Tuesday, June 14, 2005

Cash Car

Dan Luke is one of the most creative thinks about carsharing I've ever met, and is a regular contributor to the World Carshare forum. Several years ago he proposed a concept for incorporating privately-owned vehicles into a carsharing fleet that would lower costs for the CSO and share the risk of low utilization, while providing the vehicle owner with continued access to their car when they want it.

When he first described his concept he wasn't aware that a very similar concept had been implemented as a demonstration project in Berlin between 1998 and 2003. It was called Cash Car and was run by an organization called CHOICE. It enabled people who lease new Audi's to temporarily make these vehicles available to StattAuto members when they weren't needed by the owner. Revenues generated would be applied to lease payments. When the vehicle was used, revenues were split between StattAuto and vehicle owner. There were specific requirement set for the minimum amounts of time a vehicle would have be made available in order to participate in the program. StattAuto maintained the vehicle to insure it met their standards.

Dan's concept went further: he suggested that the vehicle owner should also take responsibility for all cleaning, maintenance and repairs. They could even provide their driveway as the designated parking space. As with Cash Car program, revenues would be split whenever the vehicle is used. If the vehicle owner wanted to take a long trip, of course, they would earn less that month. And, since the amount of money they earn is related to how much the vehicle is available, the owner has incentive to recruit members in their neighborhood.

This concept could be implemented quite easily. First, the CSO would specify the makes and models of vehicles they would consider; then they might lease the on-board computer to the owner and specify the service and repair standards and records so the CSO could verify that the vehicle was safe and reliable. Since the owner would be responsible for some of the wear and tear on the vehicle, monthly repair and maintenance costs would be divided up according to the number of miles driven by the owneer and carsharing members.

There's even a relatively simple, although hardly perfect solution, to the insurance problem. The owner could simply cancel their personal auto insurance and put the vehicle on the carsharing policy, having the amount deducted from the the monthly revenue split. Everyone in their household would all became could be carsharing members in order to drive the vehicle - meaning no 18-21 year olds and no loaning the car (to non-members). In this scenario, when the owner wants to use "their" car, they simply go online and schedule their use of the vehicle just like any other member - getting billed nothing for trips in their own vehicle and regular rates for use of any other vehicle in the fleet. And, like any carsharing member they have to return their vehicle on time or face the penalties!

An extreme, but logical extension of this concept would be for the carsharing company not to own any vehicles at all, only handling marketing, membership processing, insurance, scheduling and billing, leaving all aspects of the vehicles to the individual owners - a real "virtual" carsharing company. Such a service could even be formed as a cooperative association of vehicle owners. Of course, it's easy to imagine such ideas, but much harder to write a business plan around them!

Several detailed evaluations of the project, in German, were completed by the (Berlin Center for Social Research describing the project, also in German, is at the link below.

(Editor's Note: Since the post was written the concept has become a reality - peer to peer carsharing - RelayRides, Getaround and Spride in the US, Wombat Car Club in the UK, and Tamycar.com in Germany, to name a few.  Please click on "peer to peer" label below for other posts on this topic.)