Modern Classic Car Co-operative
Discussion
Hi all,
Long time lurker, first time poster. I'm thinking of developing a car club focused on modern classics (Integrale Evo, R32 GTR, F355, etc.), so I wanted to put it out there to PHers for some valuable (i.e. brutal) feedback/input.
Like existing car clubs members would pay to play (although membership would be on a PAYG basis rather than an annual lump sum), but the novel part is an increasing proportion of the fee would constitute investment in the cars. So in effect, members build up ownership over time and so are entitled to an increasing share of sale proceeds, membership revenue, etc.
That's the gist of it, obviously there's a lot of detail to be worked out (pricing, driving days per member, etc.) but it would be great to hear if any of this resonates (whether it's the focus on analogue heroes, the membership/ownership model or anything else).
I'll brace myself for the hordes of people beating down my door..
Long time lurker, first time poster. I'm thinking of developing a car club focused on modern classics (Integrale Evo, R32 GTR, F355, etc.), so I wanted to put it out there to PHers for some valuable (i.e. brutal) feedback/input.
Like existing car clubs members would pay to play (although membership would be on a PAYG basis rather than an annual lump sum), but the novel part is an increasing proportion of the fee would constitute investment in the cars. So in effect, members build up ownership over time and so are entitled to an increasing share of sale proceeds, membership revenue, etc.
That's the gist of it, obviously there's a lot of detail to be worked out (pricing, driving days per member, etc.) but it would be great to hear if any of this resonates (whether it's the focus on analogue heroes, the membership/ownership model or anything else).
I'll brace myself for the hordes of people beating down my door..
Risky on a PAYG model, but the bigger issue is the shared ownership / revenue model - how would that work in practice? if I buy into the club and there's 5 members, I get a big share, if it becomes 1000 members I get way less than I originally planned. If you fix the shares at purchase time its basically a pyramid scheme, if you don't, the prospect will become far less tangible to the point it's not a real benefit.
Probably an obvious answer I've missed?
Probably an obvious answer I've missed?
vdn said:
If it was set up well then I'd be interested. Sounds good on paper. I suppose the ownership also incurs a downside, with share of costs also?
The potential downside to ownership would mainly be a drop in the price of the assets after having built up an ownership stake, but that only matters in the case of a forced disposal (hopefully not likely), and given the class of cars the expectation is that depreciation shouldn't materially contribute.Running costs will ideally be covered by membership fees but I agree that this is highly dependent on the assets and needs to be more deeply analysed.
shouldbworking said:
Risky on a PAYG model, but the bigger issue is the shared ownership / revenue model - how would that work in practice? if I buy into the club and there's 5 members, I get a big share, if it becomes 1000 members I get way less than I originally planned. If you fix the shares at purchase time its basically a pyramid scheme, if you don't, the prospect will become far less tangible to the point it's not a real benefit.
Probably an obvious answer I've missed?
Valid points and I probably should have mentioned a couple of other details. Membership would be limited according to how many assets are in the pool (by my reckoning somewhere between 10 and 20 depending on how much people want to invest versus the number of driving days).Probably an obvious answer I've missed?
At a high level the mechanism would be thus - the first asset is initially owned by the club and over time ownership is transferred to members in exchange for their investment. That investment is then used to purchase a second asset at which point new members are allowed to join (on the same terms), meaning the number of members to assets stays relatively stable over time.
So for any given member, their ownership percentage of the pie decreases as the number of members (and investment) increases, but that is offset by the overall pie being bigger. This actually brings a few benefits such as having an increasingly diversified pool of assets (good for stability of the value of the portfolio as a whole) and having access to a wider range of cars.
Have you any experience of starting and running a business? If you have, forgive the sucking eggs approach, but if not.....
Have you worked out your start up costs? Purchases, storage, insurance, etc...? Where's the money coming from?
Have you worked out your running costs? Rent, wages, maintenance, marketing, professional fees, etc...?
Have you done a risk assessment? - what if fuel prices continue to rise, etc...?
If you haven't done any of these things, then start here. Do the sums. I fear that you may be in for a shock but better to suffer that without spending money (and time).
I'd also advise you speak to an accountant as I have a feeling you may encounter some complex tax issues around your business model (corporation tax, not car tax). If I've understood it correctly, the vehicles would start off being owned 100% by your company but then gradually a proportion of their ownership is passed to increasing numbers of members. So if your F355 ends up being 'owned' by 20 people, who is the registered keeper and how will this affect your tax liabilities? And the owner's come to that! The Co-Operative structure may simplify some of this as the members would essentially own a share of the business rather than the cars (is that right?).
Have you worked out your start up costs? Purchases, storage, insurance, etc...? Where's the money coming from?
Have you worked out your running costs? Rent, wages, maintenance, marketing, professional fees, etc...?
Have you done a risk assessment? - what if fuel prices continue to rise, etc...?
If you haven't done any of these things, then start here. Do the sums. I fear that you may be in for a shock but better to suffer that without spending money (and time).
I'd also advise you speak to an accountant as I have a feeling you may encounter some complex tax issues around your business model (corporation tax, not car tax). If I've understood it correctly, the vehicles would start off being owned 100% by your company but then gradually a proportion of their ownership is passed to increasing numbers of members. So if your F355 ends up being 'owned' by 20 people, who is the registered keeper and how will this affect your tax liabilities? And the owner's come to that! The Co-Operative structure may simplify some of this as the members would essentially own a share of the business rather than the cars (is that right?).
Was scribbling out some fag-packet figures.
If you start with five cars at say £50k each, that's £0.25m off the bat to start with. On top of this I'd say that you're looking at an annual overhead of around the £100k mark (wages, admin, marketing, etc..).
The offer wouldn't attract HNWIs as those interested in such things would likely have their own fleet of similar cars. Equally, nor would it be attainable at the other end of the economic scale. So I'd say you're pitching to the higher-earning middle classes earning £80k / £90k plus.
The PAYG model would be unlikely to appease investors or lenders because there's no surety of any of the £250k ever being recouped or your £100k being covered.
Investors and lenders like subscriptions. If you had 40 subscribers (or members) each paying £500 a month that would bring in £240k a year. If you spread the repayment of the original investment of £250k over three or four years, that should therefore cover the repayments, your overhead and leave a decent enough bit of profit.... which could be boosted by hiring out the cars to non-members when not being used and other additional things.
So in theory, your idea has some legs. But here's the 'however'....
The market you'll be targeting are typically asset-rich, cash-poor. Assuming the £500 a month subscription applies, that's a big chunk of money even for them and many of them will be in their 40s/ 50s with kids and all that. Plus it's an amount that were it a loan repayment, would put them in any number of nice cars that they get to keep for themselves.
So your ideal punter is going to be a 40 - 50 year old single bloke, no kids, earning upwards of £90k a year living in a pokey two bed terrace that he owns mortgage free whose only passion is cars.
The upside is that you only need 40 of them.
If you can find them first, sign them up before you spend any money (i.e. get a commitment from them), taking that to a bank or investor would, I think, be seen favourably as it would be a low-risk loan/investment; they'd have title on valuable assets until the debt is repaid plus a clear and confirmed revenue stream that would cover the repayments.
I think your biggest challenge will be finding those 40 people. If you can, I can't see many reasons for it not to work.
HTH.
If you start with five cars at say £50k each, that's £0.25m off the bat to start with. On top of this I'd say that you're looking at an annual overhead of around the £100k mark (wages, admin, marketing, etc..).
The offer wouldn't attract HNWIs as those interested in such things would likely have their own fleet of similar cars. Equally, nor would it be attainable at the other end of the economic scale. So I'd say you're pitching to the higher-earning middle classes earning £80k / £90k plus.
The PAYG model would be unlikely to appease investors or lenders because there's no surety of any of the £250k ever being recouped or your £100k being covered.
Investors and lenders like subscriptions. If you had 40 subscribers (or members) each paying £500 a month that would bring in £240k a year. If you spread the repayment of the original investment of £250k over three or four years, that should therefore cover the repayments, your overhead and leave a decent enough bit of profit.... which could be boosted by hiring out the cars to non-members when not being used and other additional things.
So in theory, your idea has some legs. But here's the 'however'....
The market you'll be targeting are typically asset-rich, cash-poor. Assuming the £500 a month subscription applies, that's a big chunk of money even for them and many of them will be in their 40s/ 50s with kids and all that. Plus it's an amount that were it a loan repayment, would put them in any number of nice cars that they get to keep for themselves.
So your ideal punter is going to be a 40 - 50 year old single bloke, no kids, earning upwards of £90k a year living in a pokey two bed terrace that he owns mortgage free whose only passion is cars.
The upside is that you only need 40 of them.
If you can find them first, sign them up before you spend any money (i.e. get a commitment from them), taking that to a bank or investor would, I think, be seen favourably as it would be a low-risk loan/investment; they'd have title on valuable assets until the debt is repaid plus a clear and confirmed revenue stream that would cover the repayments.
I think your biggest challenge will be finding those 40 people. If you can, I can't see many reasons for it not to work.
HTH.
Was scribbling out some fag-packet figures.
If you start with five cars at say £50k each, that's £0.25m off the bat to start with. On top of this I'd say that you're looking at an annual overhead of around the £100k mark (wages, admin, marketing, etc..).
The offer wouldn't attract HNWIs as those interested in such things would likely have their own fleet of similar cars. Equally, nor would it be attainable at the other end of the economic scale. So I'd say you're pitching to the higher-earning middle classes earning £80k / £90k plus.
The PAYG model would be unlikely to appease investors or lenders because there's no surety of any of the £250k ever being recouped or your £100k being covered.
Investors and lenders like subscriptions. If you had 40 subscribers (or members) each paying £500 a month that would bring in £240k a year. If you spread the repayment of the original investment of £250k over three or four years, that should therefore cover the repayments, your overhead and leave a decent enough bit of profit.... which could be boosted by hiring out the cars to non-members when not being used and other additional things.
So in theory, your idea has some legs. But here's the 'however'....
The market you'll be targeting are typically asset-rich, cash-poor. Assuming the £500 a month subscription applies, that's a big chunk of money even for them and many of them will be in their 40s/ 50s with kids and all that. Plus it's an amount that were it a loan repayment, would put them in any number of nice cars that they get to keep for themselves.
So your ideal punter is going to be a 40 - 50 year old single bloke, no kids, earning upwards of £90k a year living in a pokey two bed terrace that he owns mortgage free whose only passion is cars.
The upside is that you only need 40 of them.
If you can find them first, sign them up before you spend any money (i.e. get a commitment from them), taking that to a bank or investor would, I think, be seen favourably as it would be a low-risk loan/investment; they'd have title on valuable assets until the debt is repaid plus a clear and confirmed revenue stream that would cover the repayments.
I think your biggest challenge will be finding those 40 people. If you can, I can't see many reasons for it not to work.
HTH.
If you start with five cars at say £50k each, that's £0.25m off the bat to start with. On top of this I'd say that you're looking at an annual overhead of around the £100k mark (wages, admin, marketing, etc..).
The offer wouldn't attract HNWIs as those interested in such things would likely have their own fleet of similar cars. Equally, nor would it be attainable at the other end of the economic scale. So I'd say you're pitching to the higher-earning middle classes earning £80k / £90k plus.
The PAYG model would be unlikely to appease investors or lenders because there's no surety of any of the £250k ever being recouped or your £100k being covered.
Investors and lenders like subscriptions. If you had 40 subscribers (or members) each paying £500 a month that would bring in £240k a year. If you spread the repayment of the original investment of £250k over three or four years, that should therefore cover the repayments, your overhead and leave a decent enough bit of profit.... which could be boosted by hiring out the cars to non-members when not being used and other additional things.
So in theory, your idea has some legs. But here's the 'however'....
The market you'll be targeting are typically asset-rich, cash-poor. Assuming the £500 a month subscription applies, that's a big chunk of money even for them and many of them will be in their 40s/ 50s with kids and all that. Plus it's an amount that were it a loan repayment, would put them in any number of nice cars that they get to keep for themselves.
So your ideal punter is going to be a 40 - 50 year old single bloke, no kids, earning upwards of £90k a year living in a pokey two bed terrace that he owns mortgage free whose only passion is cars.
The upside is that you only need 40 of them.
If you can find them first, sign them up before you spend any money (i.e. get a commitment from them), taking that to a bank or investor would, I think, be seen favourably as it would be a low-risk loan/investment; they'd have title on valuable assets until the debt is repaid plus a clear and confirmed revenue stream that would cover the repayments.
I think your biggest challenge will be finding those 40 people. If you can, I can't see many reasons for it not to work.
HTH.
StevieBee said:
Have you any experience of starting and running a business? If you have, forgive the sucking eggs approach, but if not.....
Have you worked out your start up costs? Purchases, storage, insurance, etc...? Where's the money coming from?
Have you worked out your running costs? Rent, wages, maintenance, marketing, professional fees, etc...?
Have you done a risk assessment? - what if fuel prices continue to rise, etc...?
If you haven't done any of these things, then start here. Do the sums. I fear that you may be in for a shock but better to suffer that without spending money (and time).
I'd also advise you speak to an accountant as I have a feeling you may encounter some complex tax issues around your business model (corporation tax, not car tax). If I've understood it correctly, the vehicles would start off being owned 100% by your company but then gradually a proportion of their ownership is passed to increasing numbers of members. So if your F355 ends up being 'owned' by 20 people, who is the registered keeper and how will this affect your tax liabilities? And the owner's come to that! The Co-Operative structure may simplify some of this as the members would essentially own a share of the business rather than the cars (is that right?).
Regardless of my background I'm here to suck eggs and value the advice! For reference my background is financial services (IB, 15 yrs) and I'm a Chartered Financial Analyst (so well-versed in risk analysis albeit mainly from a financial markets perspective) and a financial advisor to a tech start-up (where I've been responsible for FP&A, etc). Nevertheless, this would be a departure from my normal wheelhouse so your input is much appreciated.Have you worked out your start up costs? Purchases, storage, insurance, etc...? Where's the money coming from?
Have you worked out your running costs? Rent, wages, maintenance, marketing, professional fees, etc...?
Have you done a risk assessment? - what if fuel prices continue to rise, etc...?
If you haven't done any of these things, then start here. Do the sums. I fear that you may be in for a shock but better to suffer that without spending money (and time).
I'd also advise you speak to an accountant as I have a feeling you may encounter some complex tax issues around your business model (corporation tax, not car tax). If I've understood it correctly, the vehicles would start off being owned 100% by your company but then gradually a proportion of their ownership is passed to increasing numbers of members. So if your F355 ends up being 'owned' by 20 people, who is the registered keeper and how will this affect your tax liabilities? And the owner's come to that! The Co-Operative structure may simplify some of this as the members would essentially own a share of the business rather than the cars (is that right?).
Agree with your points re viability, I decided to come out into the open having crunched the numbers (embarrassingly that's part of the fun for me..) and am finding that this may well be possible should there actually be any interest.
In terms of the expenses side of the equation, without going into too much detail this is where the membership fee comes in as with traditional car clubs. However it gets pretty complex when you start factoring in fixed vs variable costs, fee elasticity and how its effected by the choice of assets, the membership/owernship split schedule and all that other good stuff. However none of it matters if there is zero traction in the community with the concept itself!
Hence if this has the potential to be something people may actually want, I definitely wouldn't consider the time and effort to prove it out wasted, quite the opposite
To your last point, you are correct with regard to the structure being a co-operative and therefore members sharing ownership of the business itself - for the most part the business will be the assets themselves (tax liabilities notwithstanding), but agree that a co-operative would probably be the best way forward. Now I just need to find enough people who want to co-operate...StevieBee said:
Was scribbling out some fag-packet figures.
If you start with five cars at say £50k each, that's £0.25m off the bat to start with. On top of this I'd say that you're looking at an annual overhead of around the £100k mark (wages, admin, marketing, etc..).
The offer wouldn't attract HNWIs as those interested in such things would likely have their own fleet of similar cars. Equally, nor would it be attainable at the other end of the economic scale. So I'd say you're pitching to the higher-earning middle classes earning £80k / £90k plus.
The PAYG model would be unlikely to appease investors or lenders because there's no surety of any of the £250k ever being recouped or your £100k being covered.
Investors and lenders like subscriptions. If you had 40 subscribers (or members) each paying £500 a month that would bring in £240k a year. If you spread the repayment of the original investment of £250k over three or four years, that should therefore cover the repayments, your overhead and leave a decent enough bit of profit.... which could be boosted by hiring out the cars to non-members when not being used and other additional things.
So in theory, your idea has some legs. But here's the 'however'....
The market you'll be targeting are typically asset-rich, cash-poor. Assuming the £500 a month subscription applies, that's a big chunk of money even for them and many of them will be in their 40s/ 50s with kids and all that. Plus it's an amount that were it a loan repayment, would put them in any number of nice cars that they get to keep for themselves.
So your ideal punter is going to be a 40 - 50 year old single bloke, no kids, earning upwards of £90k a year living in a pokey two bed terrace that he owns mortgage free whose only passion is cars.
The upside is that you only need 40 of them.
If you can find them first, sign them up before you spend any money (i.e. get a commitment from them), taking that to a bank or investor would, I think, be seen favourably as it would be a low-risk loan/investment; they'd have title on valuable assets until the debt is repaid plus a clear and confirmed revenue stream that would cover the repayments.
I think your biggest challenge will be finding those 40 people. If you can, I can't see many reasons for it not to work.
HTH.
Sorry I didn't see your (very helpful) analysis before I responded to your first message! There's a bit to unpack but it looks like we both agree with the hardest part being finding willing partners (such is life).If you start with five cars at say £50k each, that's £0.25m off the bat to start with. On top of this I'd say that you're looking at an annual overhead of around the £100k mark (wages, admin, marketing, etc..).
The offer wouldn't attract HNWIs as those interested in such things would likely have their own fleet of similar cars. Equally, nor would it be attainable at the other end of the economic scale. So I'd say you're pitching to the higher-earning middle classes earning £80k / £90k plus.
The PAYG model would be unlikely to appease investors or lenders because there's no surety of any of the £250k ever being recouped or your £100k being covered.
Investors and lenders like subscriptions. If you had 40 subscribers (or members) each paying £500 a month that would bring in £240k a year. If you spread the repayment of the original investment of £250k over three or four years, that should therefore cover the repayments, your overhead and leave a decent enough bit of profit.... which could be boosted by hiring out the cars to non-members when not being used and other additional things.
So in theory, your idea has some legs. But here's the 'however'....
The market you'll be targeting are typically asset-rich, cash-poor. Assuming the £500 a month subscription applies, that's a big chunk of money even for them and many of them will be in their 40s/ 50s with kids and all that. Plus it's an amount that were it a loan repayment, would put them in any number of nice cars that they get to keep for themselves.
So your ideal punter is going to be a 40 - 50 year old single bloke, no kids, earning upwards of £90k a year living in a pokey two bed terrace that he owns mortgage free whose only passion is cars.
The upside is that you only need 40 of them.
If you can find them first, sign them up before you spend any money (i.e. get a commitment from them), taking that to a bank or investor would, I think, be seen favourably as it would be a low-risk loan/investment; they'd have title on valuable assets until the debt is repaid plus a clear and confirmed revenue stream that would cover the repayments.
I think your biggest challenge will be finding those 40 people. If you can, I can't see many reasons for it not to work.
HTH.
IMVHO, its not viable.
I think the chances of finding enough people who are not going to back out when the costs start to build up are slim.
Lets say you find 25 people and you have 10 cars. So the cost of running the 10 cars is 1/25th each. That sounds great, but then when you add on the extra costs that you normally dont have as a private petrol head like storage, PL/EL insurance, probably 1 full time member of staff prob 2, security, cost to administer the fleet i.e you need 10 MOTs, 10 services etc.
I do this for a living as I run a fleet of vehicles in work and its a full time job just keeping on top of the R&M.
I have a list of stuff thats currently in progress, couple of tyres due to be fitted today, wipers needed on one vehicle, an oil leak on a gearbox which needs looking at, an electrical problem that I have yet to get to look at and a leaking fuel tank thats currently waiting welding. Thats pretty standard stuff. You need to factor in down time of about 25% on modern classic cars IMHO.
Even on a basic level tracking the 10 cars would cost the co-op around £5000 a year to start with. Then you have de/re-fits of the tracking units at £180 a pop. This kind of stuff adds up big time.
As someone else mentioned the tax implications are going to be "interesting". I assume you are aware of depreciation and balancing charges??
Finding an insurance company who are willing to take on this sort of risk is also going to be an issue. You might find you can get cover but with say a £10k excess. What use is that?
Honestly, unless you are wealthy and have a few hundred grand to throw at this and have it as a play thing then I would not bother. Just my 2ps worth.
I think the chances of finding enough people who are not going to back out when the costs start to build up are slim.
Lets say you find 25 people and you have 10 cars. So the cost of running the 10 cars is 1/25th each. That sounds great, but then when you add on the extra costs that you normally dont have as a private petrol head like storage, PL/EL insurance, probably 1 full time member of staff prob 2, security, cost to administer the fleet i.e you need 10 MOTs, 10 services etc.
I do this for a living as I run a fleet of vehicles in work and its a full time job just keeping on top of the R&M.
I have a list of stuff thats currently in progress, couple of tyres due to be fitted today, wipers needed on one vehicle, an oil leak on a gearbox which needs looking at, an electrical problem that I have yet to get to look at and a leaking fuel tank thats currently waiting welding. Thats pretty standard stuff. You need to factor in down time of about 25% on modern classic cars IMHO.
Even on a basic level tracking the 10 cars would cost the co-op around £5000 a year to start with. Then you have de/re-fits of the tracking units at £180 a pop. This kind of stuff adds up big time.
As someone else mentioned the tax implications are going to be "interesting". I assume you are aware of depreciation and balancing charges??
Finding an insurance company who are willing to take on this sort of risk is also going to be an issue. You might find you can get cover but with say a £10k excess. What use is that?
Honestly, unless you are wealthy and have a few hundred grand to throw at this and have it as a play thing then I would not bother. Just my 2ps worth.
Jason_TKG said:
There's a bit to unpack but it looks like we both agree with the hardest part being finding willing partners (such is life).
If it was easy, etc... My knee jerk reaction yesterday was that it was a non-starter. We see many similar ideas pop up here were guys think it's a good way to gain access to decent cars but make no business sense whatsoever.
But I was mulling your idea over this morning and I come to quite like it. I can see the appeal and if you keep the member numbers small, you could end up creating a nice little community. I can see you all driving the cars down to LeMans, car shows, charity runs, Silverstone Classic and the like.
Some ideas to think on...
How about tiering 'membership'; Bronze, Silver, Gold. Bronze being the cheapest with the least access to the cars, Gold being the opposite (obviously) with pricing reflecting this - broadens the net a little and people can always upgrade or re-introduce the idea of PAYG.
Might be worth reaching out to car clubs to access potential members. I'd reckon car club members are likely to be the most receptive to the offer.
And just for clarity, I have neither £250k or £500 spare cash available each month - but good luck with it anyway!
Also if you were to do it then I would go for higher end cars.
The reason for this is you want people to keep driving the cars. There is no point getting a member who drives each car then says... eh well I have driven them all and it was fun but thats enough.
You want the cars to be involving and attractive to keep people coming back and back rather than just having a go in them all and then saying I am out.
And thats limiting you to the big brands like Ferrari, Porsche, Lamborghini and Aston.
You could add a second layer in with Bentley, TVR, Mercedes AMG, BMW M, Jaguar and Audi RS but I expect they will be a drive once or twice and not bother type of stock.
The reason for this is you want people to keep driving the cars. There is no point getting a member who drives each car then says... eh well I have driven them all and it was fun but thats enough.
You want the cars to be involving and attractive to keep people coming back and back rather than just having a go in them all and then saying I am out.
And thats limiting you to the big brands like Ferrari, Porsche, Lamborghini and Aston.
You could add a second layer in with Bentley, TVR, Mercedes AMG, BMW M, Jaguar and Audi RS but I expect they will be a drive once or twice and not bother type of stock.
gotoPzero said:
IMVHO, its not viable.
I think the chances of finding enough people who are not going to back out when the costs start to build up are slim.
Lets say you find 25 people and you have 10 cars. So the cost of running the 10 cars is 1/25th each. That sounds great, but then when you add on the extra costs that you normally dont have as a private petrol head like storage, PL/EL insurance, probably 1 full time member of staff prob 2, security, cost to administer the fleet i.e you need 10 MOTs, 10 services etc.
I do this for a living as I run a fleet of vehicles in work and its a full time job just keeping on top of the R&M.
I have a list of stuff thats currently in progress, couple of tyres due to be fitted today, wipers needed on one vehicle, an oil leak on a gearbox which needs looking at, an electrical problem that I have yet to get to look at and a leaking fuel tank thats currently waiting welding. Thats pretty standard stuff. You need to factor in down time of about 25% on modern classic cars IMHO.
Even on a basic level tracking the 10 cars would cost the co-op around £5000 a year to start with. Then you have de/re-fits of the tracking units at £180 a pop. This kind of stuff adds up big time.
As someone else mentioned the tax implications are going to be "interesting". I assume you are aware of depreciation and balancing charges??
Finding an insurance company who are willing to take on this sort of risk is also going to be an issue. You might find you can get cover but with say a £10k excess. What use is that?
Honestly, unless you are wealthy and have a few hundred grand to throw at this and have it as a play thing then I would not bother. Just my 2ps worth.
Thanks for your honest assessment, going into this eyes open is infinitely better than going in blind. Of course, now I know that you're in the business I hope you don't mind me tapping you up for advice should I end up going through with it!I think the chances of finding enough people who are not going to back out when the costs start to build up are slim.
Lets say you find 25 people and you have 10 cars. So the cost of running the 10 cars is 1/25th each. That sounds great, but then when you add on the extra costs that you normally dont have as a private petrol head like storage, PL/EL insurance, probably 1 full time member of staff prob 2, security, cost to administer the fleet i.e you need 10 MOTs, 10 services etc.
I do this for a living as I run a fleet of vehicles in work and its a full time job just keeping on top of the R&M.
I have a list of stuff thats currently in progress, couple of tyres due to be fitted today, wipers needed on one vehicle, an oil leak on a gearbox which needs looking at, an electrical problem that I have yet to get to look at and a leaking fuel tank thats currently waiting welding. Thats pretty standard stuff. You need to factor in down time of about 25% on modern classic cars IMHO.
Even on a basic level tracking the 10 cars would cost the co-op around £5000 a year to start with. Then you have de/re-fits of the tracking units at £180 a pop. This kind of stuff adds up big time.
As someone else mentioned the tax implications are going to be "interesting". I assume you are aware of depreciation and balancing charges??
Finding an insurance company who are willing to take on this sort of risk is also going to be an issue. You might find you can get cover but with say a £10k excess. What use is that?
Honestly, unless you are wealthy and have a few hundred grand to throw at this and have it as a play thing then I would not bother. Just my 2ps worth.
You can PM me no problem - I am not an expert but I did rent out cars on track days - it was hard work so I do have a bit of XP and have seen the real costs (in 2005!).
I think think shared ownership can work - I have done it with a race car. 50%. But that was as far as I would want to take it.
People do the same with light aircraft, 3 or 4 people usually.
But, this is all done for fun - not as a business. As soon as you bring the business into it you are into a whole other world of issues.
HTH.
I think think shared ownership can work - I have done it with a race car. 50%. But that was as far as I would want to take it.
People do the same with light aircraft, 3 or 4 people usually.
But, this is all done for fun - not as a business. As soon as you bring the business into it you are into a whole other world of issues.
HTH.
gotoPzero said:
But, this is all done for fun - not as a business. As soon as you bring the business into it you are into a whole other world of issues.
I think this is the key thing.On a smaller scale, a model that I see as being similar are Photography Clubs. Many of these use the subscription fees to buy higher end equipment that would otherwise be unaffordable to the individual members who then have access to that equipment as and when they like.
Yeah I have seen the same with boats, 3 or 4 people club together. Buy a £500k boat that they could not afford individually.
Rather than spending £50k a year on up keep they spend £15k each. So their running costs are the same as their share in the boat if they had bought say a £150k boat outright.
So it can work. But none of this makes money, its just a way to have nicer things at lower individual cost with a trade off for less usage - but often these are assets that are just sat there unused for long periods anyway.
Rather than spending £50k a year on up keep they spend £15k each. So their running costs are the same as their share in the boat if they had bought say a £150k boat outright.
So it can work. But none of this makes money, its just a way to have nicer things at lower individual cost with a trade off for less usage - but often these are assets that are just sat there unused for long periods anyway.
The fractional ownership model - popular in US - might be a useful reference point.
Great idea, but I suspect the detail will become cumbersome. As an example, what would happen if a subscription-paying-member chooses to leave, or decides to stop paying, but has equity in the club and wants (re)payment. Do they find a replacement member or do you?
Management of minor damage will become a headache, and even handling different tolerances for cleanliness and roadworthiness between members, where one member returns a car in a condition that the next finds unacceptable.
Great idea, but I suspect the detail will become cumbersome. As an example, what would happen if a subscription-paying-member chooses to leave, or decides to stop paying, but has equity in the club and wants (re)payment. Do they find a replacement member or do you?
Management of minor damage will become a headache, and even handling different tolerances for cleanliness and roadworthiness between members, where one member returns a car in a condition that the next finds unacceptable.
sideways sid said:
The fractional ownership model - popular in US - might be a useful reference point.
Great idea, but I suspect the detail will become cumbersome. As an example, what would happen if a subscription-paying-member chooses to leave, or decides to stop paying, but has equity in the club and wants (re)payment. Do they find a replacement member or do you?
Management of minor damage will become a headache, and even handling different tolerances for cleanliness and roadworthiness between members, where one member returns a car in a condition that the next finds unacceptable.
Yeah potentially some answers (like membership liquidity) lie in that space. Assuming maximum ownership % is set at 1/n members, the best case scenario would be that there is enough outside demand to offer exit liquidty (especially given membership would be limited). Failing that (or in addition to that), there'd need to be enough funds in the treasury for a redemption (however in the case of multiple redemptions there would need to be multiple asset disposals, probably leading to the dissolution of the project not unlike with the closure of a fund or a run on a bank). Also if member ownership wasn't limited to 1/n then one person would potentially have the power to torpedo the whole thing.Great idea, but I suspect the detail will become cumbersome. As an example, what would happen if a subscription-paying-member chooses to leave, or decides to stop paying, but has equity in the club and wants (re)payment. Do they find a replacement member or do you?
Management of minor damage will become a headache, and even handling different tolerances for cleanliness and roadworthiness between members, where one member returns a car in a condition that the next finds unacceptable.
Fractional ownership was actually one of the motivations behind the concept, but the idea of not necessarily being able to drive the investments left me cold. Essentially I realised that I'd much rather pay a deposit and a monthly payment to be able to rotate through my car heroes with something to show for it (equity), than spend the same money locked in one new car with the spend mainly reflecting depreciation, or being in a car club where I'm purely paying for membership and no investment.
Maybe if there is enough of us who feel the same way we can derive a mechanism to make it work, but I'm definitely aware that the devil lies in the detail.
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