Introduction
Welcome to another update on the car service business in LA. If you’ve ever wondered what it’s like to run a car service in Los Angeles, you’re in the right place. So I’ve been running a car service in LA for about 4 years. Technically, it’s been 3 and a half because the first year, I only had four months out of the year. Over these three years, I’ve gone from one car to three. The growth hasn’t been great, but it’s to minimize risk. Two of my cars have four years left on the loans, and one is a recent purchase with high rates.
Join me as I unpack the lessons learned, the financials, and the day-to-day realities of managing a car service in one of the busiest cities in the world. Let’s get into the details of how I’ve managed my fleet and what the future holds for this endeavor.
Initial Strategy and Adjustments
I originally didn’t want to commit to anything too crazy. The idea was to only offer Teslas or electric vehicles. However, with more Teslas being rented on the platform, the margins got so small that they barely covered the car payments. Insurance and maintenance costs are almost at a loss. Last year, I broke even with the two cars. After discussing with a fellow car service LA host in another area who has a complete fleet, triple my number. It seemed like a good idea to buy a hybrid hatchback that was also all-wheel drive like my other cars. This car is cheaper than a Tesla and has good gas mileage. A good gas mileage is important as I live in Los Angeles.
Financial Overview and Current Fleet for car service in LA
My car payment for the new hybrid hatchback is around $550 monthly, and insurance is $79. So, I’m looking at about $650 a month, including maintenance. In the first few months, it’s covering its monthly payment and a little bit more. It’s more profitable than the Teslas.
Business Review and Reflections
Just like in the previous blog, I’m going to share with you guys the nitty and gritty of the inner workings of my business and how it’s going. I will talk about everything that’s happened so far. we will start from the very beginning up until now, including whether this business is worth continuing. Also, what my future plans are.
Yearly Breakdown and Profitability
Let’s start with the first year, 2020, which was a bad year for the economy but a decent start for my CAR SERVICE LA journey. I had one car listed for about 4 months and made a gross profit of $3,975. After all expenses, the profit was slightly over $250, but it made its car payments. The following year, I had a full year on CAR SERVICE LA with the Tesla Model Y. It was listed for the entire year. Four months before the end of the year, I purchased a Tesla Model 3. It was to test whether it could match the Model Y’s earnings, which it exceeded. The Model 3 produced about $700 in profit after all expenditures. The Model Y made more than $4,000 after all expenses.
Future Projections and Considerations
I could have bought six or seven more cars, but then my risk would be much higher. If I didn’t make those payments for a few months, I’d be underwater financially. That’s why I started with one car and went to two in my car service in LA.
Next, let’s talk about the third year, where I had both cars all year long on the platform. This year was interesting because it was the first year I had both cars on the platform all year long. I refinanced Model Y, lowering my monthly payment by about $180. However, it extended my payment period by almost 24 months. However, it allowed the cars to be profitable. Unfortunately, the Model 3 wasn’t profitable this year; it lost over $1,000 due to registration issues and a lack of bookings for 7 out of the 12 months.
In contrast, the Model Y compensated for these losses by bringing in a net of almost $5K. As of this year, including all expenses, I netted around $6,000. It was not a huge sum, but I also had to manage additional costs like new tires and a down payment for another car.
Conclusion
Reflecting on the past few years, my journey through the car service in LA has been filled with valuable lessons, modest growth, and strategic decisions. Starting with a single vehicle and cautiously expanding to three, I’ve aimed to balance risk with potential rewards. The shift from exclusively using Teslas to incorporating a hybrid hatchback was a significant turn, addressing the challenges of slim margins and high operational costs.
Despite the economic hurdles and the intensive nature of this business, the experience has been enriching. Each year has brought its own set of challenges and successes. From managing finances and optimizing fleet performance to navigating the competitive landscape of Los Angeles.
This company is more than simply automobiles; it’s about the people I meet, the relationships I make, and the service I offer. Whether I sell or continue to expand. This enterprise has taught me about
- Perseverance
- Adaptability
- The value of making smart decisions
Thank you for joining me on this ride. I hope sharing my story helps illuminate the complexities and rewards of running a car service in LA. As I ponder the road ahead. I look forward to either new adventures or a new chapter in this ongoing journey.