When you rent a car on vacation, would you borrow a stranger's car? The car rental industry is betting some people might.
To compete with the rise of new startups that let strangers share their cars, Hertz and Enterprise started new car-sharing services that let members reserve, drive and return fleet vehicles via phone or Internet and then unlock and drive them using RFID cards.
"Rental car companies are realizing that their model is very dead. Why would you want to deal with the hassle of rentals?" says Rachel Botsman, author of "What's Mine is Yours: The Rise of Collaborative Consumption," and a partner in the Collaborative Fund, a venture fund in New York. People can now rent a car without checking in at a counter, talking to a salesperson and dealing with numerous hidden costs and fees, she says.
Witness the growing momentum for car sharing: Zipcar, which offers daily and hourly rentals of its fleet of vehicles scattered on city streets, is preparing to go public. Google Ventures invested more than $2 million in RelayRides.com, a San Francisco startup that lets people share their personal cars with strangers, while competitor Getaround.com added 1,600 cars in one day at the TechCrunch Disrupt conference in New York City.
More startups are following suit: there’s JollyWheels in New York, Go-op in Pittsburgh and SprideShare in San Francisco. Car manufacturers, including BMW, Volkswagen and DaimlerChrysler, have also started car-sharing services.
Botsman says the Internet is driving a shift in consumer behavior and a resurgence of community. “It’s all being driven by efficiency and trust in strangers.”
While RelayRides has not yet seen big demand from out-of-town visitors for its 150 cars available in Boston and San Francisco, that could easily change in the future, says the company’s founder and Chief Community Officer Shelby Clark. There are many people who may have cars at mountain homes or other vacation destination spots, and they can earn an average of $250 a month by renting it through RelayRides. “As it becomes ubiquitous, it could have an impact on traditional car rentals,” he says.
Instead of taking a shuttle to a car rental counter, filling out forms, paying extra fees and hunting for a car among hundreds, people could easily use public transportation for most of their trip and then borrow a stranger’s car in the city for one or two extended day trips for a flat fee of $60 per day. That RelayRides rental price includes 160 miles of driving, gas and insurance. The cars offered are also high-end rides: Think Mercedes, Audis and Mini Coopers.
“Car sharing is a much more liberating experience,” says Clark. “It’s on-demand, cheaper and more convenient.”
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