US has a similar company with correspondingly similar alliteration, Rent a Wreck (http://www.rentawreck.com/). Despite the name, they seem to rent newer model vehicles at market rates.
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.
IIRC (at least in California) it is illegal to lease a used vehicle - it must be purchased. I don't know what the reason for this is, or if I even remember that correctly but I'm pretty sure its a law because when I purchased my car I checked into this. You can transfer your lease (i.e. swapalease.com), but in order to do it legally the swapper typically has to have their credit approved and fill out paperwork for the dealership. Another factor is that most sellers won't be interested in leasing a used vehicle because there is so little financial incentive -- leasing distributes that value of the car over a period of time and based on mileage used -- if a used car is only worth (say) $5-10k, it couldn't be leased for very much.
Here in Poland it's completely legal and I have leased used vehicles both personally and for business use as well. My experience with leasing companies is that they will lease pretty much any vehicle there that is out there on the market. If you find a used car offer, you can contact a leasing company, they will buy the car and then lease it out to you. I even had a car which had to be imported first - I've signed a contract with the leasing company first,then I was given access to a special account with money in it for the car,and then had to go abroad,buy the car and bring it back to Poland - and then they took care of registering it and they were the rightful owners of it - I was only leasing it out from them.
If anyone has a link, that'd be helpful. Start in a state without such regulations. Or just ignore them until you're big enough to matter to regulators.
I think this ignores the fact that used car sales are one of (if not the) largest revenue source for dealerships. With current interest rates a lease would probably end up bringing in less revenue than a sale, new cars move at low prices because dealerships get volume bonuses. Those same bonuses don't apply to used cars so you're eating away at your bonuses if people are now tempted to lease a 2012 for less than a new car. This wouldn't make financial sense for them to do, even with MB-USA while they offer this service it's not exactly what they push hard to get you to do.
Without the infrastructure and support of an auto manufacturer this would be hard to get a profit, and no dealership would find this to be the best business model.
It matters a lot more if people are interested in this than if dealerships maximize profit doing it. I think people would move away from ownership if it were easier, and considering all the parts of the process that could be improved, it seems like a good experiment.
The new hotness in the auto business is used car only stores. So not EVERY dealer would suffer from your proposed hardship. Further, the way the market segments some people only consider new cars. It's as much habit or bias as it is an opportunity based decision.
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!
Duh, Mercedes Finance will happily lease you a nice, clean used Mercedes. Especially if it meets their Star Certified criteria. My first MB was leased from new for three 3-year lease terms; obviously terms 2 and 3 were a used car. My next MB was used and leased for three years. In all cases the lease terms were clear and fair, and the interest rate very competitive. Right now my car loan is with them and under 1%.
I'm sure that other reputable brands have similar programs.
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 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).
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.
Seems to me the real obstacle would be financing the operation. Finance shies away from used vehicles because they are much more difficult to accurately appraise, and without accurate appraisals you are assuming another (large) dimension of risk.
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 myself leasing high mileage luxury cars--cars I wouldn't normally buy due to the mileage but wouldn't mind renting for a few years, so long as the price was notably less than leasing a brand new car of the same kind.
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.
If anyone would be doing this, I figure it'd be CarMax. They have a steady supply of used cars (mostly bought at auction), a staff that is good at appraising used cars, and a well worked-out & automated sales process.
If any folks are interested in working on this idea, I'd be up for exploring the feasibility of the project & how we could work together. Contact info in my profile.
This has actually crossed my mind lately, i looked into leasing a van for business purposes and i did "back of the napkin" calculations on hypothetically starting my own used van leasing company. I couldnt make it worth the hassle. Does anyone have any of their own basic business model calculations?
That's a good idea. I'm not the one to take it on, but could see myself being a customer.
Especially the month-to-month thing, I'd be all over that just because I don't like the commitment of owning a car although it's basically required where I live
This must be a US-only thing - I have personally leased used cars and leased them for my company's use as well. So maybe it's just your country(which I assume is US) that does not have used-car leases?
[+] [-] klapinat0r|12 years ago|reply
Literal translation: rent-a-corpse. You pay about $50 a day, choose your type (van, personal, etc.).
They're mainly used when people move by themselves, have to take stuff to the junkyard and such.
The down-side is, typically, that you can get a lousy car (playground for lemons).
On the plus side, they have a thriving business, and been in business since 1995, so it's not a dead-end idea.
[+] [-] mutagen|12 years ago|reply
[+] [-] nixy|12 years ago|reply
[1] http://en.wikipedia.org/wiki/Rent-a-Wreck
[+] [-] coffeemug|12 years ago|reply
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.
[+] [-] gavanwoolery|12 years ago|reply
[+] [-] gambiting|12 years ago|reply
[+] [-] ivankirigin|12 years ago|reply
[+] [-] haldujai|12 years ago|reply
Without the infrastructure and support of an auto manufacturer this would be hard to get a profit, and no dealership would find this to be the best business model.
[+] [-] blhack|12 years ago|reply
No, they're not. New car trades are liquidated at auction houses.
Source: I work in the automotive industry.
[+] [-] ivankirigin|12 years ago|reply
It matters a lot more if people are interested in this than if dealerships maximize profit doing it. I think people would move away from ownership if it were easier, and considering all the parts of the process that could be improved, it seems like a good experiment.
[+] [-] jmatthews|12 years ago|reply
[+] [-] cykho|12 years ago|reply
[+] [-] Satoshietal|12 years ago|reply
I'm sure that other reputable brands have similar programs.
[+] [-] AHconsidered|12 years ago|reply
[+] [-] ValG|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] ivankirigin|12 years ago|reply
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: [email protected]
[+] [-] webwright|12 years ago|reply
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).
[+] [-] gojomo|12 years ago|reply
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.
[+] [-] sliverstorm|12 years ago|reply
[+] [-] maxerickson|12 years ago|reply
(High value meaning predictable/reliable/etc, not necessarily sticker price)
[+] [-] nilkn|12 years ago|reply
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 myself leasing high mileage luxury cars--cars I wouldn't normally buy due to the mileage but wouldn't mind renting for a few years, so long as the price was notably less than leasing a brand new car of the same kind.
[+] [-] jmatthews|12 years ago|reply
[+] [-] chiph|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] tylerlh|12 years ago|reply
If any folks are interested in working on this idea, I'd be up for exploring the feasibility of the project & how we could work together. Contact info in my profile.
[+] [-] TamDenholm|12 years ago|reply
[+] [-] conductr|12 years ago|reply
Especially the month-to-month thing, I'd be all over that just because I don't like the commitment of owning a car although it's basically required where I live
[+] [-] gambiting|12 years ago|reply
[+] [-] jussy|12 years ago|reply
[+] [-] Apofis|12 years ago|reply
www.leasetrader.com or www.swapalease.com or a boat load of other websites.
How is this any different?
[+] [-] argumentum|12 years ago|reply