Due to a shortage of rental cars, and the subsequent spike in costs, drivers in need of a vehicle for the short term are looking to an emerging alternative, car-sharing. It’s a peer-to-peer model where car owners rent out their own personal vehicles.
At the start of the pandemic, when travel rates dropped drastically, car rental companies sold off fleets of vehicles to stay afloat. But as tourism rates picked up, those companies weren’t able to restock because of a pandemic-related shortage in car manufacturing. That’s what led to a surge in car rental prices.
In May, car rental prices in the US shot up 30 percent compared to the same period in 2019 according to Cheap Car Rental, a rental car website. Customers can expect to see especially steep prices over Memorial Day. In Chicago, a car rental will run $900 for the holiday weekend. But renters may be able to find availability, and better pricing through car-sharing sites. Renting a car in Chicago through Turo, a car-sharing service, costs $250, according to The Chicago Tribune.
Companies like Avail, Turo and Getaround function much like Airbnb. Users type in their location, price range and dates of use, and they can then peruse the available options.
Both Turo and Getaround have been around since 2009, but are now seeing much more interest from customers. While the post-pandemic car shortage is giving these companies a boost in business, this market is likely to see continued growth, experts say.
Turo saw a spike in first-time users in May, according to AZ Family. Getaround saw a 40 percent increase in weekly revenue since February, coinciding with the subsiding of lockdown measures, Bloomberg reported. There are currently about 20 million shared vehicles available and that figure is expected to exceed 70 million by 2040, according to Bloomberg.
“The covid and chip shortage-related anomalies in the automotive sector are going to provide a unique opportunity for car-sharing platforms to rise to the occasion as we enter what’s expected to be a very busy summer travel season,” said Mike Landau, CEO of mobility hub company ParkMyFleet.
Part of the appeal is that renting through a peer-to-peer site is often cheaper. Individual owners can afford to rent at a lower rate since they don’t have to account for the overhead cost of maintaining a fleet, which traditional big-name companies have to contend with.
However, unexpected fees can often still pop up in the car-sharing space when a customer, for example, exceeds the agreed-upon mileage limit. Users will have to pay up if the car is returned dirty, damaged, or without gas.
Car-sharing sites also give customers more flexibility. Customers can book a car for as little as 30 minutes and as long as months at a time. Traditional rental companies, on the other hand, compel customers to rent a car by the day, even when they might only need the car for a handful of hours.
“Car sharing provides flexibility and ease,” said Michele Pierog, CSO of ParkMyFleet. “Add vehicle availability without having to wait at a counter and convenience wins over the traditional rental options.”
Car-sharing is also an easy way for car owners to earn money from vehicles that might otherwise be sitting idle in their driveways.
“We are striving for a future of better asset utilization and sustainability, so it only makes sense that people are willing and wanting to leverage their vehicles, which — on average — sit unused in their garage 95% of the time,” said Kristin Slanina, CIO ParkMyFleet and Managing Director Charge Across America. “Technology makes it easier and more efficient to connect people to these new types of business models.”