Car-sharing, the Future of Transportation

Tired of the downside to owning a car in the city? High insurance rates, maintenance costs, trying to find a place to park. Well, car sharing might just be the answer.

Car sharing is the renting of cars for short periods of time, often by the hour. This process is prefered by people who make only occasional use of a vehicle and with people who like an occasional change in the type of vehicle they drive every day. These cars are being rented by commercial businesses, companies, public agencies or co-operatives. Car-sharing is available in over a thousand different cities in several countries. Some of the rental companies include Zipcar, Car2go, Flex and many more.

Recently, traditional car rental companies have started their own car sharing services, including Hertz on Demand, Enterprise CarShare, Avis On Location and U-Haul Car Share. Car manufacturers have also joined the trend by introducing their own car sharing services, including Daimler’s car2go, BMW’s DriveNow and VW’s Quicar.

According to the Transportation Sustainability Research Center at U.C. Berkeley, there are an estimated 1.7 million car-sharing members in 27 countries, of these, 800,000 were located in the United States.

According to Navigant Consulting, revenue for global car sharing services will climb, from an estimated $1 billion in 2013, growing to an estimated $6.2 billion by 2020, with over 12 million members worldwide.

The driving factors to the rising popularity in carsharing include, the increasing road congestion that people who live in the city have to deal with every day, an overall shift in the feelings about owning a car and the increasing cost to own a vehicle. According to The Economist, car sharing can reduce the number of cars owned by an estimated rate of one rental car replacing 15 personally owned vehicles.

How it works

Even though all of the car sharing rental companies are different in their approach, the way they run their business and their target markets, they all share some relatively common features. For example, the more established operations usually require a check of past driving records and a monthly or annual fee to become a member.

To make a reservation you can either go online, call or text depending on the company’s flexibility. Once your reservation is made and confirmed, the car will be delivered at the time and place scheduled.

The cars will have a small card reader mounted on the windshield, which you place your membership card on. This is called blink technology and it activates the time and unlocks the car. The reader won’t work until the specified time of the reservation. The keys will be located in a designated spot inside the car, as in the glove box or console. Some companies give the customer a key that will unlock a lock box within the cars, where the ignition key is located. After that your are on your way to your destination.

Currently, Zipcar is the largest service in the world with 800,000 members and offering over 10,000 vehicles throughout the United States, Canada, the United Kingdom, Spain and Austria. On March 14, 2013 Avis Budget Group bought Zipcar for around $500 million in cash.

Peer-to-peer car sharing

In 2010, a new approach to carsharing began, called peer-to-peer carsharing. Peer-to-peer car sharing is a form of person-to-person lending. The idea is similar to that of traditional car clubs like Streetcar or Zipcar, however, instead of a typical fleet of vehicles it is made up of “virtual” vehicles from participating owners.

Participating car owners are able to charge a fee to rent out their car when they aren’t using it. This allows participating renters to use nearby and affordable vehicles, while only paying for the time they need to use them.

Businesses in this sector screen both the owners and renters, then offer a platform for the two to meet and work out an arrangement. This is usually in the form of a website or mobile app that brings the parties together, manages rental bookings and collects the payment. These businesses usually collect between 25% and 40% of the total income, which is used to cover borrower and renter insurance, operating expenses and roadside assistance.

Car Sharing is Greener

Car sharing is greener than owning your own car. Depending on the location, each shared car can replace between 6 and 20 personally owned cars. Most shared fleets are recent models with the latest emission control and many have fuel efficient options including hybrids.

Another way that car sharing is greener is by giving strong incentives to drive less. When you own a car, you already have high fixed costs including car payments, insurance, maintenance, parking and so on, so driving more doesn’t really cost more except for fuel. With car sharing, the less you drive the less you pay. This means that a lot fewer unnecessary trips are taken. Also, car sharing members tend to walk and bike more because they aren’t of the mind set “well, I have a car sitting in the drive that I’m already paying for, I might as well drive it.”

The Future of Car Sharing

The world is urbanizing quickly and in the future most people will live in cities. Car sharing fills the desire to have personal mobility and solves the solution of vehicle congestion at the same time, so the concept is most likely here to stay and to be capitalized on.