My background is in personal finance, wealth management and investing. So naturally, when I discovered Turo I started crunching the numbers. I even discounted my projected cash flows back to time zero like a good financial analyst.
You might be wondering if the financials work for car sharing on Turo? It’s complicated. But it doesn’t need to be.
To be fully transparent, a pivot is in order. What’s a pivot?
A ‘pivot’ is an overused term I’m borrowing from my Silicon Valley friends. Most people describe it as changing strategy or direction. I prefer ‘The Friends definition’ (YouTube – 2 min clip).
Previously I viewed Turo through the lens of a profitable side business. I now believe that’s only the case for a small percentage of hosts. I’ll explain below.
My general recommendation is to view Turo as an opportunity to reduce the cost of vehicle ownership.
A few things first. ‘General recommendation’ meaning I don’t know your specific situation. If you’d like to discuss specifics feel free to schedule a free call (schedule here).
The majority of us should not engage in Turo car sharing for profits. It’s easy to adopt this idyllic vision. The thought of starting with one car, acquiring another, then another and soon you have a hugely profitable fleet…
While not as impressive I believe it makes more sense to list the vehicle(s) that you already own or require on the Turo platform in order to offset ownership costs.
In other words, list your car on Turo during the week since you only take 1 or 2 roadtrips a month. Or list the vehicle on the weekend since you live in the city and don’t use it then.
The main rationale underpinning my recommendation comes down to the financials. I believe most car sharing hosts don’t properly consider depreciation and deferred costs in their accounting. Turo hosts generate $10k in revenue with $20k in losses.
To see depreciation in action visit UsedFirst. I plugged in my Ford Mustang.
Deferred costs refer to amortizing or distributing the costs over time for replacing brakes, tires, oil, air and engine filters, etc. over the ownership period.
Again, it’s my feeling that most Turo car sharing hosts aren’t properly considering depreciation and deferred maintenance costs.
American Automobile Association (AAA) cites the average cost per year of vehicle ownership is $8,849. That doesn’t even include parking (source).
Consider car sharing to offset the costs of car ownership. Depreciation, insurance, financing, taxes & fees, registration, fuel, maintenance, repairs, tolls, tickets, and parking are no small deal.
Having a vehicle is convenient. Why not minimize your ownership costs?