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Startup Idea: Used Car Leasing

blog.kirigin.com

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Re: Startup Idea: Used Car Leasing

#41

Post by jmatthews »

ivankirigin wrote: post #14
AHconsidered wrote: post #2

Anyone interested in exploring car sales ideas in SF/Bay-Area? I have one for which I did a bunch of market research and it looks promising. Happy to explore more.

post your contact info :) I know from posting these ideas that there is a lot of latent interest, but less publicly stated. I post my email all the time on HN and never get spam. Thanks gmail! See: ivan.kirigin@gmail.com

20 years in the auto industry on the retail side. I'd be happy to consult for free and dig deeper if I liked the direction of the project. jmatthews005@gmail.com

Re: Startup Idea: Used Car Leasing

#42

Post by cykho »

I like this a lot - if you can regulate the market and ensure a high quality experience this would fit perfectly in the space between owning a car (big commitment) and renting (obscenely expensive). I'd use it!

Re: Startup Idea: Used Car Leasing

#43

Post by coffeemug »

I would love this. I always lease my cars. It's extremely convenient, but there are also huge price benefits. Manufacturers often have great lease incentives, and spending ~$35k on a car I'll likely get sick of in a few years seems crazy to me.

But I don't particularly care about new cars, I just want them to be "new enough". If someone can deliver a good used car leasing service, I would be all over that.

Re: Startup Idea: Used Car Leasing

#44

Post by nilkn »

jmatthews wrote: post #38
nilkn wrote: post #32

Generally what you pay for when leasing a new car is the depreciation. This is why luxury sedans like a BMW often have better lease deals than cheaper or less desirable cars--you're only paying for the depreciation, not the base cost of the car, and these cars depreciate much slower. That said, just because that's how it works for new cars doesn't mean there isn't a market for leasing used cars. In fact, I could see…

Luxury brands depreciate at a higher per-day-per-mile amount than non-luxury brands. A trivial amount of research will prove this out. No disrespect intended.

No disrespect taken at all. I don't have any problem admitting I'm completely wrong on something. I'd be glad to learn more about the topic. However, a trivial amount of research has really only served to seemingly complicate the matter rather than confirm it either way. For instance, luxury brands fared well here:

http://forums.motortrend.com/70/1044466/the-general-forum/co...

Re: Startup Idea: Used Car Leasing

#45

Post by ValG »

AHconsidered wrote: post #2

Anyone interested in exploring car sales ideas in SF/Bay-Area? I have one for which I did a bunch of market research and it looks promising. Happy to explore more.

I worked through car dealerships both at a low and a high level through my early career. Would be interested in chatting. valgui@gmail.com

Re: Startup Idea: Used Car Leasing

#46

Post by gojomo »

For such a business, the real competition is the same customer using a loan to buy a used-car, approximating the same up-front, monthly, and end-of-term costs.

So, to succeed, can the business acquire its fleet more cheaply than others? Tricky, especially if trying to keep a uniform fleet of desirable used-cars like the example Honda Civics (which already command a resale premium).

Or, can the business better assess credit/damage risks than established used-car financers? My hunch is those people wanting to lease, rather than buy, a used-car could be uniquely risky.

So it feels double-sided in the adverse-selection dimension: both your fleet and your customers will be rejects from other fairly competitive, evolved systems.

Re: Startup Idea: Used Car Leasing

#47

Post by webwright »

I think there's WAY too much baggage with the word leasing. Car ownership-as-a-service or car subscription or...

For $X, you get a the use of a clean car full-time. For a $30 cleaning fee, you can swap it out for a different car (bonus-- drive different cars!). Or for a one-time fee, you can access the "specialty fleet" - trucks, vans, and the like for when you need to move stuff or when you have lots of company in town.

Upsell to insurance packages, white-glove maintenance packages, etc.

This also disrupts long-term car rental (which is annoying) for relocation, long-term biz trips, etc.

Huge savings in time dodging registration, buying/selling, etc.

The big question is: can you make the numbers work... And, of course, the elephant in the room is that you need a TON of money to give this a proper try (though there are interesting hacks to test an MVP).

Re: Startup Idea: Used Car Leasing

#48

Post by sliverstorm »

ivankirigin wrote: post #27
sliverstorm wrote: post #24

Earlier quoted context omitted.

It can be modeled and incorporated into price. I don't have evidence, but I expect once you correctly account for the risk in your cost model, your pricing will be wildly unattractive.

Yep, I haven't modeled this out. If anyone wants to do the legwork, compare the cost of a 2014, 2013, 2012, and 2011 basic package honda civic, and the maintenance cost estimate for the next year of each. I'd expect the depreciation from 2-3 years in life to be a small fraction of 0-1 years, with slightly higher maintenance.

The problem isn't depreciation vs. normal maintenance. The problem is the occasional write-off of an entire car because the moronic previous owner didn't change the oil for the first 30,000 miles. For example.

Re: Startup Idea: Used Car Leasing

#49

Post by jmatthews »

nilkn wrote: post #44
jmatthews wrote: post #38

Earlier quoted context omitted.

Luxury brands depreciate at a higher per-day-per-mile amount than non-luxury brands. A trivial amount of research will prove this out. No disrespect intended.

No disrespect taken at all. I don't have any problem admitting I'm completely wrong on something. I'd be glad to learn more about the topic. However, a trivial amount of research has really only served to seemingly complicate the matter rather than confirm it either way. For instance, luxury brands fared well here: http://forums.motortrend.com/70/1044466/the-general-forum/co...

Ahh, when determined as a percentage of msrp the field gets murky. But 10% of a $20,000 msrp is markedly different than 10% of a $70,000 msrp. In raw dollars higher msrps depreciate by a much larger whole dollar amount, which would be reflected in the depreciation component of a pre-owned lease.

Also the luxury examples in your provided link trend towards "niche" luxury models. It is possible on some models at certain times to be a car new and re-sell it for a profit immediately. (Examples at current are the Range Rover and the new Corvette.) These markets are extremely fickle though.

A final point having read the comments of your link. When they rank cars by the factory residual value they do not discount that manufacturers attempt to prop up resale value by inflating residuals and writing offf the loss at lease maturity. Accounts based on that should be discarded or at least fact checked by an independent source, such as ALG.

https://www.alg.com/

Re: Startup Idea: Used Car Leasing

#50

Post by prostoalex »

sliverstorm wrote: post #48
ivankirigin wrote: post #27

Earlier quoted context omitted.

Yep, I haven't modeled this out. If anyone wants to do the legwork, compare the cost of a 2014, 2013, 2012, and 2011 basic package honda civic, and the maintenance cost estimate for the next year of each. I'd expect the depreciation from 2-3 years in life to be a small fraction of 0-1 years, with slightly higher maintenance.

The problem isn't depreciation vs. normal maintenance. The problem is the occasional write-off of an entire car because the moronic previous owner didn't change the oil for the first 30,000 miles. For example.

Requiring proof of regular maintenance or even owning the process of maintenance is pretty common for dealerships.

http://us.lexusownersclub.com/forums/topic/70591-is-it-manda...

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