Exotic car rental businesses are often categorized as a money-making business. Given the types and car models they rent, such assumptions are not that hard to justify. But how profitable is an exotic car rental business?

In this article, we will focus on the financial performance of this business. We will explore all perspectives affecting the profitability of this business to give you a clear idea of its worth.

Let’s get started!

Factors Affecting Profitability

Several factors affect the financial performance of your exotic car rental business. If you strive for achievement in this niche industry, you need to comprehend these important factors. So, we review each in detail to see what can affect your rental business.

Location of the business

You should pay close attention when choosing the location for your business for several reasons. First, you need a lot of space to display the cars. Second, the location should be near a hotel or other accommodation where car enthusiasts or tourists gather. This strategy is effective and directly impacts the profitability of your business.

Type of cars in the fleet

The type of cars your company will offer is another crucial factor. Your business can make money depending on the models for renting. For example, the average rental price of the 2023 Corvette C8 Stingray Rental might be $149-$499 per day rate. Adding a few more cars of this line to the fleet may allow your businesses to increase their revenue.

Typically, you determine the type of cars in your fleet based on your customer interest and needs. You can conduct thorough research on your customers and then offer the most wanted cars for rent.

Cost of purchasing and maintaining exotic cars

Exotic cars can be high-maintenance. Take the usual servicing expenses of a 2018 Audi R8 coupe, for example. You’ll find that they come to more than $5,000. Consider that the cost of upkeep for a 15,000-mile drive in such a vehicle may surpass $140,000.

Furthermore, add 20 more to these, and you may be puzzled how you can profit if the maintenance costs only are this big. Given these numbers, it’s no wonder why many of you wonder: how are exotic car rental companies profitable, anyway?

The catch is rental companies don’t own most of the cars. They are liaised with the manufacturers. This is one way to reduce the maintenance costs. As for the other cars, they rent them less than 60% of the time. It allows them to profit from the car, and once they finish with the car, they sell it.

Competition in the market

Although luxury rental cars are a multi-billion-dollar industry, the competition on a local level is not that saturated. Therefore, the fewer competitors, the better for your business.

Rental rates and pricing strategy

There are three types of rental rates: daily, weekly, and monthly. However, this may be a standard pricing system, but many companies charge rents hourly. So, the pricing strategy is key to regulating your business’s financial performance.

Target market and customer base

We mentioned that your exotic car rental businesses respond to the target market and customer base interests. This allows you to build customer trust and grow as a business overall.

Potential Revenue Streams

Is exotic car rental profitable on its own? Yes, but it depends on the revenue goals. Also, exotic car rental businesses do not rely on car rental only. They introduce other features and options along the car rental as additional profit streams.

Furthermore, Industry Research concludes that the global Luxury Car Rental market value was $29698.14 million in 2022, and the forecast said it will grow by 20% by 2028. As the car rental prices increased by 287%, an average agent salary is $30,000 whereas owners may reach over $100,000 annually. 

Daily or weekly rental fees

When visiting a tourist area, renting a luxury car for the day is tempting. You would want to experience a nice driving experience as you explore popular places like Santa Monica. 

So, exotic car rental businesses offer daily or weekly rental fees that would satisfy the demands of their clients and develop another revenue stream. For example, you can check our fleet and choose the one that most suits you for your vacation or business trip.

Chauffeur services and event rentals

Some exotic car rental businesses include chauffeur services for their clients as an additional cost for special events. Hollywood lux car rentals make tons of money on this service, especially for movie premieres.

However, this revenue stream is highly profitable even for less popular cities. Hence, renting a luxury car with a chauffeur service for weddings, proms, or other special events can be highly profitable for you.

Referral and affiliate programs

The referral and affiliate programs are revenue streams and a clever strategy to tap into another customer base and gain more leads. Word-of-mouth is still the most powerful marketing strategy. Therefore, using it to expand the audience allows your exotic car rental business to build a loyal customer audience.

Partnerships with hotels and resorts

Another stream that might help your exotic car rental businesses is partnerships with hotels and resorts. This can be your guarantee that all hotel guests who need a car rental will go with the partnership program.

Cost Analysis: How Profitable Is an Exotic Car Rental Business?

Walter Jacobs, the pioneer in the car rental industry, started his business with only 12 rentals at customers’ disposal. A year later, Jacobs succeeded in turning $1 million in revenues.

According to experts, to start a car rental business, you have to prepare $50,000 as an initial deposit for the fleet. As the business grows, it can increase the fleet, number of employees and services.

So, is luxury car rental a good business and worth the investment? Find out below based on more specific numbers and information.

Fixed costs: fleet maintenance, employee salaries, and rental space

When starting a luxury car rental business, you should consider the fixed costs that include fleet maintenance, employee salaries, rental space, etc. According to experts, the basic costs consist of the following:

Basic fixed costs	Monthly
Fleet maintenance	$15,000-$25,000
Employee salaries	$5,000-$15,000
Rental space	$4,000-$10,000

Variable costs: insurance, fuel, and repairs

In addition to the fixed costs come the variable costs such as insurance and potential repairs. Although you will not have to pay these monthly costs, you should still consider them.

Insurance premium	$2,500-$5,000
Repairs	$750-$2000
Fuel	$5,000-$10,000

Marketing and Promotion

To rank higher in the luxury car rental market, you need to have and develop an excellent marketing plan and effective campaigns. Here’s a brief breakdown of things you should focus on the following:

Effective marketing strategies

Most exotic car rental businesses revolve around the customer’s interests and demands. So, the first approach targets customers through digital marketing strategies (newsletters, promos, loyalty offers for existing customers) and competitor analysis.

Strong brand identity and reputation

Creating a strong brand identity is crucial to stand out from the crowd. To do so, you should focus on building a great reputation in the market. For example, host events and display the cars at regional shows, charity shows, and business expos. All these are effective marketing methods intended for your car rental business.

Collaboration with influencers and social media advertising

Influencer marketing is one of the most effective strategies to expand the customer base through the voice of an influencer. If you own a luxury rental car company or want one, you need to get familiar with the influencer marketing method. You can collaborate with car enthusiasts with a significant follower base and engagement rate.

Legal Considerations

The legal department is the final point for a profitable exotic car rental business. Here are the details you need to understand:

• Obtaining necessary licenses and permits: Rental companies in the lux category spend $5,000-$10,000 on licensing and attorneys.

• Ensuring compliance with regulations and laws: You need a general business license and a license for the fleet. If your company arranges airport meet-ups, you also need a license from that department.

• Liability and insurance coverage: An insurance policy for rental cars is needed in case of an accident.

Conclusion

Do exotic car rentals make money, and how profitable is an exotic car rental business? The average annual revenue goes around $1 million, but depending on the fleet, it can be a multi-million dollar business.

As discussed, the expenses in this business can go about $10,000-$50,000. If you have ever thought of opening an exotic car rental business, you need to find a few cars your customers want to drive and start building up from there. You can expand your fleet and add more features depending on many personal factors.

Altogether, we can say the luxury car rental business might be highly profitable, but starting and running the business requires substantial investment. Good luck!