Driving force behind club steers it to profit

Yorkshire-born City Car Club, which has been trading for 10 years, promises to alleviate the costs and hassles associated with owning a car, such as insurance, servicing, MOT, tax and parking permits, by providing a fleet of cars parked in designated bays that can be booked when required.

The company was originally founded in Huddersfield, but now has its headquarters in Leeds.

With a turnover of £3.9m in 2011, City Car Club, which has 24,000 members representing a 25 per cent growth on the previous year, has yet to make a profit.

But James Finlayson, managing director, is confident this will change in 2012.

City Car Club, which has a fleet size of nearly 600 cars and small vans in total, has Yorkshire operations in Leeds, York and Huddersfield. It targets both the individual consumer and the business community.

London, Edinburgh, Manchester, Brighton and Birmingham are among the other cities in which it operates.

Mr Finlayson said: “Turnover is expected to be £5m this year. We expect a small amount of profit but considering we lost £500,000 in 2011 it’s a big change for the business.

“The reason we’ve not been possible until now is that we’ve been expanding so fast and expanding our fleet very fast, which is capital intensive.

“And, the nature of our business is that we can’t get members in advance of putting cars in place.”

He added: “Part of the reason we expect to be profitable this year is that we have a slight change in strategy for 2012, to reduce the fleet growth. We’ve not got any other plans to go into any new cities in the short term. We’ll be building up the density of cars in the existing cities in which we operate.”

For 2014, Mr Finlayson forecasts City Car Club will have 40,000 members with a turnover of £6.5m and 10 per cent net profits.

To benefit from City Car Club, an annual membership fee of £60 is required. When members wish to use a car they can book online and use their membership card to activate the closest car to them.

They pay per hour, but can book for as little as half an hour, and are charged fuel costs.

Mr Finlayson said: “City Car Club is an environmental scheme. When people join they get rid of a car or don’t buy a car. That means fewer cars on the road so it’s better for the environment. Members drive less than they would if they own a car too.”

As a part of a trial this year, the company plans to introduce pure electric vehicles into its fleet, which already includes hybrid vehicles.

Mr Finlayson said: “Electric cars have a purpose in city centres for people doing shorter journeys.”

And with the average length of a journey by City Car Club members at five hours or 20 miles, the electric car is “perfect” for the business, said Mr Finlayson.

Mr Finlayson got involved with City Car Club in October 2006, when he invested £100,000 in the company as a business angel.

He had recently sold his company Greenscene, a £4m turnover company providing hanging baskets and window boxes to businesses and public sector organisations.

Mr Finlayson said: “There were less than 2,000 members at that time, now there’s 24,000.

“Within a short period of time, I decided the whole company needed restructuring. I took the helm at that point. The former managing director moved on.

“I raised a lot of additional money at that point, from the existing shareholders and myself. I had to go to the shareholders and say, either the business goes down the pan or we put money into it?”

There have been a few funding rounds since Mr Finlayson got involved, himself having invested £1.5m of his own cash into the business, as well as providing an additional £500,000 director’s loan.

He now owns approximately a third of the business, with the majority of the remaining ownership divided among business angels and high net worth individuals.

Mr Finlayson, who expects the company to be sold in a few years’ time, said: “Interest in car clubs has grown massively but there’s still massive potential. It won’t be a flash in the pan sector, it will be a mainstream sector in cities across the world.”

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