Peer-to-peer car sharing startups making it big

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A parked car with the logo on the right-rear hatchback.

Zipcar has spawned a new breed of car sharing business. (Photo Credit: CC BY-SA/Lightpattern Productions/Flickr)

The trend of car sharing, when drivers borrow vehicles for an hourly fee, is growing by leaps and bounds, notes the Detroit Free Press. Automakers like General Motors are now funneling their dollars into the peer-to-peer movement, and Google is exploring investment opportunities.

Car sharing: A new way to rent cars

Numerous start-up firms are working to bring car sharing to the general public, particularly in progressive, urban areas where the entrepreneurial spirit and green transportation movements are alive and well. Getaround and RelayRides rank among the more popular car sharing companies currently in operation. Wheelz began in September around Stanford University in California, and the target demographic is college students. In Los Angeles, HiGear is expanding its stable of luxury vehicles for the car-sharing set.

RelayRides takes off in San Francisco

RelayRides began in Boston, and the company expanded into San Francisco because venture capital firms interested in car sharing startups are plentiful there, said RelayRides co-founder Shelby Clark. GM has invested the business.

“We were in Boston first, but there was just no appetite from the venture-capital firms,” he said. “It’s way easier to raise money in the Bay Area.”

A stumbling block for the growth of car sharing has been that some state insurance commissions allow insurance companies to terminate auto insurance coverage if a customer shares a vehicle. However, more progressive states like California have passed laws preventing insurers from doing this. IIn California, owners are not held liable for damages incurred as part of a car sharing business transaction.

Peer-to-peer versus fleet services

Unlike fleet-based companies like Zipcar, which has been in business for more than 10 years, the latest crop of car sharing businesses allow drivers to rent cars from individuals rather than companies. The car sharing companies that help connect owners with renters do not guarantee exactly what the renter will be getting, unlike the Zipcar experience, for which the company maintains a fleet and charges annual membership fees starting at $60. Peer-to-peer typically does not require membership, hourly rental rates start at $7.25 and rental details are handled between the owner and rental parties rather than the company itself.

Turning idle cars into active cash

Jessica Scorpio, a co-founder of car sharing start-up Getaround, noted that 1 billion cars in circulation in the U.S. today (a number experts predict will reach 2 billion over the next two decades) sit idle 92 percent of the time. The moneymaking opportunities are obvious.

“We saw an opportunity to enable car owners to share them when they’re not using them,” she said.

The early days of car sharing


Detroit Free Press

iGo Car Sharing


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