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Since the cars have to be registered to be on the platform, dealers must sell the cars on as used and disclose that it's been used as a rental car.

yakshaving_jgt 7y ago
Sounds like it’d be an unattractive deal for the dealership, no? They have to take the hit on the depreciation. Would the profits from rentals cover that?
- dubcanada 7y ago
  There are car rental companies, so I would assume that a car rental can cover the cost of a small deprecation on a car.
  - amosgewirtz 7y ago
    Exactly right. The rental revenue more than offsets depreciation within 1-3 months on the platform (thought it does depend on the model). The important thing to remember is that a lot of larger car dealers are actually getting better deals on cars from manufacturers than rental car companies. When it comes to luxury cars, the depreciation tends to be steeper up front, so they'll need to be on the platform longer to make up for depreciation. We also take used luxury cars.
  - dragonwriter 7y ago
    > There are car rental companies, so I would assume that a car rental can cover the cost of a small deprecation on a car. But can a rental that is simultaneously trying to undercut the incumbents on price while exceeding them in service? That's a harder question. It seems like the big innovation this service is offering is (aside, presumably, from the standard startup initial subsidy of investor cash funding artificially low prices to build position) is leveraging a short-term market fluctuation that leaves dealers with unusual sunk unsaleable inventory costs that are, in effect, subsidizing the rentals from money that the dealer was going to lose anyway, but those go away if either sales pick up or dealers adjust to the new normal of sales levels.
- gwbas1c 7y ago
  It's very close to an already proven business model: Enterprise rent-a-car buys new cars, rents them, and then sells them at their own dealerships. They time it so they buy the cars as cheaply as possible, and then sell them when it's most profitable. So, they do things like buy excess inventory of convertibles in the fall, and then sell them as used in spring. IMO, I suspect that, for this business, most rentals will be 2-4 year old new-ish cars that are sold as used: Lease returns, trade-ins, ect.
  - amosgewirtz 7y ago
    Yep, that's the exact rental car company MO. By providing the demand side, we're allowing car dealers to do what car rental companies have been doing for the last 50 years.
    - hef19898 7y ago
      Just a thought on that. I have the impression that your business model is a platform, right? In practical terms you will one day have to manage the schedule of your rentals to allow dealerships to sell cars whenever they want, regardless of the booking situation of a given car, somewhere above you already hinted at that problem. This becomes easier with scale as more comparable cars will be available. But at that point you basically have a rental car company to run. Unless you figure out a way to do that automatically, which would be a great value proposition in itself.
      - gwbas1c 7y ago
        Honestly, I prefer renting a car for a weekend before I buy it. Two years ago I rented a Pacifica to move a snowblower, and my wife liked it so much that she talked me into buying one. The dealer was confused when we told them we didn't need to test-drive the minivan.
  - bluedino 7y ago
    Rental cars also have much lower value than non rentals
- jagger27 7y ago
  There are plenty of cars on a dealer’s lot that they’d love to squeeze extra value out of. This isn’t for new cars with the plastic still on them, it’s for last year’s model that didn’t sell, demo units, recent off-lease trade-ins, etc. I could see this working quite well.
  - bluedino 7y ago
    >> last year’s model that didn’t sell, demo units Those are both 'new' in the dealership's eyes
- SkyPuncher 7y ago
  Several Toyota dealers where I use to live offered rentals. Most of the big players, have a small "fleet" they use as loaner vehicles (maintenance, body work, etc). Since new cars have pretty big markups, they run them for a year and basically take a small loss when they go to sell them. It seems like this system provides the missing piece to easily rent idle vehicles from the "loaner fleet".
  - gnicholas 7y ago
    How do you find out about this? I'd love to know where I can rent a Sienna or something for a road trip, and the rental companies are terrible at actually having the car you "reserved".
    - SkyPuncher 7y ago
      This is a good start: https://www.toyota.com/rental/index.html https://www.toyota.com/rental/index.html You can also search Google/Bing for local dealerships and check if they have a rental section. ------ We're planning to do something similar to test some of the lane keep systems on a long road trip.
      - gnicholas 7y ago
        FWIW, the lane keep assist in the Toyotas is still pretty rough. I test drove the 2019 RAV-4 Hybrid a couple times, and it is unusable in the right lane (it will steer you into an exit barrier, trying to keep you centered between your left lane marker and the diverging exit lane marker). Even in a center/left lane, it still ping-pongs around more than I'd like. That is to say, I could imagine getting pulled over on suspicion of drunken driving, and sheepishly saying "I'm sober, I'm just using the LKAS, which performs roughly as well as a drunk". The Honda system seemed better (2019 CRV) to me, though I didn't test it for quite as long.
        SkyPuncher 7y ago
        Thank you! I'm really interested in LKAS, but none of the car bloggers seem to touch it. We have a lot of country highway driving and LKAS seems like a nice way to reduce fatigue. Bummer that it's not up to par yet.
- dragonwriter 7y ago
  > Sounds like it’d be an unattractive deal for the dealership, no? Not if the car is a trade-in that would be sold as used, anyway. Otherwise, I can't see how it makes sense: it takes a lot for rentals to make up for the “new” to “used” transition.

yakshaving_jgt 7y ago

Sounds like it’d be an unattractive deal for the dealership, no? They have to take the hit on the depreciation. Would the profits from rentals cover that?

dubcanada 7y ago
There are car rental companies, so I would assume that a car rental can cover the cost of a small deprecation on a car.
- amosgewirtz 7y ago
  Exactly right. The rental revenue more than offsets depreciation within 1-3 months on the platform (thought it does depend on the model). The important thing to remember is that a lot of larger car dealers are actually getting better deals on cars from manufacturers than rental car companies. When it comes to luxury cars, the depreciation tends to be steeper up front, so they'll need to be on the platform longer to make up for depreciation. We also take used luxury cars.
- dragonwriter 7y ago
  > There are car rental companies, so I would assume that a car rental can cover the cost of a small deprecation on a car. But can a rental that is simultaneously trying to undercut the incumbents on price while exceeding them in service? That's a harder question. It seems like the big innovation this service is offering is (aside, presumably, from the standard startup initial subsidy of investor cash funding artificially low prices to build position) is leveraging a short-term market fluctuation that leaves dealers with unusual sunk unsaleable inventory costs that are, in effect, subsidizing the rentals from money that the dealer was going to lose anyway, but those go away if either sales pick up or dealers adjust to the new normal of sales levels.
gwbas1c 7y ago
It's very close to an already proven business model: Enterprise rent-a-car buys new cars, rents them, and then sells them at their own dealerships. They time it so they buy the cars as cheaply as possible, and then sell them when it's most profitable. So, they do things like buy excess inventory of convertibles in the fall, and then sell them as used in spring. IMO, I suspect that, for this business, most rentals will be 2-4 year old new-ish cars that are sold as used: Lease returns, trade-ins, ect.
- amosgewirtz 7y ago
  Yep, that's the exact rental car company MO. By providing the demand side, we're allowing car dealers to do what car rental companies have been doing for the last 50 years.
  - hef19898 7y ago
    Just a thought on that. I have the impression that your business model is a platform, right? In practical terms you will one day have to manage the schedule of your rentals to allow dealerships to sell cars whenever they want, regardless of the booking situation of a given car, somewhere above you already hinted at that problem. This becomes easier with scale as more comparable cars will be available. But at that point you basically have a rental car company to run. Unless you figure out a way to do that automatically, which would be a great value proposition in itself.
    - gwbas1c 7y ago
      Honestly, I prefer renting a car for a weekend before I buy it. Two years ago I rented a Pacifica to move a snowblower, and my wife liked it so much that she talked me into buying one. The dealer was confused when we told them we didn't need to test-drive the minivan.
- bluedino 7y ago
  Rental cars also have much lower value than non rentals
jagger27 7y ago
There are plenty of cars on a dealer’s lot that they’d love to squeeze extra value out of. This isn’t for new cars with the plastic still on them, it’s for last year’s model that didn’t sell, demo units, recent off-lease trade-ins, etc. I could see this working quite well.
- bluedino 7y ago
  >> last year’s model that didn’t sell, demo units Those are both 'new' in the dealership's eyes
SkyPuncher 7y ago
Several Toyota dealers where I use to live offered rentals. Most of the big players, have a small "fleet" they use as loaner vehicles (maintenance, body work, etc). Since new cars have pretty big markups, they run them for a year and basically take a small loss when they go to sell them. It seems like this system provides the missing piece to easily rent idle vehicles from the "loaner fleet".
- gnicholas 7y ago
  How do you find out about this? I'd love to know where I can rent a Sienna or something for a road trip, and the rental companies are terrible at actually having the car you "reserved".
  - SkyPuncher 7y ago
    This is a good start: https://www.toyota.com/rental/index.html https://www.toyota.com/rental/index.html You can also search Google/Bing for local dealerships and check if they have a rental section. ------ We're planning to do something similar to test some of the lane keep systems on a long road trip.
    - gnicholas 7y ago
      FWIW, the lane keep assist in the Toyotas is still pretty rough. I test drove the 2019 RAV-4 Hybrid a couple times, and it is unusable in the right lane (it will steer you into an exit barrier, trying to keep you centered between your left lane marker and the diverging exit lane marker). Even in a center/left lane, it still ping-pongs around more than I'd like. That is to say, I could imagine getting pulled over on suspicion of drunken driving, and sheepishly saying "I'm sober, I'm just using the LKAS, which performs roughly as well as a drunk". The Honda system seemed better (2019 CRV) to me, though I didn't test it for quite as long.
      - SkyPuncher 7y ago
        Thank you! I'm really interested in LKAS, but none of the car bloggers seem to touch it. We have a lot of country highway driving and LKAS seems like a nice way to reduce fatigue. Bummer that it's not up to par yet.
dragonwriter 7y ago
> Sounds like it’d be an unattractive deal for the dealership, no? Not if the car is a trade-in that would be sold as used, anyway. Otherwise, I can't see how it makes sense: it takes a lot for rentals to make up for the “new” to “used” transition.