The sharing economy grows bigger each day, and pioneers like Uber, Lyft, and Airbnb make it clear the concept isn’t just a passing fad. Interested consumers can now share lodging, rides, even pets. But what was once a quieter trend is becoming louder, and more mainstream across the U.S. Car sharing—as distinct from ride sharing and rental cars—has been gaining traction in several major U.S. cities, and automobile manufacturers are even joining the fray, disrupting what many consider a quintessentially American experience–owning a car.
For people who don’t want to (or can’t) own a vehicle, car sharing services offer a great alternative with much less commitment than traditional rental cars. The savings can really add up, too—car sharing takes away worries about parking or vehicle storage costs, as well as vehicle maintenance or repair expenses. Exclusively car sharing can also free up a big chunk of your budget because it means you don’t need your own auto insurance policy.
However, car sharing, like ride-sharing and home sharing, hasn’t quite hit the mainstream yet. A recent survey by the Pew Research Center found that 73% of Americans aren’t familiar with the term, “sharing economy,” and only 15% have used services like Uber and Lyft. But for the subset of people who regularly use services within the sharing economy, car sharing might soon be the next great thing, and personal vehicle ownership might dwindle.
What is Car Sharing?
Traditionally, paying an entity to use a car for a period of time has been defined as renting. We all know about car rentals, but most of us only rent while traveling or when their car is in the shop. Car sharing proponents, on the other hand, are looking to change the way we think about personal vehicles in general and car ownership in particular. We recently presented our vision of the future of the auto industry, and car sharing plays a prominent role: “Assuming we keep to our current ownership model, we are tracking to put two billion cars on the planet within the next decade — yet most of the 250 million cars in the U.S. sit idle 22 hours a day. Sam Zaid, founder & CEO at car sharing community Getaround, says this behavioral pattern is not sustainable, which means we need to break the current ownership model.”
Car sharing companies distinguish themselves from car rental companies by seeking to become part of our everyday lives—for people who don’t need a car every single day, but need one, say, once or twice a week for the big grocery store run, or every month or two for travel, car sharing can be a great alternative to personal vehicle ownership. And as car sharing catches on, companies are poised to capitalize on people who need a car daily but don’t want the responsibility (and expense) of car ownership, too.
Benefits of car sharing:
- No trekking to the rental counter or dealership: most car sharing companies keep their vehicles on the street in convenient locations
- No car payments, maintenance expenses, or depreciation
- No car ownership inconveniences like being without a car for a period of time due to breakdown or damage
- No insurance policy: The car share company takes care of insurance, so individual users don’t need to carry policies. Our resident insurance expert, Neil Richardson, explains that the car share service would provide the liability coverage and physical damage coverage for the vehicle. The driver would only have to pay the deductible if they wrecked the car, similar to traditional auto insurance policies. There’s one caveat though: Neil says some exclusive car sharers might still benefit from a non-owner’s policy. Medical coverage for you and your passengers isn’t covered if you’re hit by an uninsured driver, unless this particular coverage is required by your state, which is not a given.
Car Sharing From Major Automakers
BMW has been laying the groundwork for their very own car sharing service. Since April of this year, BMW has operated ReachNow in Seattle, which gives members access to 370 vehicles, including BMW’s i3 electric vehicle, the BMW 3 Series and the Mini Cooper. Gaining access to cars and returning them is easy: available cars can be located within the “home area” (downtown Seattle, for now) through the ReachNow app, and when drivers are finished, they just park in any legal parking spot—even at meters, without paying the fee. For now, cars can be used for just 41 cents a minute, but BMW notes the price is promotional. The price includes fuel or charging costs, insurance, and parking fees. It took just one month for 13,000 people to sign up, says Road Show, and BMW has made it clear they plan to expand the program to more U.S. cities in the coming months.
On May 19, General Motors announced expansion plans for their car sharing service, Maven. Previously, the service was only available to a select few—residents of Ann Arbor, Michigan, and residents of three Manhattan high rises. But now, GM will launch Maven in Boston, Chicago, and Washington, D.C, writes The Wall Street Journal. Maven’s concept is similar to other car sharing services: sign-up takes minutes, available vehicles can be located through the app, and the $6 to $8 hourly fee includes fuel and insurance (with no added annual membership fee). GM launched Maven when they acquired Sidecar, the now defunct rides-haring service. One interesting difference between Maven and other car sharing services is its link to Lyft: Lyft drivers can rent Maven cars by the week to use while ride-sharing.
Car Sharing Services
Zipcar offers a range of vehicles for daily or hourly rental, available for pickup either from centralized locations (including airports) or right off the street (with keyless entry using your smartphone). When users are finished, they return the car to a reserved parking spot on the street. Like other car sharing services, Zipcar’s prices include gas and insurance, but there is an annual fee attached.
The Austin-based car sharing service boasts a fleet of 350 cars and with no fixed rental stations, users can find an available vehicle in their area, get in, and go—simple. Just like Zipcar, ReachNow, and Maven, entry is keyless (the app opens the doors), insurance and fuel are included, and when customers are done, they just park the car on the street.
Get Around offers the same type of service as the others, but their model is peer-to-peer sharing, rather than a company with cars to lend. Get Around says users listing their cars earn $10,000 per year, and customers borrowing cars can get them for about $5 per hour, with insurance included. People interested in using someone else’s car submit to screenings of their driving record, to ensure they’re good drivers.
Even though only a small percentage of the U.S. population currently engages with the sharing economy, the ones who do tend to be trendsetters, making the spread of car sharing all the more likely. And as we reported when considering the future of the auto industry as a whole: “We are at beginning of profound shift in the way we all get around,” said Luke Schneider, CEO of Silvercar and former CTO of Zipcar. Indeed.