The business of renting your dream car: Part 1Posted: November 8, 2011
The sun shines brightly down on a sleek, sculpted shape; the rays reflecting outward with a voluptuous red hue. The car contrasts sharply with the restrained elegance of nature, imposing itself on all within view. This is your dream car; it is vastly expensive (more than you are ever likely to afford), insanely fast (capable of easily breaking the highest speed limit in just a few seconds), and quite rare (only a few hundred exist, and they are not seen often on the street). In the past it was accepted that only a lucky few would ever get to even drive an ultra-exotic car, and even fewer would ever own one; however in the last decade or so an industry has emerged that will let anyone get behind the wheel of the worlds auto exotica, for a price though, of course. I have been following this industry with great interest and have had some recent experiences with two leading companies. While there are more and more companies popping up out there, I still have yet to see an industry standard emerge, lets first look at what there is out there right now.
The standard rental car business provides people with transportation, but with an exotic rental company transportation is a secondary concern. The cars themselves will be the main attraction for customers, and companies must play to this fact if they are to be anything special. There are many operations out there that operate solely as a normal rental agency, just with more expensive cars, but this is not what this industry should be. Companies need to offer an experience that caters to the enthusiasts who will make up the majority of their clientele. Many standard rental companies either detune the engines of their powerful cars, or fit them with speed restrictors around 80mph. Now lets be real here, anyone renting a Ferrari does not want to drive slowly, no, they want to experience that famous exotic performance first hand. This desire is what companies in this industry must cater to above all else if they are to see anything more than just moderate success.
The two companies I have dealt with both offer their own experiences that are tailored to the types of cars they offer. Last June I went on Gotham Dream Car’s Dream Car Tour in New Jersey, an event where you drive 6 exotics on a 150 mile cruise, switching between cars at checkpoints. It is a solid morning or afternoon event that is not to be forgotten by anyone who partakes. The other company I have been to is Exotics Racing in Las Vegas, NV. They have access to the infield road course at Las Vegas Motor Speedway, and you get to drive the exotic of your choice flat out on a closed track (legally) with a racing instructor in the passenger seat to guide you. Each company has a very different background and business model, despite being in the same industry, which makes it interesting to compare them. Neither of them are flawless in their operation, but in my opinion they are the best of what is currently out there, so when looking at them it is possible to kind of see where an ideal standard for this industry may lie.
Lets begin with Gotham Dream Cars because they have been around longer. In short, the company was started by Noah Lehmann-Haupt, who had made some money elsewhere and bought a Ferrari 360. Around 2004, he decided to rent it out, found a solid niche, and now his company has a fleet of around 20 or so high end and exotic cars for hire. They operate in the NYC area and in Miami during the winter. While they are a traditional rental company at heart, their understanding of their demographic lead them to innovate and create what they call the Dream Car Tour.
As I said above it is a 150 mile cruise where you drive 6 exotics over a few hours. It is how they run the event that makes it so good though. The route is an amazing mix of everything from highways to winding mountain roads in southern NY state. The best part is that you don’t feel held back either because the staff is very good at what they do. They give people a very long leash to play with, so long as they see you are being intelligent and not outright reckless (they will call you out if you are). I clocked over 140mph in the Murcielago on an open stretch of highway though, and nobody wagged a finger because I was not being stupid about it. Also, the scenery we drove through was nothing short of breathtaking, and the roads were simply epic to drive on. It was an unforgettable day for me, and the best part is that, at around $900, it costed less than most of the daily rentals they offer. This brings me to the biggest problem with Gotham’s business model though, the large security deposit.
Like in many industries out there, exotic car rentals are plagued with fine print catches that can ruin things for many potential customers. Yes the Dream Car Tour is priced at $900 on paper, but then you find out that you have to give them a refundable $5000 deposit for possible damages. A very large gamble, even for most of Gotham’s clientele, and it almost ruined the opportunity for me. Now, of course I understand why a deposit is necessary if you are letting people take these cars out on public roads. The folks at Gotham have endless horror stories about all of their cars that have been wrecked by customers. As a consequence, they also have a rock solid insurance setup that protects them against the huge losses caused by totaling a six figure car. This also means that if you crash their Lambo, as far as your insurance company is concerned, you have crashed your own Lambo, and your premiums will react accordingly. So while Gotham is extremely well run, and offers some of the best experiences in the industry, there is a lot more money at risk than the basic prices would suggest. As a result it seems they have limited their market to those who are still above middle class for the most part. It has served them well so far for sure, but if they could find a way to make it more accessible by limiting the other costs and risks (on both the tour and for daily rentals), then they could vastly increase their market.
Exotics Racing is the first American subsidiary of Cascadevents, a popular European racing school, and it is marketed as more of a racing school than a rental company. In reality, while it does have many aspects of a racing school, it is more of an exotic car theme park with the cars acting as the thrill rides. It was started around 2 years ago as yet another attraction in the glamorous Las Vegas, NV. It has seen some serious success though because it offers thrill seekers a legal and safer means to experience their dream cars than just renting one and tearing up the streets. When I was there, in January 2011, they were holding two events per week in Las Vegas, now they are holding four events per week there, so it definitely would seem that their operation has caught on.
Exotics Racing has a fleet of 15-20 exotic cars (some are doubles for volume reasons) for you to choose from. The basic package gives you 5 laps in your chosen car, and you can pay to add more. The experience begins with some basic classroom racing instruction, then a ride along tour of the track so you can get your bearings. Then you are ready to go to you car, usually after a few minutes of waiting. You hop in with your instructor, get situated, and you’re off. Right away, they encourage you to drive the cars hard; flooring it on straights and taking corners faster than most people will be comfortable. The braking zones are marked pretty early, but otherwise you really do get to drive the cars as hard as you like, and the instructors do a fantastic job of directing you through the course. They tell you when to gas, brake, turn in, etc so you wind up getting a feel for racing, and you wind up going much faster through corners than you thought possible at first. They will step in an grab the wheel if need be, but I’ve only seen this happen in videos where someone is basically losing control, I never had such an issue myself, nor did anyone else I met there.
This brings me to the best part of Exotics Racing, the price is the only posted cost. There are no damage deposits, and you just sign an insurance waiver absolving them from responsibility for anyone’s willful negligence. This makes it all much more accessible to more people, and it can be seen in the crowds that are drawn there. To my knowledge, they have also never had a wreck. I think this is because having the instructor riding along lets people know the realistic boundaries of the car (nobody wants to crash, some people just don’t understand basic physics), and the event takes place on a closed course with no random pedestrians around. There is even passing allowed, and the instructor will let a driver know when someone is trying to get by. It is all very well thought out and as far as I know, the safety record has shown it.
Exotic’s Racing’s one real issue, visible from the consumer’s view, lies in how they have structured their pricing for various cars. The really exotic Ferraris and Lambos all cost $300-400 for 5 laps, and the “lower end” cars (Aston Vantage, Audi R8, Porsche 911, and Nissan GTR) all cost $200-250 for 5 laps. The prices are too close for the lower cars to be in demand, because just another 50 bucks will put you in a Ferrari. Now, I think the prices for the higher cars are where they should be, any more than $400 for around 8 minutes of driving, even in an exotic car, is pushing it. So that leaves them to lower the prices of the lower end cars to around $100-150 where they would function more as an on-site add on after someone has just had a blast in a Lambo. It would work well in conjunction with their “Ride Along” lap that costs $100 and you ride as a passenger with a professional racing driver. When I was done with my two exotics that day, I sprang for the Ride Along because I was pumped up, but had 5 laps in the Porsche Carrera S been a similar price, I surely would have gone for that hands down. They need to use the addictive nature of racing to their advantage more. This is especially so because many of the lower end cars do not see anywhere near the action as the full exotics do under the current structure; much of the time the R8 is just sitting there and that is a waste. It also makes sense because the lower end cars cost about 1/3-1/2 as much as the Ferraris and Lambos that are offered, so the prices should reflect that.
These two companies, Gotham Dream Cars and Exotics Racing, are both leaders in the same industry, but are very different in what they are. In many ways their strengths and weaknesses are complimentary to one another. Gotham has its structure down to a tee, but is still too high end for most of the market. Exotics racing is far more accessible to the masses, and has become a fast hit in a fiercely competitive climate, but it’s business structure needs some work to maximize the appeal and profitability of all they have to offer. Both companies continue to excite their followers by adding the newest cars to their lineups. Gotham recently acquired a Ferrari California and a Mercedes SLS AMG, and Exotics Racing has orders in for both the Mclaren MP4-12C and the Lambo Aventador. All of this is very exciting for us car enthusiasts because just knowing that we are able to experience such cars, even for just a few minutes, is nothing short of a dream come true. There is still a lot to be done for this industry though, and I will share my thoughts on that in Part 2 of this article.