When Mike Dabish found out his cousin, Norman Dehko, was referring clients from his 12 affiliated body shops to the major insurance replacement rental providers, he saw a business opportunity he couldn’t pass up. Those 12 body shops equated to about 40 rental cars out at any given time, income that could’ve been kept within the family.
“I said, ‘How about if I come see you tomorrow and we start a company?’” says Dabish.
In just one month, Dabish pulled everything together to start the Detroit-based Rent A Ride USA with his cousin as his business partner. “We went to the Manheim auction,” says Dabish, who has owned and run various business ventures since the age of 18. “We bought 10 cars, and when we rented those out, we bought another 10, and then another.”
Now, just two years in the business, Rent A Ride USA owns 151 vehicles.
Finding a Niche
Dabish realized early on that his insurance clients, especially those with families, appreciate a larger rental vehicle than a subcompact. And he realized he could provide a roomier, higher grade car for about the same rate the competition charges for a smaller car. Because he buys used at auction, holding costs for his larger cars are about the same as buying new subcompacts.
“I’m not taking a loss on renting the bigger cars,” Dabish says. “Would you rather drive a 2006 Ford Taurus or a little Chevy Aveo?”
He believes this extra courtesy has made Rent A Ride USA grow.
Dabish rents vehicles next to Dehko’s main collision shop. Half of his business comes directly from the collision shops, and a quarter comes from repeat customers who rent for general purposes because they like the service.
The shop isn’t located on a main street, so walk-ins are minimal. Still, Dabish says he doesn’t need advertising. In the beginning, he went to other body shops and offered special deals to get more business, but “now I’m so busy that I don’t need to do that,” he says.
Dabish estimates he’s taken a third of his main competitor’s business, which has three neighboring rental locations. Not realizing Dehko is co-owner of Rent A Ride, the competitor tried to win back the business. “They went to my partner and said, ‘Why aren’t you using us?’” Dabish says. “They started taking him to lunch. And then he said, ‘We own the company.’”
Dabish is able to buy the vehicles outright with profits from his other businesses instead of financing. “That extra percentage of interest that you’re paying for all these cars is extra profit,” he says.
Dabish says he and Dehko make sure to run each vehicle as a separate profit center. “Basically, Rent A Ride is being run and operated by me. My partner comes in when I need him,” says Dabish.
[PAGEBREAK] Rent A Ride USA owner Mike Dabish (right) and co-owner Norman Dehko have grown the company fleet to 151 vehicles in two years. The pair recently purchased a new location that can handle 500 vehicles.
There is no online reservations system because the business is usually out of cars. Dabish will hold 10 to 12 cars to be ready for new collision shop clients.
Rent A Ride publishes its rates online, and Dabish pretty much sticks to them, preferring not to change rates with the seasons as competing businesses do.
The rental company does cash rentals, as long as the client has full-coverage insurance or has a credit card that will cover damages.
Dabish also makes sure to have a GPS tracking system in some vehicles, usually reserved for walk-ins or non-insurance rental customers. Dabish figures clients with cars in the body shops won’t give him too much trouble.
To keep his high-mileage rental units in top condition, Dabish has a full-time mechanic and two detailers on site. His fleet is aged from 2006 model year to 2008. A few cars have more than 100,000 miles on them, which doesn’t worry Dabish because of his strict fleet maintenance.
Because his maintenance is so good, Dabish will keep a car in the fleet longer and rent it for less. If he keeps utilization high, the rental rate will more than cover the depreciation loss.
Dabish sticks with American cars such as Dodge Chargers, Dodge Magnums, Chevy Trailblazers and GMC Envoys because they are easier to work on and parts are cheaper to replace. He says the smallest models he has are the Chevy Cobalt and Chrysler PT Cruiser.
Dabish hasn’t sold off many units yet, though he’s retailed a few on craigslist.com. “I’m not afraid to sell any of my cars to retail customers,” he says. “You can’t run the kind of thing I’m doing if you didn’t have the mechanic on duty.”
A Bigger, Better Location
With his first location a success, Dabish plans on going big with a new rental center nearby. He hopes to run 500 rental vehicles out of the new location, a 12,000 square-foot facility that he and Dehko have already purchased.
He plans on keeping the current location for body shop work and to service all the vehicles. The new location is on a main road, near two freeways, and he expects to get Internet customers as well as drop-ins. The new facility will be much more state of the art, with a proper storefront, two vehicle turnarounds and a full reservations system that manages rentals and rates.
His market is the inner city. He’s comfortable with that and sees opportunity there. “I have the street knowledge, the school knowledge and the money. And you need all three to be in the type of areas I deal with,” he says.
Dabish isn’t worried about his ability to rent so many vehicles. Financing is his biggest concern, one shared by many new business owners these days. While he already has some money set aside, he wants a large fleet for the new location to spread the costs over personnel, maintenance and facility costs.
“I guarantee you if I had the financing now for 500 vehicles, I would have 90 percent of those on rent with the business plan I have,” Dabish says. “All I need is a customer to walk in, and if I just deal with him once, he never needs to go anywhere else.”