A Better Way to Own Lots of Cars
If you are a gear head, you probably can’t shake the desire to own a garage-full of vehicles. There is something so luxurious about choosing which car to take out on which day — but that luxury comes at a steep price. Even setting aside the initial investment for ownership, vehicles cost owners several thousands of dollars every year in insurance, fuel, registration and maintenance. Because you aren’t Jay Leno or Kylie Jenner, there is little hope that you can afford such a collection. Unless…
One way to own a fleet of vehicles and survive the costs is to monetize your garage by transforming it into a carshare enterprise. Many experts believe that carsharing services are the future of transportation, so by hopping onto the market trend now, you could stand to grow your business big before the boom. Plus, you can justify purchasing vehicles of all makes and models for the sake of your business. If you want to learn more about how to launch and run a carsharing business in 2019 and beyond, read on.
Research Your Local Market
Unless you live in an exceedingly rural community, there is probably at least one carshare service operating in your area. Large, established carshares, like Zipcar and Enterprise CarShare, have covered a large portion of the globe, and if they aren’t in your suburb, they are surely servicing a city nearby. Because you aren’t ahead of the curve in developing a carshare service, you need to perform some market research to understand what carshares are in operation, what models they use, what their price points are and who their customers are.
Next, you should perform additional research on your potential clientele. Questions that should guide your research include:
- What age are carshare clients in your region?
- What do carshare clients use the service for?
- Where do carshare clients live, and where do they travel to?
- What is the typical income of carshare clients?
- How tech-savvy are carshare clients?
Finally, you should meld both halves of your research together to understand what parts of the local market are currently underserved. This will help you start your carshare in a niche and gain more traction from the get-go. Some niche examples include providing a carshare for the elderly, for families or for those who want luxury makes and models. Once you have an idea for the basis of your business, you can begin building it in earnest.
Understand Your Needs
You know you need cars — though what makes and models you choose might depend on your audience and your car sharing model. However, there are a few more necessary components to acquire before you can be certain your business has what it needs to succeed. These include:
The right technology. Carshares rely on all sorts of tech, from GPS on vehicles in the fleet to payment services for users to keyless entry and ignition systems. You can take advantage of carshare software from RideCell to help you with some of these needs.
The right insurance. Cars are expensive, and they are dangerous. Undoubtedly, more than one of your car share clients will be involved in a collision, and you need a way to protect your assets from any lawsuits. You can’t rely on typical car insurance; your business needs specialized car share insurance to stay safe.
The right cost structure. How (and how much) you charge your clients will depend on who they are and why they need a vehicle. And that brings us to the last step…
Develop Your Model
There are three established models for carsharing businesses. These include:
The most well-known form of carsharing, business-to-consumer carshares provide vehicle access to regular people who need transportation. There are several ways to structure B2Cs, from station-based models (in which all available vehicles are picked up and dropped off in a specific lot) A-B models (where members can pick up and drop off vehicles in different designated parking spots) to free-floating models (which allow users to pick up and leave vehicles wherever they need to within an area). Usually, users pay monthly subscription fees as well as per-mile or per-hour fees. Because this is a popular carsharing model, it’s likely that consumers in your area are familiar with the concept and capable of setting up service with minimal fuss.
Because most personally owned vehicles sit idle for 90 percent of the day, this is a passive way for car owners to make money — like Airbnb for cars. You will develop the infrastructure, but car owners will provide the vehicles and the listings for users to see and book. You will need to devote a portion of your earnings to payments to car owners, and there are some risks for car owners and for you, the business owner, but considering the recent growth in the P2P industry, this isn’t a model to dismiss immediately — unless you are only getting into carsharing to purchase a fleet for yourself.
Businesses often need vehicles to help workers get from office to office, meet with clients, transport products and more. If you are interested in purchasing not consumer cars but commercial vehicles like trucks, trailers and tractors, you might consider establishing a B2B carshare in your area. Business clients tend to be harder to attract but more profitable in the long run.
In truth, a desire to own lots of cars isn’t a good driving force behind building a carsharing business. However, if you have an entrepreneurial mindset and enjoy purchasing and organizing fleets, you might thrive in this industry.