A scarcity of automobile rental firms sparked a increase in peer-to-peer automobile sharing
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When the coronavirus pandemic brought almost all travel to a standstill, Anwar Ali was forced to store a fleet of cars, which he rents through the Turo car sharing platform, in an unused gym in Kauai, Hawaii.
Now his company Ali’i Rental Cars is well booked for the month and has a waiting list. Even after adding 20 cars to his fleet, when travel demand picked up again and tourists discovered that traditional car rentals were solidly booked.
In the Atlanta and Chicago area, car sharing hosts have similar stories. Tatiana Pisarski, a Turo host in Atlanta, said she had rental inquiries two to three times a week. This year’s bookings are more than the last three years combined, she said. In June, she felt confident enough to order a Tesla Cybertruck and plans to rent it when it is finally delivered by the dealer.
The lack of available reservations with major car rental chains this summer, as well as the desire for a unique rental experience, are factors driving travelers to turn to car sharing platforms like Turo and GetAround. In response to increased demand, some car sharing providers are doubling their business by expanding their fleets. Some succeed by providing their customers with a personal touch that Hertz, Enterprise, and other big chains can’t.
“As summer travel has risen, Turo has become a critical platform supporting both growing consumer demand and business opportunity,” said Andre Haddad, CEO of Turo, in July. “With traditional rental car companies having limited inventory and skyrocketing prices for their cars, our hosts were able to capitalize on this moment, build thriving businesses by listing their personal cars on Turo and scaling their businesses to serve their goals.”
On Monday, the company, which is supported by Daimler, submitted confidential documents to the regulatory authorities for an IPO in the USA.
A pop-up ad triggers an idea
Ali was a youth pastor and his wife was expecting their first child when he performed an Isuzu rodeo on Turo in 1998. Within 24 hours, the car he had named Ruby was booked for the week. It was the family’s second car, and he was hoping he would live in Lihue, a tourist hot spot on the Hawaiian island of Kauai, to make a little extra money.
Ali heard about peer-to-peer car sharing through a pop-up ad on Mint. It was just the minimal business opportunity he was looking for. Other companies he was considering took a lot of capital to get started. With that, he took an idle car he already owned and made $ 200 on his first transaction.
Soon he added the couple’s other vehicle to the platform and that income paid for the family’s home for the month. Now, seven years later, Ali said he made five digits in the first quarter of 2021. Due to his current reservations by the end of the year, he predicts that it will be well into the six-figure range. This spring he broke ground for his family’s new home in Kauai. He also plans to pour his profits from his car sharing business into an Airbnb property.
For those who want to get into peer-to-peer car sharing. Not all platforms are created equal.
Customers of the competing platform GetAround often do not own a car, but need a vehicle to run errands or to pick up an oversized object in the neighborhood. These customers are only allowed to rent the vehicle for a few hours or a day.
Adjustment of the rent
Turo customers are looking for a unique car sharing experience rather than the usual airport terminal pickup. Hosts may receive requests to drop off a vehicle at a hotel, or they may be looking for a specific type of vehicle.
When DeAnthony Hill rented a Tesla Model X for his son’s eighth birthday, hostess Pisarski put the hawk wing doors in the upper position for an extra birthday surprise when she delivered the vehicle to Hill in Charlotte, North Carolina.
Bookings are also increasing for car sharing customers who are interested in buying an electric vehicle but are not sure whether it fits their lifestyle. For example, you can rent a Tesla S for a week to test your commute and see how quickly it recharges. While charging stations for electric vehicles are becoming increasingly popular in office buildings and public parking lots, there can still be some anxiety while charging.
Car-sharing host Ryan Hagler uses Turo to deliver what he calls what he calls a “luxury car rental experience.” Its seven-part inventory includes a Mercedes Benz C300, a Land Rover Defender 110 and several Teslas.
“I was just a fan of the site five or six years ago,” he said, explaining how he started his business, Aloha Luxury Car Rental. Then he had an idea: “Wouldn’t it be cool to have some nice luxury cars and rent them on this platform, because then I can have a luxury car that I would normally never buy for myself. And then I can drive it and make some money with it – or at least pay for it. “
Before starting his car sharing business, Hagler owned a coffee shop franchise with multiple locations in Portland, Oregon. He sold the business in 2018, took a year off and moved back to Maui, where he met his wife 20 years ago.
Logo for the peer-to-peer car sharing service Getaround on the side of a car in the Silicon Valley town of Mountain View, California, August 24, 2016.
Smith / Gado Collection | Stock photos | Getty Images
Hagler began testing Turo by renting a Tesla that he bought for his wife in 2019. He hired someone to help run the day-to-day business so he could rent cars while traveling and get a feel for the company’s running costs. But then Covid struck and travel – including for himself – was put on hold and he temporarily sidelined the business.
He restarted it in October 2020 and gradually increased the number of vehicles he rented.
“For now, this is a proof of concept for a location,” said Hagler. “I plan to have 15-20 EVs as 80% of my inventory and the remaining 20% hybrid vehicles. … Our mission is to get a facility that is completely solar powered. My goal was to make a profit of $ 1,000 per vehicle, “per month.”
In June, Aloha Luxury Car Rental was 95% booked, making between $ 1,500 and $ 2,000 per month in profit per vehicle. Hagler’s inventory was booked out for more than 30 days in May, but the pace slowed to about 10 days in July as new people joined the Turo platform, Hagler said. His expenses also increased as he leased a lot to park his vehicles and added the equivalent of a full-time employee.
Car sharing vehicle rental prices fluctuate based on various market factors including the level of insurance chosen by the user and the length of the rental. GetAround works with Apollo Underwriting, while Turo has an insurance contract with Liberty Mutual.
Travelers who rent through a car sharing service will note that some vehicles allow unlimited mileage while others may have a daily or weekly mileage limit.
While tourist demand for car rental companies has led some to try these services, GetAround says its core business remains customers who want to replace car ownership and rent cars when needed.
“We’re definitely benefiting from the uptrend in travel … but since we have both use cases (travel and everyday use), we see success on both sides of the equation,” said Pat Notti, vice president of Marketplace at GetAround and Operations.