Good business to takeover?

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Alfissti
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Looking for ideas and opinions on this.

Basically there is this bloke who inherited his dad's collection of classic Rolls Royce, Bentley and other vintage cars, he been hiring it out for events (primarily weddings) He does a very good job at it, the fleet is in impeccable condition as it is only him and his 2 brothers or someone whom they trusted who drove the cars. They decided to diversify and bought newer F-segment cars.

It started out good, they bought 4 newish Mercedes S-Class cars and they saw it was going well and decided to quickly expand and ordered 26 new cars, this is in addition to their fleet of 20 vintage cars. Then things went quite wrong from there as they underestimated the cost of maintaining newer luxury cars. The other problem was while they were extremely careful with whom they allowed behind the wheel of their vintage fleet they were somewhat lackadaisical with regard to their newer cars thus they hired the wrong kinds of people to drive. Didn't take long before 4 of the cars were a total-loss and the company started to get a poor reputation due to various reasons from cars that broke down to drivers not showing up to some drivers who weren't properly trained to be chauffeurs. Wasn't too long before no one wanted anything to do with them and it also affected their vintage car business.

Now they want to sell off the newer 26 cars they have on their books and concentrate purely on their vintage car rentals.

The following are the fleet of cars :

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1x Rolls Royce Phantom (EWB) cost £180k (18 months old)
1x Rolls Royce Ghost (EWB) cost £130k (11 months old)
1x Bentley Mulsanne cost £240k (not delivered)
1x Bentley Flying Spur cost £170k (not delivered)
1x Maserati Quattroporte cost £90k (2 months old)
1x Tesla Model S cost £87k (not delivered)
1x Cadillac XTS cost £35k (8 months old)
1x Lincoln MKS cost £36k (11 months old)
2x Range Rover Autobiography (LWB) cost £95k (3 months old)
2x Porsche Cayenne cost £90k (6 months old)
4x Jaguar XJL Portfolio cost £90k (between 1 and 6 months old)
4x BMW 740L cost £70k (between 6 and 9 months old)
4x Mercedes S400L cost £75k (between 3-6 months old)
2x Audi A8 (LWB) cost £70k (between 3-6 months old)

Price is for each individual car or £2m for everything on an as is where is basis. Most just need a good clean while some there are scratches on it either from careless driving or being keyed. The cars that are under 4 months old only has delivery miles on it.


There are several plans that can be used with this business, among which I could most likely sell off one car at a time and still make a small profit. But looking at the following :-

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The approximate cost per mile for these cars assuming a 15k miles per year are as follows :-

RR Phantom : £6.25
RR Ghost : £4
Bentley Mulsanne : £4.50
Bentley Flying Spur : £2.50
Maserati Quattroporte : £1.60
Tesla Model S : £0.93
Cadillac XTS : £0.90
Lincoln MKS : £0.90
Range Rover : £1.70
Porsche Cayenne : £1.15
Jaguar XJL Portfolio : £1.60
BMW 740L : £1.35
Mercedes S400L : £1.30
Audi A8 : £1.35

A chauffeur will cost £28,000 per annum for an excellent one or around £20 per hour for an agency one.

There are a few ways this could be done. The first is I could just use this app called Uber which pays £4 per mile or £0.72 per minute as the cars will be parked 7 miles from Heathrow therefore hoping there can be a pickup from Heathrow into Central London for which it is a flat £75, the RR Phantom and the Bentley Mulsanne obviously won't usually be used this way as then it'd be operating at a loss.



However to make good profits will need to get the cars charterred at the following rates :-

It is per 10 miles and then surcharge per 5 minutes.

RR Phantom : £75 + £5.50
RR Ghost : £50 + £4.50
Bentley Mulsanne : £60 + £5.50
Bentley Flying Spur : £40 + £4.50
Maserati Quattroporte : £35 + £5.50
Tesla Model S : £9.99 + £4.50
Cadillac XTS : £20 + £3.50
Lincoln MKS : £20 + £3.50
Range Rover : £35 + £4.50
Porsche Cayenne : £30 + £4.50
Jaguar XJL Portfolio : £30 + £3.50
BMW 740L : £25 + £3.50
Mercedes S400L : £25 + £3.50
Audi A8 : £25 + £3.50

After 6pm +15%
Weekends +20%

No surcharge for airport drop-offs



Each car at maximum can stay on fleet for 3 years as after it is 3 years old it becomes difficult to get charters.

The cost to finance the £2m required to buy the cars is 3.6% per annum for 3 years, most of the cars will come with a full tank of fuel.

Will also need to spend around £30k on hardware and other set up cost.

Some other fixed cost :-

Rent : £1200 per month for the parking area and warehouse.
Utlities : £1500 per month.
Salary : £1800 per month for a fleet controller/planner.
Business rates : £300 per month


What do you think?
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samba
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If that was an exec summary - from a VC perspective, no ****ing chance.

no management experience, no pl projection. What are your cash reserves? You'll also need people to clean/service them after each use.

btw, you'll want to factor in biggin hill and london city

Your money but I wouldn't touch it with a bargepole based on that.
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Hedgeman49
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Why are you paying list price for the cars? As soon as you drive them off the forecourt they devalue. I'd knock 25% off that at least.

Using Uber with a fleet like that is nuts, people use Uber to get a minicab not hire a Maserati.

Without experience in running a fleet of this size I would strongly advise against
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username1456920
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Why not just force them to knock the prices of the cars down. A lot of them are used and some are damaged, nobody is going to want a luxury damaged car so don't know why you're stating how much they would cost to buy new. Buy the cars dirt cheap, sell cars. Quick money move on.
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Runninground
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I agree with Hedgeman about Uber, don't use that.

I don't know the total cost of the cars but if you're buying them all you should be expecting a huge discount.

Don't forget- expensive cars come with expensive repair bills. You need them in tip top condition as that's what people expect when they hire them out.

I think you've missed a few costs- insurance being a big one.

This is a seasonal business, as most weddings and events happen in the summer (apart from airport runs).

If you started this, you'd not get orders straight away, with wedding hire etc being booked months and years in advance. That means you'll have those cars just sitting in a warehouse doing nothing (not good!). Maybe you could look at doing deals with other luxury car hire places so they can offer your cars to their customers, then pay you.

Other than that, I'd love to start this type of business, just for the fact I could turn up to work in a Rolls Royce or something one day haha.
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Alfissti
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(Original post by samba)
If that was an exec summary - from a VC perspective, no ****ing chance.

no management experience, no pl projection. What are your cash reserves? You'll also need people to clean/service them after each use.

btw, you'll want to factor in biggin hill and london city

Your money but I wouldn't touch it with a bargepole based on that.
12 months cash reserves for this.

Cleaning and servicing has been amortized over 15k miles per year and it is in the cost per mile to operate.

Actually the real reason am thinking of taking over this fleet is I'm opening a new hotel in November and on most days I'd need about 6-8 limousines for my own guests.

Not really looked at other venues yet and was primarily looking at Heathrow because I'm trying to minimize empty journeys.

Yes, don't have management experience with regard to such kinds of business. Most likely will hire a business manager of some sort who has experience in this field.


(Original post by Hedgeman49)
Why are you paying list price for the cars? As soon as you drive them off the forecourt they devalue. I'd knock 25% off that at least.

Using Uber with a fleet like that is nuts, people use Uber to get a minicab not hire a Maserati.

Without experience in running a fleet of this size I would strongly advise against
I was thinking of using Uber only where there are no other jobs because either way I do have to pay chauffeur salary and the biggest expense of having these cars is the depreciation.

None of those cars are at list price. The Audi A8 for example they paid £98k for it. The Rolls Royce Phantom is a £305k car. All their cars were specified with a huge list of options.

TBH I'm not sure why or what they saw in a Maserati, no clue if anyone would specifically ask for it.


(Original post by Runninground)
I agree with Hedgeman about Uber, don't use that.

I don't know the total cost of the cars but if you're buying them all you should be expecting a huge discount.

Don't forget- expensive cars come with expensive repair bills. You need them in tip top condition as that's what people expect when they hire them out.

I think you've missed a few costs- insurance being a big one.

This is a seasonal business, as most weddings and events happen in the summer (apart from airport runs).

If you started this, you'd not get orders straight away, with wedding hire etc being booked months and years in advance. That means you'll have those cars just sitting in a warehouse doing nothing (not good!). Maybe you could look at doing deals with other luxury car hire places so they can offer your cars to their customers, then pay you.

Other than that, I'd love to start this type of business, just for the fact I could turn up to work in a Rolls Royce or something one day haha.
Still trying to negotiate on the price, they aren't really wanting to budge much due to how much they paid for these cars which is a lot as someone went crazy when it came to ticking the options.

Yes they are indeed expensive cars to maintain hence the reason I won't keep them for more than 3 years on hand. Also becomes difficult to charter it out once it is 3 years old.

Insurance is already included in the cost per mile to operate these cars.

I prefer more business related or corporate events rather than weddings. However those too tend to be planned months in advance therefore there won't be any orders and most likely I'd probably launch it at the same time as I open my new hotel in November.

Opening up one yourself? Better wait till you are at least 35, kind of stuck as to who I could hire as a chauffeur for this business as insurance premiums are expensive if any of the drivers are under 35 and it goes up exponentially if there is a driver under 25. This is especially so with the Bentley, Rolls Royce and Maserati.

The novelty of showing up to work in a Rolls Royce will wear out soon enough before it becomes just another car Also it is a car you would prefer to sit behind rather than at the driver seat.


(Original post by TSA)
Why not just force them to knock the prices of the cars down. A lot of them are used and some are damaged, nobody is going to want a luxury damaged car so don't know why you're stating how much they would cost to buy new. Buy the cars dirt cheap, sell cars. Quick money move on.
Actually all these cars have very low mileage on them, the one with the highest mileage on it is one of the Jaguars that has done 9k, the rest has done under 2k, there are some damaged ones out there, most scratches or kerbed alloys.

All those cars have a long list of options and you won't be able to buy a new one at those prices.
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Tayfun Tugra
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You have calculated the cost per mile over 15k miles per year, but will they even do 15k miles in a year?
I think it's appropriate to calculate cost per mile in 500 mile increments starting from 0 - 15K.
25% depreciation per year (at least) per car for the end of the 3 years a further 10%.
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samba
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(Original post by Alfissti)
12 months cash reserves for this.

Cleaning and servicing has been amortized over 15k miles per year and it is in the cost per mile to operate.

Actually the real reason am thinking of taking over this fleet is I'm opening a new hotel in November and on most days I'd need about 6-8 limousines for my own guests.

Not really looked at other venues yet and was primarily looking at Heathrow because I'm trying to minimize empty journeys.

Yes, don't have management experience with regard to such kinds of business. Most likely will hire a business manager of some sort who has experience in this field.
Wouldn't worry about prices etc; first thing to do is get/hire a consult from somebody with serious experience in the sector for a viable plan. Work out the p&l over 3 years etc with them, work out the kinks. Currently the figures just seems to have been plucked out of thin air. I also don't get how the S classes are younger than the others, given most vehicle orders have a 12~ month lead time and they had the S classes first. Talking of the S class, I imagine they will be your bread and butter; that's what I'd pick (and I imagine most would). Not a single S63 in that fleet. Again though, I'm just guessing as I have zero experience in the sector.
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Alfissti
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(Original post by samba)
Wouldn't worry about prices etc; first thing to do is get/hire a consult from somebody with serious experience in the sector for a viable plan. Work out the p&l over 3 years etc with them, work out the kinks. Currently the figures just seems to have been plucked out of thin air. I also don't get how the S classes are younger than the others, given most vehicle orders have a 12~ month lead time and they had the S classes first. Talking of the S class, I imagine they will be your bread and butter; that's what I'd pick (and I imagine most would). Not a single S63 in that fleet. Again though, I'm just guessing as I have zero experience in the sector.
The S-Class are newer because 2 of the earlier ones were written off and they sold off their other earlier models as it was giving issues.

The versions they have on the fleet are S400L models. All their cars are ordered in white and it does appear someone went crazy when it came to ticking the options.
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Tayfun Tugra
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(Original post by Alfissti)
The S-Class are newer because 2 of the earlier ones were written off and they sold off their other earlier models as it was giving issues.

The versions they have on the fleet are S400L models. All their cars are ordered in white and it does appear someone went crazy when it came to ticking the options.
to be quite honest mate, you're talking about a few million pounds worth of cars, which is quite a big deal. Everything needs to be calculated precisely and the numbers should tell you the story, for which seek help from somebody who is qualified and up to date with the market.

For free advice as stated above take the cars, keep which ones are viable or which come of use to the hotel, and cash in on the rest of them while they still retain value.
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Alfissti
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After thinking this through for a couple of weeks and thinking of ways and means to make this business work have decided this is not that good a deal.

Reached the decision with the following in mind :
-Business managers and fleet controllers that are good and won't screw you over are extremely difficult and expensive to come by.
-Chauffeurs worth hiring are expensive to come by and those who can properly drive a Rolls Royce are even more expensive.
-Inside the M25 there are already around 200 Rolls Royce Phantoms that you can hire, most struggle to breakeven even where it is a DODO.
-Too many different makes and models, prefer to standardise it to 2-3 models.
-Cheaper and easier for me to outsource this by arranging with a company that already has a fleet of cars to ferry my guests around.

Also in a dual stroke of luck, I today received planning permission for 2 projects that will mean I have to put money into something else first.
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FuelBowser
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(Original post by Alfissti)
After thinking this through for a couple of weeks and thinking of ways and means to make this business work have decided this is not that good a deal.

Reached the decision with the following in mind :
-Business managers and fleet controllers that are good and won't screw you over are extremely difficult and expensive to come by.
-Chauffeurs worth hiring are expensive to come by and those who can properly drive a Rolls Royce are even more expensive.
-Inside the M25 there are already around 200 Rolls Royce Phantoms that you can hire, most struggle to breakeven even where it is a DODO.
-Too many different makes and models, prefer to standardise it to 2-3 models.
-Cheaper and easier for me to outsource this by arranging with a company that already has a fleet of cars to ferry my guests around.

Also in a dual stroke of luck, I today received planning permission for 2 projects that will mean I have to put money into something else first.
Why is it so hard to drive a Rolls Royce ?

No harder than say a transit van
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tehFrance
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(Original post by Alfissti)
The cost to finance the £2m required to buy the cars is 3.6% per annum for 3 years,
How are you getting the finance? What's your start-up capital without finance? Why are you asking on a student forum, if you have to ask here then you're clearly not ready to run your own business let alone enter M&A.
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Alfissti
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(Original post by FuelBowser)
Why is it so hard to drive a Rolls Royce ?

No harder than say a transit van

It does require a certain amount of finesse in terms of starting and stopping as well as minding your words while at the wheel.

Flooring it for example might just make a mess as your passengers might be enjoying their champagne while wearing the latest LV/Gucci outfits.

A very good chauffeur, you can place a glass of water without a lid on the dashboard of a Rolls Royce and have him or her drive it 20 miles on various road conditions and at the end of the trip 95% of the water would still be in the glass.

It is actually a lot trickier than you think.


(Original post by tehFrance)
How are you getting the finance? What's your start-up capital without finance? Why are you asking on a student forum, if you have to ask here then you're clearly not ready to run your own business let alone enter M&A.
To me this is just an English language forum
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FuelBowser
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(Original post by Alfissti)
It does require a certain amount of finesse in terms of starting and stopping as well as minding your words while at the wheel.

Flooring it for example might just make a mess as your passengers might be enjoying their champagne while wearing the latest LV/Gucci outfits.

A very good chauffeur, you can place a glass of water without a lid on the dashboard of a Rolls Royce and have him or her drive it 20 miles on various road conditions and at the end of the trip 95% of the water would still be in the glass.

It is actually a lot trickier than you think.




To me this is just an English language forum
Fair enough

Must be tricky to balance making progress with delicate driving for the chaffeur
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Alfissti
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(Original post by FuelBowser)
Fair enough

Must be tricky to balance making progress with delicate driving for the chaffeur
Probably the reason why very good chauffeurs with OT (which they will get a lot of usually) tend to be paid upwards of £40k per year or closer to £60k per annum if they are also a certified bodyguard. Probably the reason why majority of the very good ones who earn the higher amounts tend to be ex tank drivers with the military.
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FuelBowser
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(Original post by Alfissti)
Probably the reason why very good chauffeurs with OT (which they will get a lot of usually) tend to be paid upwards of £40k per year or closer to £60k per annum if they are also a certified bodyguard. Probably the reason why majority of the very good ones who earn the higher amounts tend to be ex tank drivers with the military.
don't spill the general's champagne
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Tayfun Tugra
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I'd drive a rover 20 miles with a hot cup of tea on my lap without spilling a drop for £60,000 per year.

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