In 2016, having seen car sharing take off in his local area, Steve decided that building a fleet of car-share vehicles seemed like the perfect low-risk business opportunity. He’s an avid supporter of the peer-to-peer economy, and thought that his entrepreneurial experience plus Car Next Door’s established marketplace and tools would get him off to a running start.
Car sharing as a business (ad)venture
Steve saw that shared cars were important in the shift to smarter mobility as more and more people choose not to buy a car - or a second, third or fourth car for their household - there’s a growing need for easy-to-access self-drive options to fill a gap in the transport mix.
“Providing a range of clean, reliable, affordable cars right where people want them, when they want them, makes car sharing a reality for more people. And more people sharing cars instead of owning them is a win for everyone,” says Steve.
Building on his experience servicing the superyacht industry, Steve set about setting up a robust model for managing a growing fleet of shared vehicles in inner city Sydney suburbs.
Steve started out with just one car listed in January, 2018 - an eight-year-old Audi A3. It’s a solid, reliable car that appeals to Borrowers, at an affordable entry price point. Similar cars sit around the $9,000 to $15,000 mark in the second-hand car market.
Steve’s Audi has been a crowd favourite for over three years now, with close to 500 trips completed and over $26,000 earned. The car’s expenses, as well as the Car Next Door fees, add up to around an estimated $8,000 over this time - and those costs are tax deductible, since the car is 100% dedicated to sharing.
Steve estimates that his return on investment is around 35% to 40% a year.
Two months later, with the first car already proving popular, Steve added a convertible to his listings: a 2008 convertible Mazda MX-5. Another savvy buy, these cars appeal to Borrowers looking to put a little luxe in their everyday. They’re also economical to run and can be picked up second-hand from around $15,000.
The convertible was an instant hit with Borrowers in Sydney’s eastern suburbs. It’s been especially popular with people looking to drive something fun for a weekend away.
One of the unique features of Car Next Door is the range of cars available - Borrowers love the freedom to choose the right car for each trip. One Borrower told us that he picks his elderly father up each Sunday from the nursing home in a different convertible and takes him for a coastal drive.
It’s giving people the opportunity to have these experiences that makes car-sharing more than just a run-of-the-mill investment for Steve.
“I’m not going to lie: I like making money from my investments. But I’m also really proud to be doing something that has a positive impact on other people."
“My favourite metric to measure each month is how many kilometers my cars have traveled with how many different people.
To me, it represents how much they’ve actually helped people get out and explore, have fun and get things done. They’ve travelled over 78,818 kilometres this year so far - they’ll do over 100,000 kms at least over the year.”
Since listing these first two cars, Steve’s steadily built his fleet to include another Audi A3, two VW Golfs, and a Suzuki Grand Vitara SUV.
Each new car in a new location may take a few months to develop its base of loyal return customers, but once established they’re bringing in somewhere between $350 to $550 a month on average, after accounting for fuel, maintenance, tyres and other running costs and Car Next Door’s commission.
Crunching the numbers
Since joining forces with Car Next Door, Steve has earned over $80,000 from his expanding vehicle fleet. But Steve is quick to point out that this isn’t a set-and-forget investment or a get-rich-quick scheme.
Running a fleet of cars requires him to meet the needs of his customers, set financial targets and keep an eye on the market to ensure his cars are always being rented and providing a return on his investment.
“Ultimately this investment is about creating maximum impact with as little effort as possible. That’s not to say that it is a zero-effort business.”
Alongside the expected outlay for registration, servicing and scheduled maintenance - which equates to about $2,000 per vehicle per year - he also budgets for operational and vehicle management costs. Steve also sets aside money to ensure he can provide an outstanding level of service for every customer. It’s an investment in customer retention.
“In a busy month of bookings, there could be one or two that don’t go to plan: a flat tyre, bit of rubbish, minor mechanical issue, that kind of thing,” he says. “Because I budget to deal with these small issues as they arise, I can sort the problem out quickly by offering a discount or refund and still give the borrower a great experience.”
Steve’s ability to quickly turn a negative experience into a positive has seen those borrowers come back to borrow his cars - time and again.
Selecting the right cars for sharing
Whilst he has an undeniable passion for cars, Steve’s the first to admit finding the perfect share vehicle has taken some learning. They don’t need to be new, but they do need to be reliable and mechanically sound.
“I bought four cars at auction. Two were gems, and two were lemons! I’ve learnt the hard way to keep it simple. Spending a little bit more up front pays off in the end,” admits Steve.
“Choosing the right car to build your fleet will have the most significant impact on your investment returns”.
After five years, Steve says he’s discovered his perfect car for sharing: a 5- to 8-year-old VW golf TDI or the equivalent Audi or Mazda. Based on maintenance and repair costs and borrower preference, these are the vehicles that provide Steve with the highest returns and the least hassles.
He’s prepared to stand by his choice for the long term.
“I won’t sell these cars, even if they need expensive repairs. If I get another 100,000km out of a car after shelling out $2,000 on repairs, it’s worth the investment.
Plus - these cars hold their value. As they age or get scratched they are still mechanically sound and I can continue to rent them out at a lower rate, to a different market segment.
On Car Next Door, there are people who want to pay more and get a nicer car; as well as those who just want to get from A to B and not spend more than they need to.”
The secret sauce
Steve likes to provide his borrowers with the best possible experience by sending personal messages giving discounts for loyal customers or long term bookings. He loves that Car Next Door handles all the other time-consuming aspects of running a business; arranging insurance, marketing, booking management, handling payments and customer care.
“I manage all my cars and bookings from my phone: it’s so easy. I am available to respond to my borrowers directly so I can sort any problems out myself, but if I wanted that could be taken care of by Car Next Door’s member experience team. The secure lockbox on my cars means that I don’t need to meet Borrowers to hand over the keys. The customer service team are awesome to deal with - always happy to help both me and my borrowers.”
Steve’s got a busy full-time job, so now that his car-sharing business is really accelerating, he gets help from assistants with managing his six cars’ calendars, bookings and reviews and also cleaning and maintaining the cars. He’s found that the investment in extra help pays off in terms of happy borrowers, busy cars and higher earnings.
Another way that Steve makes his cars stand out and keep customers coming back is to kit them out with everyday essentials.
“Every car has a phone cradle, Bluetooth audio device, multi-charger cable, wet wipes, tissues and hand sanitiser. These get used up, go missing or break occasionally, but I just replace them. Big picture, it is a small cost.”
A few of the cars also have a selection of great and cheesy CDs, which Steve gets loads of great comments and reviews about!
Always looking for opportunities to grow his business, Steve is planning on adding one or two dual-cab utes to his fleet to satisfy local demand for utility vehicles and to diversify his borrower base.
“The income’s going into my ‘Aston Martin fund’,” laughs Steve. “It’s my dream car - and who knows, maybe I’ll end up with one in the garage eventually!”
Steve’s top tips
Steve’s top three pieces of advice for entrepreneurs looking to try Car Next Door on for size are simple and wise:
- Follow your passion. It may be easier to just put your spare money into super, but if you’re looking for an accessible enterprise that feels meaningful, challenges you and keeps you striving to succeed - this is it!
- Start slow. There’s no such thing as ‘get rich quick’. Take the time to educate yourself on how the platform works and what your local community wants, and think about what you’re prepared to invest in terms of time and money (and don’t forget to check out the competition).
- Go above and beyond. Little things like washing your vehicles, doing a monthly deep clean or sending a friendly welcome to a new borrower will keep your cars getting good reviews and build a loyal customer base.
Ready to take the next step towards starting your own car share enterprise? List your first car today. If you have any questions, our Owner Onboarding team is on hand with personalised tips to set you up for success.