The goal of this guide is to shed light on purchasing a car for Turo.
Taking your first step in car sharing can be overwhelming. But it doesn’t have to be.
Bear in mind, this is my perspective. This is one of those things where if you ask 10 Turo hosts how they purchase vehicles they’ll tell you 10 different ways.
Naturally I need to assume a few things before we get to the good stuff.
For example, I assume you’re new to car sharing. I assume you’ll use Turo as your car sharing platform. I assume you don’t have a million dollars to spend. Or a million hours of time.
Lastly, and maybe most importantly, we need to get philosophical for a minute.
Why are you embarking on a car share hosting journey? Is it to subsidize the cost of car ownership? Is it a side-gig with income the name of the game?
Remember your response. We’ll come back to this. For now, let’s shift into first gear.
My framework for purchasing a Turo car sharing vehicle involves three stages:
- Market research
- Vehicle analysis
In real estate it’s location, location, location. In car sharing, location is still important.
If you live in Salt Lake City, one could expect high demand for SUV’s. Driving up Cottonwood Canyon for fresh pow in a snow storm necessitates a certain type of vehicle.
If you’re in San Francisco you might get groups of friends interested in wine tasting in Napa.
Cruising to the Keys from Miami? Hope it’s a convertible!
Think of your local market. What do you, your friends and family do for fun? If tourism is big, what do they do?
Review the Turo marketplace for your city. Pick a date far enough into the future to accurately view most listings. What’s popular? What’s lacking?
The Turo blog occasionally publishes good market data. For example, as of mid-year 2018 Toyota, Ford and Chevy were the most booked ‘makes’.
‘Compact’ and ‘SUV/Pickup’ were the top 2 vehicle types.
Keep in mind this data represents the entire platform.
Resource: Market Guides (select cities) – Turo
Keep in mind, the general rule of thumb is the lower your car’s daily rate, the more turnover and work required.
For example, a $40 per day Toyota Yaris might require 15 reservations per month for you to breakeven. That’s a significant amount of guest check ins and outs, interior and exterior cleaning, reimbursements, possible claims, etc.
A Porsche 911 at $180 per day may require 10 reservations per month for breakeven. Yes, it’s a more expensive ride, but it’s less turnover.
If you haven’t yet, now is a great time to ponder how much time you want to dedicate to car share hosting. This will certainly influence your vehicle choice.
Once you’ve thought about your market we can get more specific. Let’s talk cars.
One of my favorite tools is Turo’s Carculator.
Based on your market research, plug in a few vehicles you have in mind for your specific area. Be sure to explore the different trims and styles. It makes a difference.
Ignore the ‘delivery’ option for now.
Take note of the model’s earnings power while toggling different years and trim/style.
Are you in a city with Turo Go remote handoff? Make sure your vehicle is eligible (2012 and newer, specific makes, etc.).
Top Earning Cars – Turo
Once you’ve identified a possible vehicle it’s time to review the financials.
Note: I can write an entirely separate guide just for this. I’m not an accountant but I have a background in finance and I’m a spreadsheet geek. Contact me and we can review your financials.
The spreadsheet you create should include:
Income & Cash Flow In
Turo’s Carculator estimates are sufficient.
Expenses & Cash Flow Out
Insurance – start with a quote from your current auto insurance company
Maintenance – research your vehicle’s maintenance schedule and ballpark costs like tires, oil change, air filter, etc. I like using Your Mechanic.
Other expenses – Registration, software like Streetsmarts, car wash, parking, Turo Go, etc.
Car acquisition costs – one time (title, registration, sales tax, etc.)
A few notes:
- It’s good practice to incorporate time value of money. This means a dollar today is worth more than a dollar tomorrow. Google Sheets NPV function.
- In regards to maintenance, I found it best to forecast miles, then break down maintenance costs per mile.
- Assume you’ll sell the vehicle with 100,000 miles (or whatever). This is a cash inflow in the last period of your model. You might be asking what’s the vehicle worth? Be sure to incorporate vehicle depreciation. If you’re reviewing a 2018 BMW 3-Series, what’s a 2015 BMW 3-series worth today? Ballpark it. Be conservative. Kelly Blue Book it.
- Estimate total car purchase price (delivery, paperwork, vehicle, etc.).
After countless revisions you’ve found a vehicle. Now what?
It’s time to make this happen. It’s time to purchase your vehicle.
Purchasing a car for Turo
There’s countless ways to purchase a vehicle:
- New and Used Car dealerships
- Third Party/Private Sellers (Craigslist, eBay, Local newspaper, etc.)
- Online Marketplaces (Carvana, Tred, Shift, Vroom. etc.)
- Dealer Auctions (Manheim)
Get the best price. And don’t get ripped off. If you’re not mechanically-inclined, have someone review the car prior to purchasing.
My general rules:
- Don’t buy a high mileage car (you’re asking for problems).
- Be realistic with maintenance costs (American and Japanese cars are less expensive to maintain than Germans, etc.).
- Don’t get the most powerful trim, unless it commands a meaningfully higher premium.
- Buy from a reputable source.
I like Carvana. They deliver the car to you. There’s a grace period where you can test it out. They perform a comprehensive check of the vehicle. Warranty coverage is available. They have competitive, no haggle pricing.
Some serious thought should go into purchasing a Turo car. I break down the process into three stages:
- Market research
- Vehicle analysis
My comments above hit on just the tip of the iceberg. Over time I plan to get more detailed.
In the meantime, please don’t hesitate to contact me. I’m happy to help.
Good luck with your car share hosting journey!