Every business owner dreams of establishing an enterprise that will thrive. This is especially true of anyone getting into the luxury car rental service. The dream of having a fleet of luxury vehicles and clients streaming in every day to hire them thus raking in thousands of dollars in profits is mouthwatering.
It is however worth noting that the luxury car rental service is not a bed of roses or an easy cash cow as some would believe. Here are 3 things you must know before making the decision to venture into this business.
#1 The business is an insurance nightmare
Most people’s aspirations to get into the luxury car rental service have been extinguished as a result of the complications that arise form insurance. This is because there are very few insurance companies willing to insure high end luxury cars and this results in them charging very high premiums.
In addition, these companies will only offer up to a maximum of three claims. Going beyond this may lead to them cancelling the policy. This is a very small number for a car rental service considering the frequency of the vehicles being in the hands of the clients.
#2 The business requires very thorough security measures
The fact that you are renting out a high end car to a client you barely know is in itself a security risk. As a business owner in the luxury car rental space, you need to be aware that you will often be required to go above and beyond to ensure the security of your investment.
This may involve carrying out background checks on potential clients to learn more about their criminal history or lack thereof as well as their driving record and credit rating. It is also very important to install state of the art GPS tracking systems. All these measures are meant to safeguard your vehicles before as well as while in the hands of the client.
#3 Luxury cars depreciate very fast
In order to be successful in the luxury car rental service, you must be fully aware of the laws of depreciation value of assets specifically high end luxury vehicles. Experts in the auto industry will affirm that a good number of high end luxury vehicles will depreciate by as much as $100,000 within the first year.
This basically becomes a challenge especially when you want to replace your fleet with newer models that are on trend. This is mainly a challenge faced by business owners who opt for buying rather than leasing. It is therefore important for you as a luxury car rental service provider to have a plan in place on how you intend to dispose of your fleet without suffering loses brought about by depreciation.
It is important to note that these 3 points are not meant to discourage you from getting into the luxury car rental service but are rather meant to help you prepare better for this venture. The key to success in any business is knowing early enough the challenges you are likely to encounter and figure out ways of countering them.
We trust you are well on your way to establish your luxury car rental service.