Running a Rental Business Without Owning a Fleet

I have a business proposition for you: It's a new form of rental agency with little overhead and no brick-and-mortar operations to worry about. The startup fees are negligible. The system borrows elements from eBay and the social networking phenomenon. Rate wars are a non-issue. It's "green," and it puts money back in the pockets of local residents. Oh, and you don't have to buy a fleet.

Welcome to "neighbor-to-neighbor" or peer-to-peer (P2P) car rental. A P2P program is based on private car owners willing to rent out their underused vehicles for extra cash, while the company manages the logistics of the rental transaction for a cut of the rental rate.

The P2P model presents its own unique challenges, such as automating the rental process, perfecting the system for scalability, gaining critical mass and educating the public on a new form of mobility. And how can you possibly control a fleet you don't own?

ARN spoke with three companies-Whipcar in the U.K., RelayRides in Cambridge, Mass., and Jolly Wheels in New York and six other cities-which are answering these challenges with variations on the model. Other players include Spride and GetAround in California; and Communauto, a car-sharing service in Montreal.

Let the System Do the Work

Vehicle owners and renters join a program, for free, and are vetted for driving records, age requirements and vehicle standards. Each system relies on varying degrees of Web technology to facilitate reservations, pickups and returns. Both owners and renters use an eBay-style ratings system to grade rental transactions and each other.

Car owners set their own rates, with guidance from the company. Car keys are either exchanged by the owner and renter in person or retrieved from inside the car using a card access system.

Marketing is grassroots. The uniqueness of the system, the environmental angle and the concept of making extra income in a down economy propel the idea virally in the community and in the media.

Insurance is a necessary component. P2P companies have contracted with insurance carriers to underwrite renters in privately owned cars for the duration of the rental. California recently passed a law establishing that personal vehicle sharing does not constitute a commercial use of the automobile. This eliminates the risk that car owners would lose their personal auto insurance if they received compensation for sharing their cars.

"The biggest challenge for peer-to-peer to succeed is to scale it in a way that the level of trust and service is maintained as it gets bigger," says Dave Brook, managing partner of Team Red U.S., a consulting firm that specializes in new mobility options.

Though removing the capital expense of a fleet is attractive, "you now have a whole new level of complexity to manage," he says.

CONTINUED:  Running a Rental Business Without Owning a Fleet
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Comments

  1. John Williams [ May 19, 2013 @ 01:45AM ]

    Unfortunately the company provides cars that are dangerous and almost certain to have problems during your rental. Running a rental service from your home might be a smart way to earn money. If you are out to rent a "car" however, your best bet is to stay away. "Let the buyer beware" as the saying goes . You ben warned!

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