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Your car – cost or revenue?

Oct 08

Your car – cost or revenue?

I am constantly on the lookout for new business models, so when I saw this one I was fascinated. The company is WhipCar and in their own words, the basic idea is “Rent the car Next door”. Let me explain by asking a question. If you have a car how many hours in a typical day are you actually in it, moving around, doing what cars are supposed to do? 1 hour? 2 hours? 3 hours? If your car is like most people´s, it does two jobs amazingly well.

Job 1 – Nothing! Your car probably spends between 80% to 90% of its life doing absolutely nothing.
Job 2 – Costing you lots of money – insurance, services, tyres, petrol, cleaning, etc.

Interesting John, but what has this to do with Business Models? Allow me 80-seconds of your time and I will tell you. The basic business model of a car rental company is:

Still with me? What about if we try and eliminate the two jobs that plague motorists the world over? Your car sitting around doing nothing for long periods and the cost of ownership. What if you could rent your car to your neighbour, or the person who works nights around the corner from where you live? Afterall your car sits on the drive all night costing you money, so why not? WhipCar has created a business model that does just that. Here are the details:

Customer Segment – focus on local rentals not business travellers or leisure tourists

Value Proposition – 1) Offer a far larger range of different cars at a range of prices (decided by the owner of the car), 2) Provide insurance to both owner and rentee, 3)Selection of cars within walking distance from your house 4) Flexible rental periods 5) Free membership

Channels – The WhipCar website (platform), text messages and emails are used to confirm rental arrangements between the owner and the borrower

Customer Relationships – Safety checks for car road worthiness (owners) and driver safety records checks (borrowers)

Revenue Streams – WhipCar earns its cash from taking a percentage of the transaction fee (from the owner)

Key Activities – Platform Maintenance, inspecting cars, checking drivers safety record and advertising

Key Resources – Online platform development and employees

Key Partners - Insurance providers (Lloyds) and financing and transaction handler (Barclaycard)

Cost structure – Platform development and maintenance, salaries and marketing. (among others)

So there you have it. A new business model for car rentals – borrow your neighbours! He earns some cash, you save money on car ownership and the providers of the this match-making miracle, WhipCar, earn some money for getting the two of you to speak to each other, even if it´s  just to discuss who left the empty coke can on the back seat.

One comment

  1. Some people might say that if we do this in Mexico it will only be to steal a car or commit a felony. Another thing that could be added as part of becoming part of the community would be to install a GPS device in the car. If it is just to be used inside the city an alarm could be activated if it left the metropolitan area.

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