Tuesday, June 22News That Matters

How to Start a Motorcycle Rental Business: Case Study

Personal transport is something that most of us need but what if we can’t afford to buy our own wheels? Yes, we can see motorcycles everywhere but still, not everyone can afford especially during this time of the pandemic.

When I returned home to Negros Occidental last 2017, I had two options, either to start a car repair business or a motorcycle rental business. I had plans for both but unfortunately, nothing was started because of the sudden change of plan that brought me back here in Batangas.

A year later, I pursued the motorcycle business even though I am not managing it personally and so far it is going better and better, and for more than two years now, The business that started with 3 motorcycles is now a fleet of 15. I am going to give you the outlook below and how can you start your own and make a profit.

Motorcycle Types and Models

All types of motorcycles can be rented out but as a beginner, I suggest you start with high-end models. Based on my 2 years of experience, highly-rentable models are Yamaha Mio, Honda Click, and Yamaha Aerox, and Nmax. For low-end, you can also have Suzuki Smash, Honda Wave, and Honda Beat.

Initial Capital Needed

Any amount north of P50,000 is a good start but if you have a limited budget, you can start with P50k. This amount is enough as a downpayment to get at least three brand new motorcycles (1 Nmax, 1 Mio, and 1 Click). I suggest you get the high-end in order to attract customers.

The fund allocation should look like this:

Downpayment

  • Honda Click = P5,000
  • Yamaha Mio Soul = P5,000
  • Yamaha Nmax = P6,000

Subtotal = P16,000

  • Insurance (all in covered) = P9,000 (P3,000 per motorcycle)
  • Business permit = P8,000

Subtotal = P33,000

This business can be operated directly from your home if you are living in an urban area and has a large garage or compound that can accommodate all three or more motorcycles. If you don’t have space and need a place to display the motorcycles along main roads, expect to pay around P5k to P10k a month. If not and can be done from home then you can add 1 more motorcycle.

How to Market Your Business

Motorcycle rental can be done anywhere in the Philippines especially in places of tourist attractions. In major cities like here in Luzon, this business has not been tested because people are afraid that their motorcycle could be stolen but we will discuss this below later. In my case, I set-up this business in a 2nd class city that is not really a tourist place but still we are having a considerable amount of success.

Marketing a motorcycle rental business is less complicated than you think. This business is different from local stores where people walk in and buy. Since most of your target customers are from other places, promotion and marketing should be done online. Social media like Facebook is a big gamechanger. In my case, since I am a web developer, I created a website. When the website went online, 60% of my customers are coming from the website and 30% are coming from Facebook. Only 10% are referred locally. If you need a website for your business (regardless of the business), contact me.

How to Manage Your Motorcycle Rental Business

Here’s a typical day in my home office. A customer calls and books a schedule. When the schedule came, he pays for the whole day. My attendant will take a photocopy of his driver’s license and a full photo of him with the motorcycle. This is important and you should rent your vehicle to someone who is not interested to be photographed. The motorcycle will always have 1 liter of fuel. It’s up to the customer to fill the tank depending on how far he will travel. Most of the time, customers return the motorcycle with lots of fuel and this is another income. You have to drain the tan always and put only 1 liter for the next customer and keep the excess. The customer needs to sign a paper with terms and conditions before you let him drive the bike away.

Rates:

For 2021, this is our current rates in Negros Occidental for brand new motorcycles (2 years old and below). Per 12 hours of use (7 am to 7 pm)

  • Mio Soul / Honda Click – P600
  • Nmax / Aerox – P700
  • Suzuki Smash / Honda Wave – P450

Revenue (for one motorcycle at 20 days rental)

Motorcycles are not rented every day so we give an estimate of 20-day rental.

  • Mio Soul / Honda Click – P600 x 20 days = P12,000
  • Nmax / Aerox – P700 x 20 days = P14,000
  • Suzuki Smash / Honda Wave – P450 x 20 days = 9,000

Expenses (monthly amortization for 2 years)

  • Mio Soul / Honda Click – P4,500
  • Nmax / Aerox – P700 x 20 days = P6,000
  • Suzuki Smash / Honda Wave – 3,500

Gross profit (per bike)

  • Mio Soul / Honda Click – P7,500
  • Nmax / Aerox = P,8000
  • Suzuki Smash / Honda Wave – P5,500

Other expenses

  • Oil and maintenance = P150/motorcycle
  • Office supplies (papers) = P30

Net profit = 20,720 (for 3 motorcycles of different models)

You can increase the earnings if you have a lot of customers and the motorcycles are rented at least 25 days a month.

Additional Information

There are people who are looking for cheaper rent so it is also advisable to have low-cost models like Rusi or used Honda, Yamaha, and Suzuki. These motorcycles can be purchased between P20k to P25k and can be rented from P250 to P350 a day.

Conclusion:

The motorcycle rental business is one of the most profitable businesses in the Philippines and you can do it even in your home. Customers will just go to your house and rent motorcycles. There is no special permit from LTFRB, just make sure your motorcycle is complete with papers including an all-in-one insurance coverage.

The fear of thieves is not a matter of concern as long as you take photos of your customers. This is important because sometimes, other people use fake driver’s licenses.

The potential earnings are 4 times higher than your monthly amortization and you can multiply the number of your vehicles in no timer.

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