Car rental shortage has sparked a boom in peer-to-peer car sharing

When the coronavirus pandemic halted nearly all travel, Anwar Ali was forced to store a fleet of cars he rents through the Turo rideshare platform at an unused gym in Kauai, Hawaii.

Now his company, Ali’i Rental Cars, is booked for the month and has a waiting list. Even after adding 20 cars to its fleet, as travel demand rebounded and tourists found traditional car rental locations to be heavily booked.

In the Atlanta and Chicago area, carpooling hosts have similar stories. Tatiana Pisarski, a Turo host in Atlanta, said she had rental requests two to three times a week. Bookings this year are higher than the past 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 dealership.

The lack of readily available bookings from major car rental chains this summer as well as the desire for a unique rental experience are factors leading travelers to turn to carsharing platforms such as Turo and GetAround. Faced with increased demand, some car-sharing providers are doubling their activity by expanding their fleet. Some find success by giving customers a personal touch that is not possible for Hertz, Enterprise and other big chains.

“As summer travel increases, Turo has become a vital platform supporting both increased consumer demand and entrepreneurial opportunities,” Turo CEO Andre Haddad said in July. “With traditional car rental companies having limited inventory and charging exorbitant prices for the cars they have available, our hosts have been able to capitalize on this moment in time, building successful businesses by listing their personal cars on Turo and by developing their activities. to serve their purposes. “

On Monday, the Daimler-backed company confidentially filed documents with regulators for an initial public offering in the United States.

Ali was working as a youth pastor and his wife was expecting their first child when he entered a 1998 Isuzu rodeo on Turo. In less than 24 hours, the car, which he had nicknamed Ruby, was booked for the week. It was the family’s second car, and living in Lihue, a tourist hotspot on the Hawaiian island of Kauai, he had hoped to earn some extra cash.

Ali heard about peer-to-peer car sharing through a pop-up ad on Mint. It was just the minimal capital business opportunity he was looking for. Other businesses he saw needed a lot of capital to get started. With that, he took an underused 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 housing for the month. Now, seven years later, Ali said he made five figures in the first quarter of 2021. Based on his current bookings through the end of the year, he expects he will do well. six digits. He opened his family’s new home in Kauai this spring. He also plans to move the profits from his rideshare business to an Airbnb property.

For those looking to get started in peer-to-peer carpooling. Not all, the platforms are the same.

Customers of rival platform GetAround often don’t own a car, but need a vehicle to run an errand or pick up an oversized item around the neighborhood. These customers can only rent the vehicle for a few hours or for the day.

Turo customers tend to look for a one-off rideshare 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 very specific type of vehicle.

When DeAnthony Hill rented a Tesla Model X for her son’s eighth birthday, host Pisarski pulled up the falcon wing doors for an extra birthday surprise when she delivered the vehicle to Hill in Charlotte, Carolina. North.

There is also a growing number of bookings for carsharing customers who want to buy an electric vehicle but are unsure if it fits their lifestyle. For example, they can rent a Tesla S for a week to test their journey and see how fast it charges. As electric vehicle charging stations become more and more common in office buildings and public parking lots, there can still be charging anxiety.

Rideshare host Ryan Hagler uses Turo to deliver what he calls “a luxury car rental experience.” Its inventory of seven cars includes a Mercedes Benz C300, a Land Rover Defender 110 and several Tesla.

“Initially, 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 money with it – or at least pay for it. “

Prior to starting his rideshare business, Hagler owned a coffee shop franchise with multiple locations in Portland, Oregon. He sold the business in 2018, took a year off, and returned to Maui, where he had met his wife 20 years ago.

Hagler started testing Turo by renting a Tesla he bought for his wife in 2019. He hired someone to help him run the day-to-day business so he could rent cars and get a feel for the costs. company generals while traveling. . But then Covid struck and travel – for himself included – was put on hold, and he briefly sidelined the company.

In October 2020, he relaunched it and gradually increased the number of vehicles he rents.

“At this point, this is a proof of concept for a location,” Hagler said. “I plan to eventually have 15-20 EVs as 80% of my inventory and the remaining 20% ​​hybrid vehicles. … Our mission is to enter a fully solar powered facility. My goal was to make a profit of $ 1,000 per vehicle. , per month.”

In June, Aloha Luxury Car Rental was 95% booked and made between $ 1,500 and $ 2,000 per month in profit per vehicle. Hagler’s inventory in May had been booked for more than 30 days, but in July the pace slowed to around 10 days as new people joined the Turo platform, Hagler said. His expenses also increased as he rented land to park vehicles and added the equivalent of a full-time employee.

Carpool rental rates fluctuate due to several market factors, including the level of insurance coverage the user chooses and the length of the rental. GetAround works with Apollo Underwriting, while Turo has an agreement with Liberty Mutual for insurance.

Travelers who rent through a carpooling service will notice that some vehicles allow unlimited mileage, while others may have a daily or weekly mileage limit.

While tourist demand for car rentals has prompted some to try these services, GetAround said its main business remains customers looking to replace car ownership and hire cars when needed.

“We are definitely benefiting from the rise in travel… but because we have both use cases (travel and daily utility use), we see success on both sides of the equation,” said Pat Notti, vice -President of the market and GetAround operations.