By Steve Kaufman
Photos by Andrea Hutchinson
Slide behind the wheel of a Lamborghini Huracán or a Rolls-Royce Phantom. Derby City Dream Cars provides the rental. You provide the fun.
Founder Anthony Miller and Jason Schmidt, whose title is co-founder, understand the allure of fine automobiles.
“As a kid, I remember my nose pressed up against the window of our minivan as the expensive cars drove by,” said Schmidt.
“I could identify all the luxury cars at night, just by their tail lights,” said Miller.
Both went on to other careers, but Miller had a dream: “Why not make the most luxurious automobiles available on a short-term rental basis to people who were interested?”
Easier said than done, however. Miller thought it was a great idea, but the banks, lending institutions, investment groups and insurers? Not so much. “They thought the liability far outweighed any benefits,” he said. Liability for the millions of dollars in depreciating inventory. Liability for the health and welfare of putting these sophisticated cars into the hands of inexperienced drivers. Liability for anyone driving or standing in their way.
“Besides,” he said, “they all wondered whether there was really a profitable market in Louisville for this kind of venture.” Miller was confident there was. “It’s an image thing,” he said. “To drive a Ferrari down Bardstown Road can be a big thing. Everyone waves, takes pictures and videos. Any exotic, flashy car – Lamborghini, Ferrari, Maserati – is going to get eyes.”
He finally appealed to a group of investors to get the half-million-to-a-million-dollar seed money he needed.
Schmidt had already been providing cars to Louisville for a few years as co-owner of CFI Auto Leasing & Sales out of the physical locations at Hikes Lane Auto Sales and Sellersburg Auto Sales.
The Dream Chasers
In April, the gears meshed and the two entrepreneurs took the auto leasing game to a whole new stratosphere when they started Derby City Dream Cars. You can get a Toyota Camry or Nissan Maxima pretty much anywhere. But where else can you get the keys to a Ferrari 458, for the day, the weekend, the week – or even longer?
“Our business model is based on the simple premise of tapping into people’s expensive desires,” Schmidt explained. “Everybody has the urge for something luxurious, whether a Louis Vuitton handbag or an Armani suit. They didn’t need to spend $2,000-3,000 on a handbag, but they wanted it. The same for a luxury car, only ten-fold.
“Certainly not everybody wants to spend $360,000 for a Lamborghini, whether he or she can afford it or not,” he continued. “But that same person would probably not mind driving one of these cars for a little bit and simply paying for the use of it. We’ve tried to make it very simple. Just drop in, sign a couple of pieces of paper, provide us with what we need, take the keys and you’re gone.”
The business started at the end of winter with an initial trickle of customers. “But once the cold snapped and the sun broke,” said Schmidt, “we’ve been booked out almost 100 percent.”
Especially during Derby, one would think. Surprisingly not, he said. “That was our thought, to open in time for Derby, when all the high-rollers were in town. But actually on Derby weekend, people are out late and doing a lot of drinking in large groups, and they’re really more interested in some kind of chauffeur service. They don’t want to be bothered driving around town, back and forth to parties, restaurants, Churchill Downs, and then to wherever they’re staying.
“We thought we’d crush it, and we didn’t. But the Monday after Derby, we started renting cars like crazy and, by the following week, we were almost completely sold out.”
The Cars are There
“Sold out” is not always what merchants want to be. Not these merchants, certainly. Schmidt likes to keep six or eight cars on the lot at any one time. But they’re also associated with a twin business – Music City Dream Cars in Nashville – so they bounce cars back and forth. Miller and Schmidt have bought cars to add to their fleet, and they also have a profit-sharing membership arrangement with a local group of like-minded luxury car owners who trust Derby City with their dream cars.
“Their travel schedules are so hectic, and they’re out of town a lot,” Schmidt said. “It can be expensive to simply park a bunch of expensive cars for a week at a time. So they let us use their cars, and we pay them for the mileage we use.”
The idea is to keep cream-of-the-crop sedans and sports cars. That’s how credibility is built. “So right now, we have Ferraris, Lamborghinis, Bentleys,” Schmidt said, “a varied selection of styles, colors and sizes, appealing to everybody’s tastes. Enjoy them for what they are – they are a novelty. Fun to drive, fun to be around.”
The Six-Figure Price Tags
Two of Miller’s favorite cars in inventory are a couple of four-door sedans. One is the Rolls-Royce Phantom, which he calls “the mother ship of vehicles,” and some have pronounced “the most luxurious car ever.”
“The Queen of England is driven around in one of these cars,” said Miller.
The other is the 523-horsepower, 193-mile-per-hour Maserati Quattroporte GTS with a twin-turbo Ferrari engine, a matchup of Italian automobile design and engineering excellence. “It’s the original race-bred luxury sedan,” according to Miller.
“Both cars are well into six figures,” he said. “The Phantom can exceed $400,000. It’s the most expensive sedan you can buy, which makes it ideal for a more-affordable short-term rental.”
Schmidt said the Lamborghini Huracán, without question, has been their most popular car to rent. “It’s so flamboyant, it’s cartoonish,” he said. “Wherever you go, people are staring.”
But, like most of their cars, the Huracán starts at $200,000 and zooms higher from there. Is it risky to have so much expensive inventory out on loan? No question. A lot can happen to a $300,000 car over a weekend. Besides, as Schmidt said, these cars are not all easy to manage, especially at high speeds, if you have no experience driving them. So they’ve built in some rigorous up-front demands.
“For one thing, all drivers must be 25 or older,” Schmidt said. “We also require 50 percent of the total cost up front, a security deposit of anywhere from $1,000 to $2,500 and comprehensive insurance coverage.”
“That security deposit goes up to $10,000 if a customer can’t prove any employment,” Miller added. “We’re letting individuals drive a car that costs more than most homes.”
The High Cost of Insurance
Since most people don’t have adequate auto insurance to cover a Lamborghini or Maserati, the company also offers its own umbrella coverage. “That’s where your cost is,” said Miller. “Your overhead is not the upkeep of these vehicles – it’s the liability insurance.”
When the cars are out on the road, Schmidt tracks them with GPS. “We always know when the car has been turned on, where it is and how fast it’s being driven.” He said they’re also going to start adding dash cameras.
“If I get an alert on my phone in the middle of the night that somebody’s speeding, I’ll text them on the spot: ‘Slow down or I’ll come get you!’ We also have behavior clauses that give us the right to shut that car down and keep their money.”
So meticulous is the care and handling of these cars that there is a strict “No Smoking-No Eating-No Drinking-No Pets” policy. Renters are also asked to use no perfumes, colognes or body sprays in the cars.
“If there is evidence of any of that,” Schmidt said, “they could be subject to a $500 cleaning fee.”
Not everyone is prepared for just how much car they’re working with, so Schmidt trains all renters beforehand, especially on the Formula One transmissions, “so we know people are ready and well-informed before they get out on the road.”
Rates can climb to $1,500 a day, based on the cost of the car, plus upwards of $10 a mile. “I’ve calculated out depreciation, maintenance and deduced down to a cost-per-mile on each car,” Schmidt said.
If it sounds like it can cost a lot, it can, but it’s still considerably less expensive than owning and maintaining one of these cars. As Miller said, “A brake job on a car like these can run $11,000.”
One popular iteration on the basic idea has been renting it out to companies for their private events and special days. “Generally, corporations will be able to go out and find their own insurance,” he said.
Planes, Boats and Automobiles
Next up is renting planes and boats. Schmidt has his own 44-foot river boat that might be the flagship of the fleet. And there’s a Cessna Citation II listed on the web site. “We had some interest from a guy who wanted to fly it to South America for some medical treatment, but the range on that plane for international travel is not sufficient. We’d have needed a larger aircraft.”
The Cessna has a range of 1,100 miles, which would have meant a lot of stops on the way – “Every time you stop and refuel, especially in a different company, it creates a lot of logistical hurdles. And we want everything to be super easy, in and out. That’s why you fly private.”
It’s also expensive. Renting a private plane would cost almost $4,000 an hour, plus expenses. That would include a pilot, even if the renter is licensed. “So we have to get it right.”
The history (thus far) of this endeavor suggests they’ll get it right.
As Schmidt said, “We’re looking to dive into all aspects of exotic transportation for people who are willing to pay for those things.” V