Forget the Zipcar Avis Deal: Rent Cheaper with Peer-to-Peer Car Sharing

Avis Zipcar
Avis Zipcar

Avis Budget Group's (CAR) purchase of major car-sharing player Zipcar this week for $500 million validates the popularity and potential of the car-sharing industry.

But though Zipcar controls 75 percent of the $400 million and growing car-sharing market in the U.S., there may be a smarter way for you to get a temporary set of wheels on the cheap: peer-to-peer car sharing.

It's a fundamentally different business than the type operated by a firm like Zipcar, which maintains fleets of vehicles for those in need of a temporary road whip. Peer-to-peer car sharing programs don't provide cars at all -- just connections between car owners and people who want to rent one.

So before you rent a minivan for a holiday in the country, or a truck to do a run to Costco with friends, consider using a company such as RelayRides, which has participants in 1,200 U.S. cities; Getaround in San Francisco and the Bay area; or Jolly Wheels, which operates in New York, Arizona, Florida and several other states.

For the renters, peer-to-peer wins because it's cheaper, and their insurance is covered by the peer-to-peer companies, (unlike the car owners, who have to pony up for extra insurance for their vehicles if they're going to make money renting them out).

Peer-to-peer participants can get cars for as low as $15 to $30 a day. By contrast, Zipcar participants in New York City, for example, must pay a one-time $25 application fee and a $60 annual membership fee on top of the $9-an-hour or $83-a-day rental rate.

RelayRides CEO Andre Haddad, who says his average customer pays $50 a day for a vehicle, views peer-to-peer car sharing as the automotive equivalent of AirBnB, and fulfilling a similar purpose to eBay, his former employer.

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"It's a marketplace to connect people who have something with people who don't," he said. "And people in this economy are not buying cars or not buying second cars, which depreciate, lose value, sit in your driveway or garage."

His virtual platform and others like it give those "have-nots" a way to harness the millions of cars sitting idle across the country without making big investments in vehicles they might need only occasionally.

How ready is nation for peer-to-peer rentals? RelayRides' move to expand beyond its early San Francisco and Boston markets only began in March 2012, and, as was previously noted, it has cars available in 1,200 cities today.

Zipcar, by contrast, finally turned a profit in in the third quarter of 2011, a decade after the company's inception. That's because managing a fleet, renting parking lot space and negotiating the corporate infrastructure makes for a low margins business.

Peer-to-peer companies, which take a 40% cut of the action car owners, serve merely as conduits with low overhead. That allows the rates to drop, with owners setting their own prices according to guidelines from companies based on year, make, model, and location.

Because the cars are widely sourced, people have access to snazzy models like a BMW Z4, high-capacity stuff-movers like the Hyundai Santa Fe, or basic transportation like a Honda Civic.

"We have brands if you want to have style and not just to go from point A to point B," Haddad said, "But because we're a platform business, it's easy for renters looking to save money."

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