[vinit.merchant]

For an individual (not a company) it is a bad investment. More so if it is taken on Loan
Reason being, For calculating personal income tax, the revenue will be considered, net of the diesel expenses, which Zoomcar will pay. The EMI is not a deductible expense, not even the interest component.
Hence the revenue will taxed at the very least 20% and more likely 30% Income tax.

Chances are, at the end of the 30 month cycle one will end up having a negative return on the investment (Revenue from Zoom net of expenses less maintenance less Interest component of the loan less 30% on revenue from zoom).

Net net, add a 30% income tax cost on the table prepared by Nilesh above.
Or rather, consider the revenue at 70% less 30% = 49%. So out of the 100 per hour that the car will be let out, the net one gets back is 49 per hour, and he will have to manage the maintenance & EMI out of this.

This thing benefits only and only Zoomcar. Hardly anything in it for the investor.

Start an SIP for the EMI amount and one will come out much richer than this scheme. There are tax free long term MF SIP schemes out there. Make use of them.

[audioholic]

Originally Posted by thoma

True. Is the FE put out in the excel sheet a constant on which fuel cost is calculated (based on the kms run and this constant) OR will the fuel be charged on the owner on actuals? The middle men who run the business at a zoomcar outlet are responsible for filling up the tank and cleaning the car before each ride. Can we be sure that no malpractices are done by these guys while re-filling?

And about the service cost, is that just billed to the owner or that the owner need to arrange to get it serviced? Guess the service rates are also actuals than fixed.

Those middlemen are not so reliable as far as my personal experience goes. I have never got a car with a full tank. Surprisingly it's 90%full always. Once since the previous customer returned with a near empty tank and we had to fill it up since the guy had no time to fill it for us.

Speaking of which, the fleet executives have some sort of a card which they use to tank up the cars. However, in India even foolproof methods can be fooled around with and I dont think Zoomcar can track the amount of fuel filed into the car to a great accuracy. That will require heavy tampering of the car.

Hence, I guess along with minimum assured returns, there should also be a minimum assured mileage(zoomcar should compensate for any excess fuel consumption) and maximum cap on maintenance charges either on a distance basis or a cover on non routine repairs. I have first hand experience of breaking the gearbox of a Zoomcar scorpio(the internals of the gearbox self-destructed) and it took one month or so for the car to get back on the road.

Considering all this, what was once a very attractive proposition in my mind has turned out to be otherwise.

[Ricky_63]

Originally Posted by CarJunki

All the tax deductible aspects works only if you are doing this investment not as individual but as a registered entity.
If investing as a company/firm there will be no loan/financing.

This entire thing will turn negative because future income is lesser than fixed income. If anyone wants tax free returns with decent risk, put money in mutual fund hold it for longer than 36 months you can expect 12% tax free returns. How abt that.

The entire scheme is sounding like OPM (other peoples money), let others bring money, Zoomcars gets the cars for free, makes money and owners of cars are left with fast depreciating assets.

The main reason behind Zoomcar bringing this scheme is to lower the working capital required.

A proprietary firm can avail tax benifits. I have done it so can say that for sure.

Proprietary firm can take a bank loan - I have.

Mutual funds are positively great - 12-18 months back I did make "decent" profits. Agreed.

Zoom Cars is making a proposal which some may agree with & some of us may not. Having said that, I feel the proposal is worth looking at from where I stand.

Yes - they are using your money to run their platform & yes they are making money, but then so is the car owner - no ? Depreciating asset - true. No argument there, but it does have a reasonable residual value which one can recover.

You are spot on - they have lowered their working capital drastically - I call that business acumen.

This is strictly my POV - no offence to anyone intended

[Jaguar]

Originally Posted by Ricky_63

A proprietary firm can avail tax benifits. I have done it so can say that for sure.

Proprietary firm can take a bank loan - I have.

Can a regular salaried person start a proprietary firm? If yes, can you explain the process (in another thread if it is OT here). Tax benefits change the equation completely.

[Ricky_63]

Originally Posted by Jaguar

Can a regular salaried person start a proprietary firm? If yes, can you explain the process (in another thread if it is OT here). Tax benefits change the equation completely.

Most certainly, as long as your contract with your employer does not say otherwise. Your CA would be better equipped to answer the nitty gritty of the process.

[blackwasp]

Even I saw the letter, but the biggest red flag that I saw was the fact that the new car will be under Zoomcar's name. Basically if we are leasing a vehicle, it should remain with us, or rather with a Gumasta, who's proprietor is us.

Recently my auntie got a Ritz petrol and put it for uber, and she had to have the car under her name - since she's paying the insurance and maintenance.

No incase of ZAP, if they are the registered owners of car, either they should pay up the insurance and maintenance or the car should be in our name.

[ajmat]

Originally Posted by blackwasp

Even I saw the letter, but the biggest red flag that I saw was the fact that the new car will be under Zoomcar's name. Basically if we are leasing a vehicle, it should remain with us, or rather with a Gumasta, who's proprietor is us.

It looks like it is shaped like an REIT or mutual fund. We do not end the end asset, just a defined share

[Lobogris]

It doesn't seem like a good model for the investor. First of all, the mileage is likely to be around 12 to 14 max as people would use it around the city and are likely to abuse the vehicles. Secondly, there will be times when the demand is low and other times when the car is undergoing repairs etc. leading to lower than projected utilisation. Finally, there are bound to be minor and major accidents and each will leave the owner with deductibles to be paid. There can also be major repairs like clutch damage due to abuse.

One can rest assured the projections are way too rosy to hook the investor. If getting a vehicle on a 9% loan with them is so profitable then why don't they themselves take the loan, buy the vehicle and keep all the profit? I understand the issues with cash flow but this scheme is bound to be profitable only for Zoomcar as they get 30% of the profit with no investment and little risk. The 3% guaranteed return is around 15k and looks good but look closely and you would find that the fuel cost, maintenence, tax and insurance might be equal to or even more than this 3% figure!

[auto_enthusiast]

Originally Posted by GTO

The numbers sure look convincing (thanks sabby for posting!).

Let me get done with all the filings of the FY 2015-16. Then, I think I'll invest in a couple of cars at Zoomcar. Lets say 1 or 2 to start off with. If it works well, will increase. I'll pick the Swift over the Ritz as its resale will be much, much higher.

If I go ahead with it, you can expect a full thread with actual earnings, pros & cons .



How did you arrive at the 57% number?

Hi GTO

What's your call on it? Your insights would be helpful

[chandras]

Did anyone pitched into this or did you know anyone who has ventured into ZAP?
I'm quite interested but mixed reviews. I'm okay to raise fund by myself, not go for loans.
Any first hand reviews?

[aptiwa]

I got an email on this recently. Guess they send it to everyone who downloads their app
They have expanded the cars to include Swift, Figo, Baleno and KUV. I've asked for updated details and financial models to try to make sense.

From a pure investment it does seem like a tough one to justify. However, since when is buying a car an investment? All of us car owners know that the depreciation starts the moment we take the car out of the showroom. We destroy the value of our car through every kilometer driven without batting an eyelid. This is even when we have no opportunity to take depreciation benefits.

I feel that this model is useful when you do need a car for your own use but also have the ability to give it to someone during some parts of the week. Think of how many couples have 2 cars that are used daily for work commute but then they use only 1 of them over the weekend. Give it to zoomcar for 2-3 days every week and get some cash out of it.

Accidents, repairs, dents are part of car ownership. That is why we take zero dep insurances, multi-year AMC etc. Nothing unusual or abnormal in having to bear these.

Originally Posted by Ricky_63

A proprietary firm can avail tax benifits. I have done it so can say that for sure.

Proprietary firm can take a bank loan - I have.

Zoom Cars is making a proposal which some may agree with & some of us may not. Having said that, I feel the proposal is worth looking at from where I stand.

Good to hear that. Does the firm need to be incorporated? That will add to costs.

Originally Posted by blackwasp

Even I saw the letter, but the biggest red flag that I saw was the fact that the new car will be under Zoomcar's name. Basically if we are leasing a vehicle, it should remain with us, or rather with a Gumasta, who's proprietor is us.

Recently my auntie got a Ritz petrol and put it for uber, and she had to have the car under her name - since she's paying the insurance and maintenance.

No incase of ZAP, if they are the registered owners of car, either they should pay up the insurance and maintenance or the car should be in our name.

As per them, the act requires the vehicle to be registered in the name of the lessee, however, the ownership continues to be with the lessor i.e. us.
Uber is different as you're not leasing the car to a 3rd party. It's also more difficult in the long-run to have a good driver. I've heard so many cases of drivers defecting or being lazy and the whole model going for a toss. With zoomcar, at least, that part of the hassle is take care of.

Originally Posted by audioholic

Fuel is included in the cost of the rental for the customer. However, zoomcar will be filling up the car right? So they are charging the fuel on you, or to be more precise, since its a 70:30 revenue sharing, even fuel costs will and should be shared that way. If not, then there is a flaw in their proposal.

The fuel thing is something that we must be concerned about. None of the cars are driven in a FE oriented manner and this will make a huge change in the running costs of the car. As shown in the previous posts, if the mileage of the car and fuel prices change to the worser side, then our returns will take a proper hit.

The email mentions that they will take and return the car with a full-tank. So the mileage during the period it is with zoomcar is irrelevant.

Originally Posted by PrideRed

I have a simple maths. The On-road price of say Ritz LDi here in Bangalore is about 6.1 lacs(No full time road tax since Yellow Board registration).
Now as per Zoomcar ideal scenario, savings per year is 90K per annum.
Lets say I go by 30 month contract, my earning is roughly 2.3lacs.
If I sell the car after 30 months I am pretty sure I wont get more than 4lacs!

Effectively after 30 months I have 4+2.3=6.3 lacs in my hand. Again the 2.3lacs is income before tax.
Comparing this with 6.1 lacs I invested about 30 months back, Is it not loss when compared with bank interest?Am I missing something here?
Car is a depreciating asset, however with this scheme you can avoid depreciation but at the same time you wont be enjoying the benefits of owning a car.

This cannot be a full-time investment. It must be something you like and want to drive but can also afford to give away to earn some extra cash.
As mentioned earlier, with an owned car, there is no financial return at all.

Originally Posted by GTO

If I go ahead with it, you can expect a full thread with actual earnings, pros & cons .

Please share your analyses.

[Nagaraj]

Hi All,
I have seen lot of debate have taken place about Zoom Associate Program since April. I just want to know have anyone taken this / joined the program. How is the procedure and how is the return so far. Though this would be too early to asses on the profitability, I just want to know how it actually works.

Kindly give your feedback as I am also interested to be a part of this ZAP Program.

Regards,
K.Nagaraj

[altius]

Zoom car receives 160 crore funding.

"With this capital we plan on expanding our Zoomcar Associate Program (ZAP) which allows users to buy cars registered in the name of Zoomcar," said Greg Moran, CEO of Zoomcar, who estimates that by early 2017, close to 2,000 cars will be added under its marketplace model, ZAP.

http://economictimes.indiatimes.com/...w/53852001.cms

[jetsetgo08]

Just came across ZAP while I was booking a zoomcar. Did anyone venture this?

[Techani]

After all the debate and no action from any members on the ground seems to suggest that ZAP is not quite recommended for pure investment.

As Aptiwa mentioned above, the scheme is for those people who can spare the car for some days of the week or for some hours of the day.
In this way the cost of ownership reduces a bit while utilizing the depreciating asset more.