The concept of fractional ownership is definitely not limited to holiday home ownership. In recent years, the popularity of fractional car clubs and fractional yacht ownership have been growing, for the same reasons that have made fractional ownership of vacation homes so popular - convenience, access to a larger selection of assets, and the financial benefits of sharing capital and maintenance expenditure.

There are eight or so exotic car clubs in the United States, some of which offer an equity share and some of which have a charge per use. As with real estate, there are options for access to a single car or a range of luxury cars.

There are some clear benefits of ownership in a car share club:

• gain the use of many exotic cars rather than owning just one or two
• reduction of capital expenditure
• depending on useage patterns, potential to save money over rentals
• avoidance of maintenance headaches
• avoidance of depreciation
• additional benefits e.g. special events, other offerings, concierge services etc.

To purchase an exotic car may cost in excess of $500 000, though of course the definition of ‘exotic’ encompasses a wide range of marques and vintages. Depending on the age of the vehicle, depreciation may range from very high to zero - many classic exotic cars have appreciated in value over the years, though classic car ownership is not often recommended as an investment strategy! The costs add up - maintenance, repairs, taxes, insurance, storage and everything else required to keep a luxury vehicle on the road. There is also an opportunity cost for the money used to purchase the car.

Luxury car rental is an option which, depending on the desired use pattern, may be much cheaper than outright ownership or membership in a car share club. However, it doesn’t take many rental days to equal or exceed the costs of car share membership, and the range of cars available may be much greater. The cost per use day for members of exotic car share clubs is generally well under $1000, and sometimes under $200.

Obviously location is important for a car share club, and residents of the United States certainly have an advantage over the rest of the world in this sense, particularly those people living in the largest cities. As the sector expands, geographic location will become of lesser importance.

As with the other fractional business models out there, some of the important aspects to consider are:

• Ratio of members to cars
• Use agreements and booking rules
• Time per use - minimum and maximim
• Daily or nightly fees
• Equity memberships vs non-equity memberships
• Stability of the club
• Satisfaction of existing members

OTHER ARTICLES THAT MAY BE OF INTEREST

• Timeshare vs fractionals vs PRCs
• Fractional jet ownership
• Destination clubs - an overview
• LUSSO member survey
• An interview with The Hideaways Club MD