By Ron Hurtibise
WWR Article Summary (tl;dr) The sharing economy strikes again! Get ready for a flood of options when it comes to renting a car, your next door neighbor may just have what you’re looking for.
Under the radar, peer-to-peer car-sharing services have emerged as alternatives to traditional car rentals and even to ride-share apps such as Uber and Lyft.
Customers can download smartphone apps and rent privately owned cars, usually parked a short walk away in urban areas or residential neighborhoods. Rates range from $5 an hour for basic models like Nissan Sentras or Hyundai Elantras, to $400 or more for a full day cruising around in a Ferrari, Aston Martin or Bentley.
Car-sharing companies say they offer benefits that young users find particularly appealing: Shared cars reduce congestion and parking shortages in cities. They reduce carbon emissions by making fewer cars necessary. They make it easier for people to live without owning cars.
Car-sharing platforms are also easy to use: Your smartphone’s GPS will navigate you to where the car is located, then you use the app to activate a remote entry system to get access to the key, or wait for the owner to bring it to you, and you’re on the road.
Using a car-sharing app eliminates trips to the airport or in-town car rental agency office. “Skip the Rental Car Counter,” beckons the website for Turo, the nation’s largest car-sharing platform.
Turo currently offers hundreds of cars across the tri-county region, but competitors are elbowing their way into the market, and well-known rental companies such as Enterprise and U-Haul are establishing their own platforms that could one day make their way here.
For many potential customers, car sharing remains such an unfamiliar concept that Getaround, one of Turo’s largest competitors nationwide, introduced its entry into the Fort Lauderdale market this summer by calling itself “the New Airbnb for Cars,” echoing a similar slogan used by Turo.
Getaround, which entered the Miami market about a year ago and has about 150 cars on its platform, has added a few cars in Hollywood and plans to have others available near the Fort Lauderdale-Hollywood International Airport within a month, and then in downtown Fort Lauderdale by the end of August, according to Nick Chong, general manager for Getaround in the South Florida market.
While Turo and Getaround have existed about a decade, both companies have raised hundreds of millions of dollars from venture capitalists in recent years to finance aggressive expansion efforts.
Letting other people drive your car
Just as Airbnb allows private home owners to generate extra income from short-term rentals, the car-sharing platforms say their apps help car owners cover ownership costs by making their vehicles available for rent when they would otherwise be sitting in a driveway or parking spot.
It’s ideal “if someone has a car they’re not using very much and they want to make a little extra money,” Chong said in an interview. Owners control when their car is available and how much they charge to rent them. They can also set minimum and maximum rental periods.
“Let’s say you’re at work for eight hours a day. You can make your car available during that time. Then, when you need your car again, you block that time off,” he said.
The car-sharing apps take care of everything else, verifying that renters have clean driving records and minimal history of accidents or infractions, processing credit card payments for the rental, and providing full insurance coverage while the car is being rented.
Owners, meanwhile, can use the apps to track their cars’ locations, how far they’ve been driven, and whether they are running properly.
In exchange, the apps typically collect 25% of the rental cost.
Some owners boast that they can cover their financing or lease payments with their rental revenue. Others say renting helps them afford vehicles they would otherwise be unable to obtain.
Start your own business through car sharing
While Chong says Getaround devotes most of its marketing effort to the single-car, part-time renter, the company also welcomes entrepreneurs who approach it as a business venture. “These are small-business owners with four or five cars they stage in a parking lot,” he said.
With the average car on Getaround’s platform generating $500 a month, someone with four cars can generate $2,000 a month and keep 70% to 80% of that revenue, he said.
Of course, those entrepreneurs also have to factor in other ownership costs, including purchase, maintenance, cleaning and storage.
Hayley Ross said she and her husband, both retired professionals living in a downtown Miami condo, have turned car sharing into full-time jobs. The couple own 12 cars staged in a downtown parking garage that’s easily accessible to tourists arriving through the nearby Port of Miami.
They’ll rent their cars for an hour or for a week. Some renters want a sports car to cruise along South Beach. Others are young professionals who live downtown. Many are repeat customers who appreciate the couple’s personal service, she said.
Figuring out a formula to keep the venture profitable has been a challenge, Ross said.
Among the lessons learned: Don’t buy new cars, but don’t buy used cars with more than 30,000 miles. Make sure the cars have a good resale value because you don’t want to keep them until they die. Keep the cars in the same location and don’t spread them across town.
And don’t select cars based on what you prefer to drive. “I hate my little Ford Focus, but renters love it,” she said.
A Turo rep did not respond to an interview request by the South Florida Sun Sentinel.
But a look at user comments about both platforms on Apple’s App Store show the platforms still have some bugs to fix if they expect to supplant traditional car renting.
Rental industry takes aim
Other headwinds threaten the ascendant peer-to-peer car-sharing niche as well, including counter attacks by the traditional car rental industry.
Enterprise CarShare, launched by the nation’s largest rental car company, enables hourly rentals via smartphone app of cars parked on streets or in lots “close to where you live and work.” But its version doesn’t invite car owners to offer their vehicles.
Meanwhile, parent company Enterprise Holdings has been lobbying state legislatures to regulate car-sharing platforms as rental agencies, similar to how hotel chains and taxi companies spearheaded regulation of Airbnbs and ride-sharing apps.
Bills that would require car-sharing apps to pay the same taxes as rental agencies are under consideration in 34 state legislatures, according to a story on the urban development website CityLab.com.
A Florida bill, backed by a coalition of rental companies and business partners calling themselves “Driving Florida Forward,” died in the state legislature this past spring, but not before clearing committees in the state House and Senate.
In addition to requiring car-sharing apps to collect surcharges for road maintenance, the bill would require car-sharing apps to pay the same consolidated facilities fees rental agencies pay to do business at publicly owned airports.
Enterprise says regulation is needed to maintain a level playing field, even as lobbyist Leslie Dughi acknowledged at one legislative hearing in March, “Quite frankly, one day Enterprise will probably be in this business.”
Distributed by Tribune Content Agency, LLC.