There are several innovative car sharing models revolutionising the way we get around.
Everybody needs to get around. And sometimes it is convenient to be able to access a vehicle for a short period without having to own one. In recent years, some innovative and creative options have been arriving on the scene. One is a car sharing model that involves renting out, by the hour, vehicles from a company. Originating in Germany and Switzerland during the 1980s, this template spread to other countries.
The first business of this type to arrive in Australia was GoGet, established in 2003 by Nic Lowe and Bruce Jeffreys in Newtown, Sydney. While they initially considered lobbying government to support this new service-based approach to mobility, they soon realised that it would make more sense to take the plunge and set up their own business. Starting with three vehicles and twelve members, over the years GoGet has thrived. Today it has expanded to more than 2,500 vehicles, while the number of members has nearly hit the 100,000 mark. A few similar businesses have joined them in the marketplace.
Who, why, and how?
This model works best for higher-density inner city suburbs. This is because car parking spaces are in short supply, and where available, are expensive. Critically important for the take-up of car sharing is easy access to a vehicle, within a few minutes’ walk of one’s home. In the City of Sydney, twenty per cent of residents are signed up to a car share service. Car sharing businesses rely on the goodwill of local councils in provided free parking spots, known as ‘pods.’ At other times, vehicles are parked in unused driveways. Conversely, the lower population density in places other than the inner suburbs, where the closest share car may be kilometres away, is a strong deterrent for potential customers.
Households most likely to transition to car sharing include those where the family car is rarely used, and public transport is the usual means of getting around. Another common scenario involves a couple owning two cars, both of which are rarely being used at the same time. Environmentally, there are several benefits, the most important being fewer vehicles purchased new; it has been estimated that one shared car removes about 9-13 cars off the road. A 2011 study carried out by the consultancy company Ricardo estimated that the manufacture of a new car is associated with 5.6 tonnes of CO2-equivalent worth of greenhouse emissions.
Other than utes and vans that are useful for carrying bulky items, and a few four-wheel-drives, car share vehicles are frequently small and economical, with some being hybrid or electric. Members also drive less distance than the typical Australian motorist. Research from GoGet found that they averaged about 20% fewer annual kilometres.
Parallel with this, car sharing offers financial savings to those who take it up, releasing drivers from the hassles and expenses associated with ownership. Rego, insurance, repairs, and fuel are usually incorporated within the fee structure. This tends to involve a monthly or annual subscription, hourly rental, and a per-kilometre charge.
While the best savings are achieved when accessing a vehicle for an hour or two, all-day bookings can often be made. With daily costs in the same ballpark as traditional car hire companies, car sharing can offer the advantages of proximity to home and a lack of bureaucratic paperwork. Cars are commonly booked via a mobile app or online, and are frequently accessed through swipe cards.
GoGet and its competitors are pursuing a further business opportunity in the form of vehicle fleets. Here, the headache of fleet management for businesses can be partially outsourced. For example, GoGet supplies a car at the Optus head office at the Sydney suburb of Macquarie Park. It has also teamed up with Ikea, in an arrangement where its vans are provided outside all of the Australian stores, to facilitate home deliveries.
Below are some car share options in Australia, and the cities in which they operate:
- GoGet (Sydney, Melbourne, Brisbane, Adelaide, and Canberra)
- GreenShareCar (Melbourne and Perth)
- Flexicar (owned by Hertz, in Sydney, Melbourne, Brisbane, Canberra and Perth)
- PopCar (a new entrant into the market, Sydney and Canberra only)
- Student Car Share (for students and university staff only, vehicle stations all located across four campuses.)
Peer-to-peer car share
In addition to the business-to-individual model, another variation is Airbnb-style peer-to-peer car-sharing. This is part of the sharing economy, also known as collaborative consumption, where under-utilised resources are put to work in order to earn extra income rather than sitting idle. A good starting point is the average car, which sits unused for around 23 hours per day.
Australian companies active in this field generally avoid direct competition through targeting different types of customers. Car Next Door offers hire for a period of an hour up to a few weeks. Operating in Sydney, Melbourne, Newcastle, and Brisbane, it is a cheaper option than corporate GoGet-style car sharing. In Melbourne, councils have begun allocating the company free parking spaces.
DriveMyCar has nationwide coverage, and operates with longer hire periods of a week to a year. Longer rentals apply when a car is not being driven due to circumstances such as the owner being overseas. Another company named Eveeh specialises in electric car rental, focusing on the Sydney-Canberra-Melbourne route. Understandably, its prices are correspondingly higher.
Compared with business-to-individual car sharing, a survey of the ProductReview site shows a higher level of customer satisfaction among peer-to-peer users.
Renters have the freedom of driving for an agreed cost without the headache of big or unexpected charges. Registration, compulsory third party insurance, collision damage waiver, servicing, maintenance, and roadside assistance are usually paid by the owner, with the renter responsible for fuel and tolls. Car Next Door has a policy of offsetting the CO2 associated with driving. DriveMyCar has branched out by partnering with Uber to supply vehicles to would-be UberX drivers who do not own a suitable car.
It is common for owners to have reservations about sharing their vehicle because they worry about theft or damage. Experience has found that these fears are exaggerated. Renters are generally more careful with vehicles than the owners expect. Protection mechanisms in place include comprehensive insurance, and pre-screening of members. Car Next Door also has GPS tracking in every vehicle. In addition, they have a monitoring device that watches for excessive speed, acceleration, or harsh braking. It also makes use of an eBay-style feedback and rating system.
One downside to the sharing economy is that it encourages the evolution of corporate giants such as Uber and Airbnb. These bahemoths naturally apply their financial muscle lobbying regulators to further their economic interests. Such a phenomenon could occur in the peer-to-peer car rental sector too.
A third option is old fashioned car pooling, but with a more modern twist. A range of websites including Coseats.com, ShareURide, Carpool Club and LifeSocial provide a space where vehicle owners can be matched up with prospective passengers. Some focus on longer road trips, while others are more geared towards short commutes. There are numerous other local and regional car pool initiatives, including several running at universities.
Unsurprisingly, car pooling offers several environmental benefits. Having less vehicles on the road relieves congestion and curbs pollution while cutting down on carbon emissions. Socially, drivers and passengers have the opportunity to meet new people and make some friends. Financially, drivers recoup some of their travel expenses, while passengers can travel for below the cost of public transport. A tip for drivers is to avoid charging more than a share of vehicle running costs, as this could invalidate insurance and affect income tax.
For car-less travellers, car pooling represents a safer and more organised alternative to hitching. The use of online platforms can narrow down the types of people you prefer to ride with. Therefore, you can choose qualities of riders, such as gender and smoking habits. Coseats.com and LifeSocial both have a noticeable focus on ensuring security.
Commonly, neither the vehicle owner nor the rider pays fees to the platform owner. So one challenge is a lack of a profitable business model. This has led some players to diversify into the fields of car hire and vehicle relocations. Carpool Club has devised an innovative smartphone-based system. Here, payment is made in the form of special tokens, equivalent to units of distance, purchased through the company’s app. When these are transferred over to the driver, Carpool Club receives ten cents per token.
For car-sharing, peer-to-peer sharing, and car pooling, innovative business models are making it possible for Australians to avoid owning a car without being disadvantaged. The growth of the car-sharing sector is an encouraging trend that offers a range of environmental and social benefits.
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