City Car Club secures £1.8m investment for expansion plans
The new investment for the pay-as-you-go car business has been raised from existing private investors and consists of £1.2 million of new finance and the conversion of £600k of loan notes. The company has reported a 90% growth in membership in the past 12 months and the new money will help fund the expansion of its fleet as well as covering costs associated with the recent acquisition of rival car club operator WhizzGo.
James Finlayson, City Car Club’s largest shareholder and MD, said: 'Our strategic acquisition of WhizzGo, combined with a 90% growth in membership over the course of the last 12 months, meant we needed additional funding to keep up with demand. We are looking to grow our 500 strong fleet to 750 into 2011 and increase membership from 16,000 to over 25,000.'
Speaking on the company's growth record even through the last year of recession, Mr Finlayson added: 'Membership of City Car Club saves our members an average of £1800 each year and the downturn has really made people think twice about car ownership.'
And he added: 'A large reason for our growth has come from demand from businesses to reduce their transport costs as well as reducing their carbon footprint. Membership to a car club delivers on both fronts.'
City Car Club says that it is set to hit month on month profitability from Q4 2010 and will continue to be profitable from this point. Commenting on this, Mr Finlayson said: 'This is a business concept that has been ahead of its time and is also very capital intensive meaning a relatively slow burn to profitability. It has been all about securing long term parking partnerships with city councils, getting to critical mass and getting the right ratio of members to cars to maximise revenue per car. We have now done much of the hard work and are all certainly looking forward to reaching profitability later in the year.'For more of the latest industry news, click here.