An exotic car rental company is a business that rents or leases exotic or luxury cars to customers. Exotic car rental typically lasts a short period usually 30 days or less, while car leasing agreements are for a longer period usually 12 months or more.
The global car rental market size was valued at $92.92 billion in 2019 and is projected to reach $214.04 billion by 2027, registering a CAGR of 10.7% from 2020 to 2027. The global Luxury Car Rental market size was USD 44.9 billion in 2020.
The car rental industry is expected to rise through 2022 following an increase in the number of passengers traveling by air, which is due to a rise in per capita income as well as corporate profit.
Steps on How to Start an Exotic Car Rental Business
Table of Content
Conduct Market Research
If you are considering starting an exotic car rental, you would need reliable market research to be able to maximize profits from the business. The first step in the market research process for your exotic car rental business should be to develop market-based research questions in line with your overall business goal and objective.
The global car rental is segmented into four places – intracity, intercity, on-airport, and others. Out of these four, on-airport is regarded as the most significant segment accounting for 49.5% share of the overall market in 2014, and is still expected to remain the most prominent.
The car rental business is mostly segmented into two – business and leisure, with the business segment accounting for a higher percentage than the leisure segment. However, the leisure segment is expected to increase due to higher leisure activities, and domestic travel. The car types are mostly segmented into economy cars, intermediate cars, compact cars, premium cars, luxury cars, as well as others.
In this regard, you should source information that will help you maximize your business, give you reliable information of what your potential market will be looking out for from an exotic car rental, and also help you operate your exotic car rental business with less stress and of course, build the business to profitability.
a. Who is the Target Market for an Exotic Car Rental Business?
- Wedding Planners
- Film producers
- Musical video producers
- Corporate organizations
- Event planners
- Everyone who lives and works in the city where we operate.
The demographic and psychographic composition of those that use the services of a car rental business are obviously corporate executives, tourists, travelers coming in or out of a town or country. Others that might require the services of a car rental business are government agencies, field managers.
Young adults, working class, senior citizens, and people those are financially capable of using the services of a car rental business.
b. Is Exotic Car Rental Business a Profitable Business?
Yes, the exotic car rental business is very profitable and the industry is projected to reach $214.04 billion by 2027.
c. Are There Existing Niches in the Industry?
No, there are no existing niches when it comes to the exotic car rental business because the exotic car rental business is a subset of the car rental services industry.
d. Who are the Major Competitors?
- Avis Budget Group
- Fox Rent a Car
- Enterprise Holdings
- Falcon Car Rental
- LVC Exotic Car Rentals
- Royalty Exotic Cars
- All Stars Cars
- Affordable Dreams Drive
- Advantage Rent a Car
- Sixt Car Rental
- National Car Rental
- Easycar Rental
- Dollar Car Rental
- Racing Limos
- Thrifty Rent a Car
- Imagine Lifestyles Luxury Rentals.
The largest car rental companies in the industry have a competitive advantage over smaller firms, especially as they have strategic alliances with airlines and hotels, which the smaller car rentals do not have.
The major companies in this industry have created strong brand awareness and therefore enjoy its recognition. This helps in retaining customers for these businesses, and creating difficulty for new car rentals start-up towards getting customers and retaining them as well.
Also, major companies constantly need to purchase fleets to meet up with customers’ demand, a feat that smaller companies cannot match up with, and yet regardless of the number of cars in one’s fleet, maintenance, storage, and then staff the rental location.
e. Are There County or State Regulations or Zoning Laws for Exotic Car Rental Business?
Yes, there are county, and state regulations laws for the exotic car rental business. Most states require drivers to be at least 21 years to rent a car. If you are under 25 many companies will charge you underage fees.
f. Is There a Franchise for Exotic Car Rental Business?
Yes, there are franchise opportunities for exotic car rental businesses, and here are some of them;
- Turo Exotic Car Rental Automation
- Priceless Rent-A-Car
- Sixt Franchise USA LLC
- Racing Limos
- Avis Car Rental
- Advantage Rent a Car
- Dollar Rent a Car
- Thrifty Rent a Car
- Right Cars
- National Car Rental
- Imagine Lifestyles Luxury Rentals
- Budget Rent-A-Car.
Buying a franchise is for those who do not want to deal with paperwork and having to worry about customers. When buying a franchise, you buy all the strategies, equipment, structure, and techniques in place, and only have to worry about rendering service to your clients.
If you are only concerned with services and have no head for other technicalities, then you should buy a franchise. However, before buying a franchise carry out a thorough research on the company that would best be suited to you business-wise and one that would generate revenue.
g. What Do You Need to Start an Exotic Car Rental?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- Exotic Cars
- Commercial Driver’s License (CDL) (at least a Class B CDL)
- EIN (Employer Identification Number) / Federal Tax ID Number.
- A Corporate Bank Account
- Hackney Carriage (Taxi) Licenses
Choose a Memorable Business Name
When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.
Some of the catchy business name ideas suitable for an exotic car rental business are;
Creative Exotic Car Rental Business Name ideas
- Kings Convoy© Car Rental Company, Inc.
- Presidential Fleet® Exotic Car Rental Company, LLC
- Tush Treatment© Car Rental Company, Inc.
- Lifestyle® Car Rental Company, Inc.
- Highlanders™ Luxury Car Rental Company, Inc.
- Celebrities™ Car Rental Company, LLC.
- The Crown© Car Rental Company, LLC
- Prince Philips® Car Rental Company, Inc.
- Stars© Car Rental Company, Inc.
- Jeremie Jones© Car Rental Company, Inc.
- Your Choice® Exotic Car Rental Company, LLC
- Lexus® Car Rental Company, LLC
- West Coast™ Car Rental Company, LLC
- Tyler Williams© Car Rental Company, Inc.
- Sopita KYLER® Car Rental Company, Inc.
- Timeless™ Car Rental Company, Inc.
- Shannon Whyte™ Car Rental Company, Inc.
- Pro Rent© Car Rental Company, Inc.
- Julius Chamberlin® Car Rental Company, LLC
- DMK™ Car Rental Company, Inc.
Register Your Business
a. What Type of Business Structure is Best for Exotic Car Rental Business?
When it comes to the business structure for an exotic car rental, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because a provider wants to protect themselves from any lawsuits.
Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below. Incorporating an LLC as a car rental company will lead to you having advantages as regards management flexibility and taxation. Also, with LLCs you get a limited personal liability for the actions of the LLC.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open an exotic car rental?
- General Business License
- Commercial Driver’s License (CDL) (at least a Class B CDL)
- Hackney Carriage (Taxi) Licenses
- Zonal Permits
- Signage Permit
- Operational State Facility Inspections for your parking
d. What Type of Certification is Needed to start an Exotic Car Rental Business?
You don’t need any certifications to start an exotic car rental business.
e. What Documents are Needed to Open an Exotic Car Rental Business?
These are some of the basic legal documents you need to legally run an exotic car rental business in the United States of America;
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval (For your parking)
- Certificate of Incorporation
- Commercial Driver’s License (CDL) (at least a Class B CDL)
- Hackney Carriage (Taxi) Licenses
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting an exotic car rental business, usually you may not have any need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start an Exotic Car Rental Business?
The startup cost of an exotic car rental is not uniform. But basically, an exotic car rental will cost from $400,000 – $2 million to start, and that can easily go higher depending on your overall business goals and objectives.
The car rental business can be started with little, average or high funds, depending on the scale you intend to start off the business with. If you intend to target the luxury clients and start hiring out limousines for instance, then you might need more funds than someone that intends to start with regular clients, and is renting out SUVs.
This is a business that you have to be careful going into. You would need to have carried out a detailed research as to how much budget you have to start the business with and how realistic your budget is in achieving your plans. If you intend to launch a car rental business in the United States of America, there are certain items and requirements that you would need to have fulfilled, and they are as follows;
b. What are the Costs Involved in Starting an Exotic Car Rental Business?
- The total fee for registering the business in the United States of America – is $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services totaling – $5,200.
- Marketing promotion expenses (2,000 flyers at $0.04 per copy) for the total amount of $80.
- The cost for hiring a business consultant (writing of business plans inclusive) – is $4,500.
- Insurance (general liability, workers’ compensation, and auto insurance) coverage at a total premium – $15,400.
- The cost of logistics software, accounting software, CRM software, and Payroll Software – $1,500
- The cost for leasing a facility (long-term lease agreement) – is $65,600.
- The cost for facility remodeling and installations – is $20,000.
- The cost for the purchase of exotic cars: $1.2 million
- Other start-up expenses including stationery – $500
- Phone and utility deposits will cost – ($2,500)
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $50,000
- The cost for store equipment (cash register, security, ventilation, signage) – $3,150
- The cost for the purchase of office furniture and gadgets – $8,000.
- The cost of launching an official website – $600
- The cost for our grand opening party – $5,000
- Miscellaneous – $5,000
c. What Factors Determine the Cost of Opening an Exotic Car Rental Business?
- The size of the business (number of exotic cars to start the business with)
- The choice of location
- The required licenses and permits
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing of the exotic car rental business
- The cost for furnishing and equipping the exotic car rental business – parking facility
- The cost for insurance policy covers
- The cost for registering the business
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
- The cost for the grand opening of the business
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
It is not compulsory to build a new facility for your exotic car rental business, but if you have the required finance, it will pay you to build your own parking facility and administrative office.
This is not a business you can run from the comfort of your house, except your operation is based on one car, and your target market is just your local neighborhood, in that case you can operate the business from home. If you however, intend to run a standard car rental business then you would need to get a facility in a place that will favor your business.
The facility you should aim for should be that which can allow you to expand comfortably. This is why a business plan is important, it allows you know your intentions towards your business, if you plan to expand or will be more comfortable on a particular scale, as this will be a guiding decision to choosing a location for your car rental business.
The truth is that building or reconstructing a facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.
e. What are the Ongoing Expenses of an Exotic Car Rental Business?
- Gas and lubricants
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees
- Maintenance and repairs
- Marketing costs
f. What is the Average Salary of your Staff?
- Chief Operating Officer (Owner) – $68,000 Per Year
- Admin and HR Manager – $48,000 Per Year
- Fleet Manager $48,000 Per Year
- Accountant $38,000 Per Year
- Chauffeurs (Drivers) – $36,800 Per Year
- Customer Service Officer (Call Center Executives) – $26,100 Per Year
- Car Detailers -$24,000 Per Year
g. How Do You Get Funding to Start an Exotic Car Rental Business?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
- Source for soft loans from your family members and friends.
Everyone knows the importance of finance in carrying out their daily activities, and every entrepreneur knows the importance of finance in their businesses as well. No business can start, or continue in its operation without finance. The car rental business is not an easy one, and so raising capital might not be so easy.
This is why the importance of the business plan cannot be over-emphasized. Your business plan helps point you to likely sources that will invest in your business. A good business plan will also help convince investors of your seriousness at making your business work to make money for its growth and to pay them back as well.
Write a Business Plan
a. Executive Summary
DMK™ Car Rental Company, Inc. is a licensed car rental company with a niche in exotic car rental that will be based in Las Vegas, Nevada. We are in business to rent or lease exotic passenger cars to customers for a short period usually 30 days or less or for a longer period usually 12 months.
DMK™ Car Rental Company, Inc. has been able to secure all relevant licenses and permits to operate throughout the United States. We will ensure that we abide by the rules and regulations guiding the car rental services industry.
b. Products and Service
- Rent and lease exotic cars such as Lamborghini, Rolls-Royce, and Ferrari et al.
c. Mission Statement
DMK™ Car Rental Company, Inc. is in the car rental industry with a singular mission to make available some of the latest exotic cars at every given time.
Our Vision is to be listed as the top 5 exotic car rental companies in the United States of America.
d. Goals and Objectives
The goals and objectives of an exotic car rental are to make available exotic cars for use to people and organizations who may or may not have the finance to purchase such cars.
e. Organizational Structure
- Chief Operating Officer (Owner)
- Admin and HR Manager
- Fleet Manager
- Chauffeurs (Drivers)
- Customer Service Officer (Call Center Executives)
- Car Detailers
Any business that wants to make money would need to ensure that their marketing strategies are sound. Marketing ensures that you advertise your products and services in an aim to make money. Every marketing strategy should leverage on all conventional and unconventional sources to be able to make money.
If your car rental business is medium or large scale, you can ensure that you bid for contracts at every opportunity available and at the right time. Running a large scale car rental business means that you can partner with smaller car rental companies, this would give you a far and wider reach, whilst still garnering brand awareness for your company.
a. SWOT Analysis
- Excellent operational history
- Availability of latest exotic cars
- Accurate estimates with no hidden costs.
- Experience and trained professional drivers.
- Excellent customer testimonials.
- Not enough existing clientele to run at full capacity immediately
- We will need a loan to build our parking facility and to purchase the latest exotic cars
- The owner is currently running the business solo and will need to manage construction/build out the existing business
- Lack of economies of scale.
- Build upon existing clientele
- Online market, new services, new technology, and of course the opening of new markets.
- Loans diminish profitability until they are paid off
- First-year will be financially tight while we gain customers and pay off loans
- Competition in the area could increase
- Management of employees requires time, money, and efforts
- The transport department could change its regulatory status and decide to enforce strict regulations that can strangulate new business.
b. How Do Exotic Car Rental Companies Make Money?
Exotic car rental businesses make money by renting and leasing exotic cars.
c. Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
d. Sales & Advertising Strategies
- Introduce Your exotic car rental business by sending introductory letters alongside our brochure to corporate organizations, celebrities, filmmakers, wedding planners, households, and key stakeholders in and around your city and state
- Print out fliers and business cards and strategically drop them in offices, libraries, public facilities, train stations et al.
- Use friends and family to spread the word about your business
- Place a small or classified advertisement in the newspaper, or local publication about your company and the services you offer
- Leverage on referral networks such as agencies that will attract clients who would need your customized services
- Advertise our business in relevant magazines, newspapers, TV and radio stations.
- Engage in direct marketing approach
- Encourage the use of word-of-mouth marketing from loyal and satisfied students
- Join local chambers of commerce and industry to market your services.
a. How Much Should You Charge for your Service?
The cost to rent an exotic car varies based on the make and model, specific location, dates, times, vehicle availability, and length of rental. For example, Lamborghini rental ranges from $1,200 up to $2,500 per day.
It is one of the world’s most renowned supercar manufacturers and they are among the most popular in the Exotic Car Rental business. It will cost you between $1,000 and $5,000 a day to rent an exotic car. Generally, you may also have to leave a significant deposit of about $5,000.
Getting the right factors that will ensure that you give the best pricing for your car rental business is one that would ensure that your rates are affordable to your clients while not allowing you operate on a loss. This can be achieved if you scale back unnecessary expenses and concentrate more on the ones that cannot be avoided.
b. How Much Profit Do Exotic Car Rental Business Owners Make a Year?
The profit an exotic car rental business owner is expected to make a year is not fixed, but on average, they can make over $175,000 in profit in a year.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the exotic car rental business (number of exotic cars owned)
- The exotic car makes and model, specific location, dates, times, vehicle availability, and length of rental
- The location the exotic car rental business is covering
- The management style of the exotic car rental business
- The business approach of the exotic car rental business
- The advertising and marketing strategies adopted by the exotic car rental business.
- The number of years the exotic car rental business is in business
d. What is the Profit Margin of an exotic car rental Service?
The profit margin of an exotic car rental is not fixed. It could range from 25 percent to 55 percent depending on the distance covered and other factors.
e. What is the Sales Forecast?
Below is the sales forecast for an exotic car rental. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year: $520,000
- Second Fiscal Year: $1.2 million
- Third Fiscal Year: $2 million
Set Up your Shop/Office
a. How Do You Choose a Perfect Location for Exotic Car Rental Business?
- The demography of the location
- The purchasing power of businesses and residents of the location
- Accessibility of the location
- The number of exotic car rental businesses in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
As an entrepreneur, you should know that the location of your business is extremely an important factor to be considered when starting out your business, as it could affect the growth of your business. There are many issues you would need to consider when choosing a location for your car rental business.
The location of your car rental business must not only be instrumental to the success of your business, the leasing of the facility must be what you can afford, and also it must be appropriate for a car rental business. While the location for some businesses might not be so much important as just finding any affordable facility anywhere, that of a car rental is mighty important as it needs to be accessed conveniently by your clients.
b. What State and City are Best to Open an Exotic Car Rental Business?
- Los Angeles, California
- Las Vegas Nevada
- Miami Florida
- Washington DC
- New York City, New York
- Dallas, Texas
- Columbus, Ohio
- Oklahoma City, Oklahoma
- Chicago, Illinois
- Boston, Massachusetts
c. What Equipment is Needed to Operate an Exotic Car Rental Business?
- Exotic cars
- Car tracker
- Booking software
- Dash Cam
- Safety tools
- CCTV Security Cars
- Maintenance tools
- Filing Cabinets
There really isn’t much equipment that you would need to start your car rental business as your cars are the main equipment that is necessary for your business to grow. Since the cars are the main equipment, it is not advisable to buy them for fairly used, as you might spend more in maintaining them than when you purchase new cars. Other equipment needed are light work tools for the cars.
When it comes to hiring employees for a standard exotic car rental business, you should make plans to hire a competent chief executive officer (you can occupy this position), admin and HR manager, fleet manager, accountant, chauffeurs (drivers), car detailers and customer service officer (call center executives).
Launch the Business Proper
No exotic car rental business opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the exotic car rental business, you will officially inform people in your city that your exotic car rental business is open for business.
a. What Makes an Exotic Car Rental Business Successful?
- Choose a good location and the latest exotic cars to launch the business
- Hire only competent, hardworking, and trustworthy staff
- Throw a party before officially opening the exotic car rental business
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your exotic car rental business
- Leverage on all available online and offline platforms to promote your exotic car rental business
b. What Happens During a Typical Day at an Exotic Car Rental Business?
- The business is open for the day’s work
- The exotic cars are washed, cleaned, and ready for work
- Customers’ requests to rent and lease exotic cars are attended to
- Schedule maintenance of the exotic cars are carried out
- Marketing/website upkeep
- Supply ordering
- Administrative duties
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build an Exotic Car Rental Business?
- Business management skills
- Customer services skills
- Interpersonal skill
- Logistics and material handling skills
- Good driving skills
- Bargaining skill
- Work experience in a car rental services industry
- Experience in managing people
- Experience in business administration
- Experience in handling logistics and transportation software.
Ensuring that your car rental business becomes successful means that you would require managerial skills in managing your resources, otherwise you might lose your valuable assets – fleet of cars. As an entrepreneur that is just starting out, you would to find a way to rise above your competition, by ensuring that you offer fair prices and are always available to your customers.
Another way to ensure that you remain successful is in paying attention to which segments of your business will give you more profit. This means that you would need to keep an eye on the items that are likely to affect the bottom line of your business, this way you can adjust your Business model according to the changes in the business environment.
Finally, you would need to thrive on opportunity, and ensure that the logistics associated by your business is simple enough for your customers to understand, this is as you offer your customers a high end experience that is guaranteed at retaining your customers, and improving the bottom line of your company.
8. Get Insurance Cover
Insurance is a very important part of any business. Not getting insurance or the correct one could spell doom for your business, as insurance protects you from probable and unforeseen circumstances. This is not a decision you rush into on your own, as you would need to meet with a professional insurance agent or broker that would guide you on the best policies that are suitable for your business.
Some of the basic insurance policies that you should put into consideration when starting your own car rental business include;
- Liability Insurance
- Collision Damage Waiver
- Personal Accident Insurance
- Personal Effects Coverage
- Commercial Auto Liability
- General Liability
- Workers’ Compensation