Rent and Repair Cost Estimation for Formula Student Car

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Report 17: Market Analysis
Rent and Repairs
Tom Sellen
Supervisors: Dr G Owen, Dr K Robinson
Pages: 27
Word Count: 5100
Executive Summary
This report looks at two areas encompassed by the business plan: renting the product as a unit or a package, and the associated repairs types and costs for either individuals or enterprises buying or renting the TBR’09 car. These areas are examined in depth by way of customer identification, customer needs and benefits, market size and growth, financial considerations, and existing competition so that the following questions can be answered: •Who will rent or repair the cars?

What are the cost and benefits of renting the car?
What degree of repairs will be needed and how much will this cost? •How much will these services cost the company, and how much profit can be gained from them? It was found that in order to consider these business aspects, a specific factory department would need to be set up with 7 employees dedicated to maintaining the TBR racecars. These staff will be required to travel to weekend events to offer the maintenance and repairs services to customers competing or who live far away from the centre of operations. Servicing will be made available to all customer types at varied rates depending on who they are and how they use the car. Servicing to individuals could generate $1,308,000 in sales, and servicing to organisations could generate $313,120. Parts could generate $486,350 in sales for 1000 cars.

Various performance-enhancing parts upgrades will be made available to all customers; these range from $1,000 to $2,600. Special ‘Arrive and Drive’ package types will be made available to individual customer: they can either rent one of 5 cars stored by TBR for a specific one day event at a cost of $600 plus deposits of $4000, or use their own car and have it stored, transported and maintained optionally by the company for a maximum of $13,680 per year. Renting of cars will be made available as a service to organisations, such as driver day experiences or performance racing schools, at a cost of $8000 per car. Associated repairs will be covered as an optional extra to the rental package at a cost of $8,240. Contents

Executive Summary 2
Contents 3
List of tables 4
Nomenclature 4
1. Introduction 5
2. Market Analysis1. Description of customers6
2. Customer needs and benefits6
3. Market segments, size and growth7
4. Competition – renting the car9
5. Competition – repairing the car11
6. Economic, social and political factors11
7. Pricing structure and background13
3. Sales1. Pricing and cost15
2. Advertising and promotions20
4. ConclusionsOverview21
Appendix 23
References 26
Acknowledgements 27

List of tables

Table1Upgrade package options14
2Estimated cost for prototype production of the TBR’09 car15 3Potential costs to a customer for parts failing over one year17 4Breakdown of servicing charges17
5Rental package costs19
6Pricing of three different packages available20
Chart1TBR'09 mass production costs breakdown16

TBR - Team Bath Racing (company producing the ‘TBR’09’ single seat race car) OEM – Original Equipment Manufacturer
ECU – Engine Control Unit
LSD – Limited Slip Differential
BRSCC – British Racing and Sports Car Club
US Autocross markets:
MCSCC - Midwestern Council of Sports Car Clubs
NASA - National Auto Sport Association
SCCA - Sports Car Club of America
1. Introduction
1.1 The theoretical mass produced formula student car enterprise targets the non-professional autocross weekend racer. The business is designed to look at all aspects of gaining profit from setting up such an outfit with one of the areas of focus being after-sales. 1.2 Due to the nature of the way the product is to be marketed and sold, there is a natural variation in...
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