Starting a Classic/Prestige/Race Car Storage Business

Starting a Classic/Prestige/Race Car Storage Business

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Discussion

48k

Original Poster:

5,792 posts

95 months

Saturday 31st December 2016
quotequote all
I've been toying with the idea of starting a storage business for classic/prestige/race cars for a while now and thought I'd seek some feedback.

Similar businesses I've looked at include Hamiltons Car Storage, Tigastor, Buckingham Car Storage, Windrush, Autovault. The type of place I'd lay up my Aston in over winter, or store for a few weeks whilst I go on holiday. Knowing it's secure, being looked after etc.

The storage location would be near M1 jnc 15 / 16, so good proximity to Silverstone, with Rockingham and Donington easy to get to as well, hence thinking about the race/track car storage angle.

I've gone in to quite a lot of detail in my fag packet Excel sheet in terms of costs and have bounced this around with a friend who operates a similar business so think I have a handle on all the different costs involved. Current research is around size of unit, cost vs revenue per sq foot for different permutations of sizes and numbers of cars, break even point and so on. In terms of pricing, the sweet spot in the market and my Excel fag packet is suggesting about £40 per week for a basic storage service, (cleaning on entry, dehumidified storage, regular inspections, battery conditioning etc.) with charges on top for things like regular engine starts/running to temperature, collection and delivery and so on. My biggest fear is investing the money and taking a punt and then be sitting there for months with an empty unit because the market isn't what I thought it was.

Just thought I'd throw this open to the PH business masses to shoot me down / provide feedback. Particularly if you have put your pride and joy in to storage before, would love to hear what you thought was good / bad about the experience, whether you'd use such a service for your P+J or track toy and so on.

Edit: spolling

Edited by 48k on Saturday 31st December 10:54

Davel

8,701 posts

205 months

Saturday 31st December 2016
quotequote all
I would imagine that there are lots of uncertainties on your fag packet.

Have you a unit in mind?

Have you costed for rent / purchase costs, rates, electricity, security / staffing which will commence on day one - yet it may well take a while to fill the unit to capacity.

I guess that insurance will be expensive or do clients insure their cars whilst at the unit?

Hope it works for you - good luck !

48k

Original Poster:

5,792 posts

95 months

Saturday 31st December 2016
quotequote all
There are a few options in terms of unit and I'm in communication with the landlords / letting agents at the moment.

Staff would be just me to start with. I have a 'day job' working from home which provides me an income, so I'm fortunate in that I don't need the car storage to generate me an income from day one.

Insurance is one of the TBCs - some storage companies provide insurance cover, other companies don't and they specify that you need to make sure your insurer is informed that your car is in storage. Obviously the business itself needs appropriate insurance cover, that's a given.

In terms of my fag packet, things I've covered:

Monthly fixed overheads
--
Rent
Service charge
Business rates
Utilities (Gas, Leccy, Water, Phone, Internet)
Insurance
Security/fire monitoring, cctv
Vermin protection (mouse traps etc)

Startup costs
--
Premises Deposit
Conveyancing/legal costs
Decor/renovations/setup/signage
Website design and set up
Equipment (eg. tools, battery conditioners)
Fit towbar to my Xtrail (using private car for the business? - confirm weight/size limit for towing)
Covered trailer (local rental options to start with)

Variable monthly costs
--
Stationery
Furniture and IT equipment
Office supplies
Advertising
Marketing items
Professional fees
Accountant
Tools / breakages

Stephanie Plum

2,551 posts

158 months

Saturday 31st December 2016
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What's the minimum occupancy you need to break even. How long can you survive without it? How long will you be committed to a commercial property before a break clause can be activated?

There was a PHer doing this who went bust recently iirc? I suspect it's a tougher game than you think. I have one car in storage currently and pay £35pw inc vat. You need a lot of cars at those sort of rates to pay rents and rates.

Valuable classics tend to go to places associated with people involved in that scene. Are you? Or involved in racing, track days etc? Don't underestimate the challenges with marketing yourself from nowhere.




ReaderScars

3,577 posts

123 months

Saturday 31st December 2016
quotequote all
Stephanie Plum said:
There was a PHer doing this who went bust recently iirc? I suspect it's a tougher game than you think.
Having said that, there was a non PHer who spent, if I recall, £11k on storage of a vehicle in the hope it would be worth a good deal more eventually, but it never reached it's expected value - sold at an overall loss after a good length of time in storage.



Newstuart

62 posts

57 months

Saturday 31st December 2016
quotequote all
With regards to the insurance,

1) most private car insurers will exclude cover while in the custody of a 3rd party business so material damage cover may well be required
2) depending on the value of cars involved insurers may well stipulate secuirty requirements potentially including a redcare type alarm
3) Goods in Transit cover for transporting the vehicles to and from the site
4) Public Liability and Defective workmanship cover should be considered if you are carrying out any work on the vehicles or having customers on site

Hope that helps and best of luck

Davel

8,701 posts

205 months

Sunday 1st January 2017
quotequote all
Just a thought about insurance.

If a client's car catches fire and the fire damages other cars nearby, who's insurance would pick up the tab?

Would you be required to install a sprinkler system possibly?

Newstuart

62 posts

57 months

Sunday 1st January 2017
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Davel said:
Just a thought about insurance.

If a client's car catches fire and the fire damages other cars nearby, who's insurance would pick up the tab?

Would you be required to install a sprinkler system possibly?
My thoughts would be that it would be a huge risk not to have material damage cover to insure the vehilces in his custody against risks such as theft and fire in much the same way as a basic motor traders policy would for a garage or bodyshop with customers cars being held for repair for example. Without this you would have no control over if the customers own insurance covers the vehicle while in the busienssess custody (which I doubt) or if a car in his storage is even insured (as owner clearly isnt using it and its potentially going to be on SORN and not insured)

Most insurers would stipulate a maximum value for any one vehicle and / or a total limit for all vehicles in his custody and the security requirements would be dictated as a result of that as well as other factors such as the area of the facility and existing physical security, this could range from somthing as simple as decent locks, grills on windows and a car key safe up to a monitored alarm system, cctv etc

Edited by Newstuart on Sunday 1st January 11:27

LarJammer

1,776 posts

157 months

Sunday 1st January 2017
quotequote all
48k, I think we chatted about this in the pub recently?
A couple of things I didnt mention - the market is very buoyant at the moment, if we see x% downturn how does this affect the business. And the marketplace is quite crowded, i think you need a usp to prise some customers out of their current deals. However it only takes 1 big collector to cover all of your costs...

Chrisgr31

11,248 posts

202 months

Sunday 1st January 2017
quotequote all
Is an x-trail with a towbar man enough to pull a covered trailer loaded with someones pride and joy? It might for a single seat race car, or Caterham etc but its not going to be man enough for your Aston and that type of car.

I'd imagine there is all manner of insurance risks. Who drives the cars in and out the unit? How many can you fit in? Do you have access to all at once, if not what happens when you want to get the car at the back out?

Little Pete

552 posts

41 months

Sunday 1st January 2017
quotequote all
Chrisgr31 said:
Is an x-trail with a towbar man enough to pull a covered trailer loaded with someones pride and joy? It might for a single seat race car, or Caterham etc but its not going to be man enough for your Aston and that type of car.

I'd imagine there is all manner of insurance risks. Who drives the cars in and out the unit? How many can you fit in? Do you have access to all at once, if not what happens when you want to get the car at the back out?
This would be an issue for me. If I were paying for collection and delivery I would want the peace of mind of a purpose built car transporter rather than a trailer, especially to move a vehicle weighing more than a tonne.
I think the main issue you need to address is insurance. You need to speak to a broker who specialises in this particular field and try to get some idea of what would be required and what the costs would be. I rarely have anything worth more than £250,000 on site for service/repair and my premium is over £10,000.
As has been mentioned, the big thing with any start up business is how long can you subsidise it whilst it isn't making any money. Best of luck.

dfen5

2,265 posts

159 months

Sunday 1st January 2017
quotequote all
£1k minimum a month for 3000sq.ft of storage. Say each car takes up 112sq.ft. That's 26 cars at very full capacity.
£40 p/w x 52 x 26 = £54k p/a.

As an aside, I think one way to make it easier would be to make a stackable stillage (or 20ft containers) that the car drives onto/into and can then be moved/stacked by fork truck (another cost) but could treble the storage capacity.





Edited by dfen5 on Sunday 1st January 16:06

strattonkillick

124 posts

162 months

Sunday 1st January 2017
quotequote all
dfen5 said:
£1k minimum a month for 3000sq.ft of storage. Say each car takes up 112sq.ft. That's 26 cars at very full capacity.
£40 p/w x 52 x 26 = £54k p/a.

As an aside, I think one way to make it easier would be to make a stackable stillage (or 20ft containers) that the car drives onto/into and can then be moved/stacked by fork truck (another cost) but could treble the storage capacity.





Edited by dfen5 on Sunday 1st January 16:06
I went to look at a car a few years ago that was in a storage unit where they had items stacked like this. They were tied on to pallets and then put in to very large racking. The site was not just cars though, there were a lot of boats there as well.

KevinCamaroSS

8,317 posts

227 months

Monday 2nd January 2017
quotequote all
Chrisgr31 said:
Is an x-trail with a towbar man enough to pull a covered trailer loaded with someones pride and joy? It might for a single seat race car, or Caterham etc but its not going to be man enough for your Aston and that type of car.
2015 X-Trail tow capacity 2,000 kg if manual, 1,500 kg if auto. So, not capable enough for high-end weight cars.

In this type of business I thank that in order to make a small fortune you would have to start with a large fortune.

Newstuart

62 posts

57 months

Monday 2nd January 2017
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If your looking to transport the vehicles you would also need a Goods in Transit insurance policy as well as potentially Road Risks, both of which would need to have a relatively high single vehicle limit and no restrictions in vehicle groups being driven which is a limiting factor on most of the online type of policies. If you are planing on staffing the unit you would also need employers liability cover as well as the public and material damge elements I mentioned in an earlier post.

You would be well advised to speak to a specialist motor trade broker to obtain quotes for you on the correct basis. It will not be cheap however if you have no previous motor trade insurance and it being a new venture. Id budget £10k as a minimum and depending on the values of cars involved potentially significantly more as it will be a very small market who would offer terms on the correct basis.

As an example I have a client who does signwriting with up to £750k of customers vehicles in his custody with no single vehicle limit, it exclides goods in transit and road risks yet that is still £7,000 as a new venture with a decent insurer underwriting it. Road risks and goods in transit would increase that significantly

iguana

6,758 posts

207 months

Tuesday 3rd January 2017
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As said above insurance will be pretty pricey, will take a fair bit of ringing around, the figures mentioned are in my experience from just vehicle transport rather than storage, are in the right ballpark.

Ref xtrail & enclosed trailer, well a big enclosed car trailer to take most large cars is 1250-1600kg ish empty so with a 2t tow capacity that's not really a goer as a tow vehicle.

Don't forget the tacho, is approx a grand fitted & calibrated.

Are lots of car storage places around in the southeast, I've been to many collecting or delivering, they seem busy anyway.

Yipper

5,964 posts

37 months

Tuesday 3rd January 2017
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The car-storage market is mature, crowded and tough to make money. Some of those companies in your list are entrenched and have been around for decades. If done properly, you're probably going to need 40-60 cars / bikes / caravans / boats / memorabilia to just breakeven. It may take 2 to 5 years for payback. Especially with Trump, US rate rises, Brexit and EU2 elections on the horizon in 2017. In all honesty, the chances of success are slim and it is a high-risk venture.

aimery96

1 posts

29 months

Thursday 22nd June 2017
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Hey,

We are thinking about building a project very similar to yours actually.

I wouldn't worry too much about insurance to be fair, dont think its gonna be this much of a hassle.

Is your project still ongoing?