The $100 Car

Recent (troubles) disasters to my Mazda made me wonder if there is more of a hassle/worry free way of owning car. While I haven’t crunched the numbers to see if this is feasible at all, could you possibly have an all-you-can-drive car for $100/month?

I’m not referring to a regular car you rent at Enterprise (which I happen to have right now) but a car specifically designed and manufactured to be rented for $100/month.

How would this work?

- You pay a $100/month, no contracts (unlike leases).
- If the car breaks down, you bring it to the dealer, and they give you another identical car, so that you can keep driving.
- Insurance is included in that $100, so if you damage/total your car, you pay at most the $500 deductible (liability might have to be charged separately according to driving records).
- You exchange your car at the dealership every 10,000 mile or 6 months so that they can service it (you don’t really need to change the oil every 3000 mile).

What does this mean for you?

- You completely minimize your risk of owning a car: the maximum you would ever have to pay would be the $500 deductible for any damage you cause to the car (necessary so that people won’t drive too recklessly).
- $100/month is really cheap for owning a car (especially if insurance is included). In seven years, when most cars depreciate entirely, you’ll be spending $7400.
- In exchange for the low cost, you completely give up any ability to customize the car (with factory or after-market options). You’ll also be driving the same model car as many other people on the road. If you are the kind of person that like to distinguish yourself with the car you drive, this is not for you.

What does this mean for the car company?

- Since the car is going to be returned every 10,000 mile or so, you can design with regular maintenance in place. This means using less reliable but easily replaceable parts.
- Since only one car model is going to be offered, it eliminates the complexity in development.
- The radical uniqueness of this business is enough for everyone to find out about it through word-of-mouth (very little marketing required).
- Very steady income stream with a subscription model.

If this idea catches on, several different models could be offered at different price points to cover different market needs. However, caution should be taken against excessive market segmentation and offering too many options (defeating the competitive advantage of this system). Simplicity is the key to this operation.

What would the car include?

- Basic features with no frills (to keep cost down).
- Small “cute” design rather than a sporty look.
- Comes in basic colors. Nothing too disagreeable as the user may not have his/her choice when he/she switches the car.
- No visible odometer. This is important since it never feels good to step out of a 20k car and get onto an 80k one. All it needs is a trip meter that keeps track of when the next maintenance is (obviously a hidden odometer is necessary for maintenance reasons).
- Possibly a two-seater (if that’s what it takes to keep cost down).
- Customizable options dock. This actually may become a lucrative business model. Basically, in the car, your radio is a detachable option that you can either rent with the car, or purchase yourself (for expanded features such as Bluetooth and iPod connectivity). Once people buy their radio units, they would feel compelled to stay with the program since their radio is useless on other cars.

Of course all of this is hypothetical and of questionable feasibility at $100. There is some price point where the model works, but that may be too high to make it attractive at all. Furthermore, you can’t start this on a small scale, making it an extremely risky venture to start. Nevertheless, I think it’s an interesting alternative to the high marketing high cost method of selling over engineered cars of today.

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2 Comments

2 Responses to “The $100 Car”

  1. # Anonymous Anonymous

    Sounds great to me. keep me posted.  

  2. # Anonymous Anonymous

    I would do it in a heartbeat! I wish!  

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ZA is a blog about ideas: cool ideas, existent ideas, pointless ideas, crazy ideas, my ideas, your ideas, interesting ideas, funny ideas, product ideas, meaningless ideas, great ideas, shrimp ideas, etc. It’s here for people to rant, rave, share, and satisfy. Any idea here (if original) is free for you to use (I take no responsibility) as long as you credit the originator of the idea (be honest). Feel free to send me any ideas, but a blog is considered to be public disclosure so you will lose all rights to patent it. Enjoy.

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