By Alex Bradford
MBA candidate, Harvard Business School

In the last couple of years, fractional car share clubs (also referred to as “exotic car clubs”) have become increasingly popular, as they provide car enthusiasts with a compelling alternative to renting or owning exotic cars.

In the last year, five clubs have formed – bringing the total number of exotic car share clubs in the US to 8. Clubs usually use a pay-per-use model or a pre-paid model, and a couple clubs have recently decided to offer members equity in cars. Some clubs provide members fractional usage of or ownership in one cars, whereas other clubs provide members fractional usage of a fleet of exotic cars.

Why join a fractional car club?

For exotic car enthusiasts, when does it make sense to consider joining a fractional car club? Members join car clubs for a number of reasons. Most members join exotic car clubs for one or more of the reasons below.

Someone who:

• would rather have access to a fleet of exotic cars than owning one;
• doesn’t want to pay for an exotic car;
• doesn’t want to lose money on depreciation;
• doesn’t want to be bothered with maintenance and repairs;
• doesn’t want to pay extremely high rental prices;
• travels a lot and doesn’t want to see their car sit in a garage;
• doesn’t have time to use an exotic car for most of the year;
• wants to be a part of an exotic car club culture with added concierge services, programs, events, and other offerings.

Renting Exotic Cars vs. Joining a Fractional Exotic Car Club

Renting an exotic car is usually impractical, since exotic car rental companies charge extremely high rental rates. For example, a 2006 Ferrari F430 Spider is rented for $3,000 per day or $18,000 per week, on average. Compare those prices to the average prices of $300-$450 per day to use a Ferrari as a member of a fractional car club. Also, exotic car rental companies usually have limited options, that are often booked during busy periods, and so exotics aren’t always available with rental companies as they are with clubs.

Owning an Exotic Car vs. Joining a Fractional Exotic Car Club

Owning an exotic car is expensive. Upfront purchase prices of exotics are usually quite high, ranging anywhere from $130,000 to $450,000. Exotic cars depreciate at a high rate – typically losing 5-15% in value per year. Owning an exotic also entails additional costs, including standard maintenance, luxury taxes, upkeep, repairs, storage, licensing and tag fees, insurance, and the opportunity cost of capital for the initial down payment.

From a discounted cash flow perspective, the net present value of owning an exotic car can far outweigh the net present value of joining a club. For exotic enthusiasts who can’t justify these costs, joining an exotic car club is a more viable option.

Profiles of Leading Exotic Car Clubs

While all 8 of the leading US car clubs offer members access to some of the most expensive and exotic cars ever produced, each club has a unique philosophy and business model. Prices per day, for instance, range from $175 (Classic Car Club Manhattan) to $950 (The Otto Club in Boston) – depending on the plan and types of cars used.

Although car clubs currently have monopolies in their localities, most clubs plan to scale up nationally soon. Curvy Road already offers its fractional ownership services anywhere in the US. With increasing competition, potential members will need to decide between competing car clubs within a specific city, and they should evaluate the differences in costs and benefits of each club’s product and service offerings.

Helium Report has interviewed each of the major 8 exotic car clubs and gathered facts and figures that will help consumers make educated decisions about joining a club.

Click here to read our complete coverage on Fractional Car Clubs.