have that on hand.

Not too much of a problem, although the one I found for 'personal' use was £850 through elephant :|. Either way I would be asking for around a 3k insurance deposit.

Servicing and maintenance of a supercar can cost thousands a year.

Yep, will be factored in to the costs, I know one car won't be a massive earner, but hoping that if I can make 2k a month that will be 1.4k for finance, tax, petrol, servicing, etc then £600 profit.

Any insurance company will require a full detailed business plan before providing insurance (its not like private insurance where you get a quote and just pay it).

Again this is where I get 'confused' with the insurance side of things. I would be setting my personal policy as 'social and business commute' as this is what I would use it for, however as others are driving it on a '1 day' insurance essentially as they would have comprehensive cover on it too then I would not need to have a business policy? A 20k insurance policy would shoot this idea dead in the water.

In the end we changed our business plan to suit the insurance needs.

good luck

 

[Experiencedays]

Yea we started out doing things the way you plan on doing them and luckily we had no problems but this was due to only dealing with family and friends.

Dealing with strangers is another matter.

What about hiring it out for track days? although it will be harder on the car it will cut out all insurance costs and track day insurance can be picked up for about £250 a year these days.

 

[Experiencedays]

Just remember when you insure your car its private insurance if they find out you hire it out for money they wont pay out any insurance as it is fraud.

Also what if someone provide's false details, pays you for the car hire then buggers off with your car?

One insurance company wouldn't even touch us because we didn't have experience in the car hire industry or the systems car hire companies use.

 

[Experiencedays]

also forgot to mention - SPEEDING TICKETS. If you have private insurance you wont be able to prove someone else (a paying customer) was driving your car without admitting you are committing fraud.

its alot of risk for a few hundred pounds a month

 

[businessfunding]

Unless you have some considerable personal means, your financing assumptions are somewhat optimistic, especially if you are honest about the use of the vehicle (I suggest you should be).

In reality you will probably need to put up 25% deposit and finance the balance over a maximum of 3 years - monthly repayments will be more like £1,200.

Remember, your customers will thrash the car to death.

 

[DAbusinessconsultant]

Unless you have some considerable personal means, your financing assumptions are somewhat optimistic, especially if you are honest about the use of the vehicle (I suggest you should be).

In reality you will probably need to put up 25% deposit and finance the balance over a maximum of 3 years - monthly repayments will be more like £1,200.

Remember, your customers will thrash the car to death.

I've checked out the finance of the car over 4 years rather than 3 @ 5% finance which is where my figures are from, the rental is only 2 weekends a month with fuel and mileage etc, think that's fair when I know one month in particular will be very busy so will sort of average out. That said whether demand for a 10 year old Vantage will be there in 3 years is another matter.

Also agree on thrashing the car, thus the big deposit and tracker to monitor speed etc.

 

[TheEngineer]

I went on one of the "experience" days last year and to be honest it was a lot of standing around waiting and then being pressured into buying the "optional" insurance. From what I could see, some or all of the cars were privately owned with the experience company branded number plates over the top. The instructors in the cars were certainly determined to make sure people didn't over-rev or thrash any of the cars. I assume private owners rent them to the experience companies to help pay for the car.

I seem to recall that at least one supercar "club" went bust in London recently. To my mind, the sort of people that will be prepared to pay to use this sort of car are likely to want a number of options available that are shared among the club members. You might want an Aston Martin convertible for a fun weekend away in the summer, a Range Rover for going to the races and a Bentley for the school reunion!

One thing I did consider, but don't have the time to do at the minute was a "car shares" scheme. Up to X people buy shares in the car and get so many weekdays and weekends use per year. You manage the car and look after things like servicing which is paid for by way of a monthly fee. This sort of thing already happens with yachts, planes etc (and probably high end cars) so there must be a way of making it work. Obviously you still have the issue of problems like 3 owners that look after the car and 2 that thrash it to death!

 

[TheGuru2010]

I can help you out on the insurance side, I cant go into to much detail but I have just quoted a new venture (no previous experience) and the price per annum was around £6,000 with a £1,000 Excess Minimum driver age of 30 with a license for 2 years.

You must make sure you have the correct usage for when you hire the vehicle out!, you must vet all potential hires.

Do not allow your vehicle to be Sub Hired. I have heard / seen many horror stories around this !