Car sharing flying high Peg City breaks out of the red, adds profits, cars and members to its fold
Read this article for free:
Already have an account? Log in here »
To continue reading, please subscribe:
Monthly Digital Subscription
$4.75 per week*
- Enjoy unlimited reading on winnipegfreepress.com
- Read the E-Edition, our digital replica newspaper
- Access News Break, our award-winning app
- Play interactive puzzles
*Billed as $19.00 plus GST every four weeks. Cancel anytime.
Car sharing has finally taken off in Winnipeg and Peg City Car Co-op is looking to add another 42 cars to its fleet this year — about twice the growth of last year, which was its previous strongest year.
In anticipation of that growth and buoyed by three years of steadily increasing profits — after several years in the red — it has recently filed an offering statement with the Community Enterprise Development (CED) tax credit program to raise $600,000.
The additional cash will help leverage lower interest rates to finance the fleet expansion. As well the additional capital will go towards some additional business development initiatives and capital investments it hopes to make this year.
Pending Winnipeg City Council approval, the company has been working with the Winnipeg Parking Authority for several months to establish on-street parking to hopefully allow Peg City to start offering a so-called free-floating car-share service later this year. Currently Peg City cars are all located at specific parking spots in parking lots throughout the city. Users have to pick up and drop off the cars in the same spot.
The free-floating scenario will allow people to pick up cars in one place and drop them off at any approved spot.
Phil Mikulec, Peg City’s managing director, said if it gets council approval and is able to implement the new service it will add “a whole new dynamic and flexibility to the service.”
Coinciding with that development Peg City Car Co-op — founded in 2011 — is also planning to roll out a new mobile booking app which will mean greater booking flexibility and allow for other service features that the free-floating situation will make possible.
The additional vehicles will bump up Peg City’s total to 130, which is almost 40 per cent ahead of its five-year projection from 2018.
Mikulec said, “This last fiscal year (which ended Sept. 30, 2022) was a big milestone for us. It was the largest net profit ever for the company (close to $280,000) and we eliminated our negative retained earnings.”
CED investments provide an upfront 45 per cent tax credit to investors. They have to hold the shares for four years and after that Peg City will buy back the shares over the course of four years.
Not counting this current offering the co-op has raised about $1.4 million through the program since 2012 and has paid back about $400,000 of that.
The company’s current healthy financial position has meant that for the first time it will also pay shareholders as of Sept. 30, 2022 a three per cent dividend.
“It is a watershed moment for us,” Mikulec said. “We recognize that it is time to pay our valued investors a dividend.”
“We recognize that it is time to pay our valued investors a dividend.”–Phil Mikulec, Peg City’s managing director
Such a dividend has always been acknowledged as an option for the board to make available but prudent fiscal management has prevented it until now.
Profitability has materialized thanks to increasing usage.
After early years of slower than forecasted growth in membership, in 2022 Peg City sold 800 new memberships— for $500 each — an average of about 67 per month. That compares to an average of 25 per month between 2018 and 2021, which was much higher than previous years. (Non members can use the service but pay a little higher usage rates.)
The additional vehicles expected to be purchased this year are needed to keep up with that membership growth.
By comparison, Peg City grew from 21 vehicles in 2017 to nearly 90 vehicles by the end of fiscal 2022. Its goal, stated in this new CED offering statement, is to grow to 196 vehicles in the next five years.
In its early years the fleet consisted mostly of fuel-efficient subcompacts, but with growing demand the fleet has been diversified to now include a range of vehicles including hybrid minivans, midsized SUVs, pickup trucks and cargo vans.
“We have in many ways have taken off as an organization,” said Mikulec. “It has taken many years of blood, sweat and toil. It was not an easy sell to get people to car share in Winnipeg but we persevered.”
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
Updated on Thursday, January 12, 2023 10:04 AM CST: Corrects typo