Saturday, January 09, 2010

Some thoughts about 2009

Welcome to the new year. Following are various thoughts about the past year (sometime dropping back a little further into late 2008). (A shorter version of this article appeared on World Streets.)

Perhaps the most important news of 2009 is to acknowledge that car sharing in North America turned 15 years old this year, thanks to Communauto - a silent leader of the industry. Congratulations Benoit, Marco and everyone there.

There continued to be a strong growth in membership in other carsharing cities.  My guess is that most companies also experienced a growth in revenues and profitability, especially Zipcar (since they haven't added any new major cities or expansion in overall fleet size (compared to where they were at the time of the Flexcar merger). I would be amazed if any carshare didn't experience an increase in vehicle utilization (hours per day) helping out the bottom line.

Campus Carsharing — What expansion that occurred in the carsharing industry was primarily in college and university carsharing services - which can be a very good deal for the carsharing companies since they usually involve a contractual arrangement with guaranteed revenues and handling of some (most) of the fleet management to the university. As has been pointed out elsewhere if you look at the budgets of higher education, they really seem to "get" the issues of transportation and are willing to do spend some money on it. Near the end of 2009, Zipcar was at more than 140 college campuses, claiming a growth of 75 percent in the past 12 months, serving a total student population of 1 million.

Meanwhile cities with revitalizing downtowns seemed to realizing that carsharing offered something of benefit and several RFPs ("request for proposals" - tenders to the rest of the world) hit the street - Miami Beach, Baltimore and Pasadena, to name a few. The usual suspects, Zipcar, Hertz Connect, U-Haul and WeCar responded. Meanwhile, in the LA basin, which once had more than 200 Flexcars, several cities are toward putting out incentives to attract carsharing - Long Beach, Santa Monica, Los Angeles city proper - as part of more comprehensive strategy to meet greenhouse gas reduction goals set by the State of California.

(Here's a special note from yours truly to cities thinking about an RFP: please don't try to ask for some sort of revenue percentage from the carshare, at least not in the first 5 years. Structure your RFP so there's as much incentive as possible to grow the service in your city. But do include definite evaluation component so you can document the value of carsharing to your city council and residents.)

Partnerships — carsharing companies made some headway in 2009: I-Go Carsharing in Chicago announced a major partnership with the Chicago Transit Authority, ace-ing out Zipcar, for the Chicago Card Plus - a stored value card for transit travel and an RFID card for carsharing. Earlier, I-Go signed another partnership with the Parks District

Developments — Kevin McLaughlin reminds me that, "In Toronto, the city is finally realizing that its all about parking. Both AutoShare and Zipcar have been taking advantage of the development offsets being granted to new condo builders if they provide carsharing parking in their buildings (often as high as 10 fewer spaces per shared car, in the range of $200,000 cost savings!)" Toronto recently approved its first large condo (300 units) with NO PARKING for residents, and 9 shared vehicle onsite."

The City of Winnepeg also provided a developer an alternative to meeting parking requirements by setting up an in-house carsharing service, since no commercial company operates in Winnepeg at the present time (entrepreneurs, Hertz, Enterprise are you listening?)

On street parking continues to a conundrum for many cities. For some reason most continue not to "get it"! They're happy to provide parking for taxi cabs, which are operated by private companies but somehow providing carsharing is controversial, even though the benefits to the city (of having cab stands) are not well documented and the benefits flow to visitors. (I've got nothing against cabs, which employ people and provide a useful service; I just want cities to acknowledge carsharing.)


On the technology front, the big news was the major investment in French carsharing technology company Eileo by Hertz. Another major development is the joint marketing agreement between Convadis (Swiss car computer maker) and Metavera (Toronto-based carsharing reservation system provider). It was a natural link up since Convadis faced limitations selling their product since they didn't have an integrated reservation system and Metavera was looking for a more fully-featured option to supplement their long-term link up with OpenCar Networks, used by most all of the independent carshares in North America. On the sidelines 5,000 miles away another carsharing technology provider Nic Low of Goget started marketing their own on-board computer for fleet applications at Fleetcutter.

Apps — This was the year of the (iPhone) app (application in non-jargon). Zipcar continued its focus on the flash with what is arguable the industry's biggest (carsharing) marketing coup of all time, scoring inclusion on stage at Apple's World Wide Developers Conference to showcase its iPhone app (replacing the interesting but limited Where app). While scoring headlines and TV segments, as happens with technology, the actual rollout was delayed for months over a seemingly trivial hardware glitch - making sure all the Zipcar's could honk their horns with a tap of the button on the iPhone screen; only to later realize that demonstrations of horn honking capabilities was likely to be highly annoying to neighbors living close to Zipcars (so the feature is only activated after the member has logged in to the vehicle with their member card).

But the independent carshares were on the wave, as well, and Metavera, which provides reservations and support to most of them through the Autovera system, unveiled its a mobile reservation site to work with iPhone, Blackberries, etc., while continuing to improve its web carsharing system with functionality that keeps up with Zip.

Battery electric vehicles edged closer to becoming a viable alternatives to gasoline/diesel with Nissan unveiling the Leaf EV; Daimler, after a year to testing their Smart ED (electric drive) in the UK, started production; BMW demonstrating the EV concept in a Mini, with a host of other companies threatening to manufacture - Norwegian Th!nk finally whirred (one can hardly say "roared" for an EV) back to life announcing a plans to produce their new models in Indiana. The most interesting is Electrovaya, which opened what they called "carsharing" in

Baltimore with a service called Altcar. Although it's being promoted as carsharing, still at year's end all the vehicles were all located at the Maryland Science Center downtown. At the present they still didn't have any electronics to allow unattended access, but I expect they will take the plunge in 2010. Better Place, Shai Aggasi's much promoted and heavily invested EV battery service, which has always indicated it wasn't interested in carsharing, cleverly signed a deal in Denmark for the railroad system (DSB) to operate a public carsharing service at several train stations in Copenhagen and elsewhere. Finally, the City of Paris continued to move closer to their Autolib, EV carsharing system, taking time out in 2009 to get the surrounding cities to participate in the program as well. Similar to car2go, Autolib would offer one way carsharing between stations. Planning on up to 4,000 vehicles in Paris and surrounding communities, Autolib could completely redefine public transportation in Paris, in much the same way the Velib revolutionized bicycle travel there. Or it could be a bust... (or something in between). This Business Week article contains a good update of the status.

Meanwhile, given the US fascination for plug-in hybrids, in 2009 Zipcar followed HourCar (including a solar recharger station) and Autoshare into the Plug In Hybrid world with a single vehicle on their system in San Francisco.

Some comments about specific companies during 2009

Hertz Connect continued to grow their fleet in Manhattan up to over 400 by the end of the year - certainly attracting members that have been frustrated with Zipcar's on-going customer service problems there. Near the end of the year Hertz surprised everyone with announcements of major new international operations in Madrid and Berlin. Fleet sizes in existing cities are up slightly Paris now with 77 and London at 115. Hertz did send a message to Zipcar by listing 4 cars in Boston and further challenged them with token vehicles in Chicago and San Francisco.

U-Carshare (U-Haul) went live in Salt Lake City with 28 vehicles - concluding a protracted RFP process. The Salt Lake operation branched out from the traditional ad-covered PT Cruisers with a wide range of vehicles, including the requisite Mini Cooper, hybrid Civic and Ford Escape, Prius, as well as Toyota Yaris, Mazda 3, Ford Focus and several pickups and larger Ford vans, both passenger and cargo configurations. In other cities, such as Portland, Oregon, U-Carshare vehicle numbers are static and they continue to take a very passive approach to marketing - with no visible advertising other that on-street here and presence at a couple of public events.

WeCar (Enterprise) - continues to play its cards very close, with several university/college deals including University of South Florida in Tampa and some fleet management contracts (with carsharing reservations and access systems). Of course, Enterprise has the biggest challenge integrating carsharing into their existing business model of any car rental company since they already have extensive network of neighborhood rental locations, which, arguably would lose a little business from carsharing but would also likely funnel some longer-term rental business they would otherwise have missed

Independent carshares in North America continue to move forward - most continuing to grow at a more modest rate than previous years. Philly Carshare is on the upswing after disastrous decision to terminate members and raise rates. Nonprofit Boulder Carshare signaled a change of strategy with it's new name EGo, expansion and upgrade of its fleet in Boulder and more significantly locating 2 vehicles in Denver, joining OccasionalCar there (see below). They continue to offer vehicles at the remarkably sensible prices of $4/hr. + 30¢ per mile. Another nonprofit, Austin Carshare, which has been struggling to figure out where the capital to grow would come from since its founding 3 years ago, sent out a letter in the fall to members that they were considering becoming a cooperative. Nothing decided yet - perhaps watching what happens to car2go. Chicago's I-Go Carsharing passed the 13,000 member mark announcing further expansion in targeted suburban pods including Oak Park, Evanston, Skokie, Forest Park, and most recently Des Plaines. Cooperative Auto Network in Vanccouver continues to provide excellent service and supports a number of smaller services in British Columbia with their Carshare Everywhere reservation system.
Both CAN and Autoshare in Toronto have demonstrated for years that in car technology isn't an essential element for a successful carshare although both are finally edging toward it.

New carshares on the street included: CuseCar in upstate Syracuse, New York with a commitment to hybrid gas-electric and alt. fuel vehicles. They are installing EV Chargepoints around the city. They have up to 5 locations. CuseCar has been remarkable in it's ability to attract funding for alt. fuel vehicles ($150K from the NYSERDA) as well as funds to remodel the old Syracuse train station downtown. CarShare Halifax (Nova Scotia, Canada), the furthest east carshare in North America completed it's first year of operations, having launched in December 2008. CarShare HFX is approaching 10 vehicles now. Also launching in December 2008 nonprofit Carshare Vermont serving Burling and Winooski, Vermont. They're up to 9 vehicles and 450 members. At almost the same time for profit CSO OccasionalCar launched in Denver in early 2009 and has 6 vehicles. Finally, in another name change, Roaring Fork Valley Vehicles in Aspen, Colorado changed its name to CarToGo, further crowding the "car to go" naming - joining car2go is Israel and Daimler's car2go in Ulm and Austin.

Meanwhile there's a host of smaller carshares all over the US and especially Canada - with 5, 10, 25 vehicles. And there's continued interest in startups for the second tier cities that the "big boys" don't seem to want to do into. (Portland would probably not have carsharing today if Zipcar or Flexcar were making the decisions.)

Zipcar - last but not least, the market leader probably crossed the line into overall profitability, amidst several mentions of an Initial Public Offering sometime in the not to distant future. They've gotten to profitability by very carefully managing their business - continuing drive more usage (hours per day) on the existing fleet. What expansion they did was primarily in contracted deals with universities, which produce a good flow revenue.

Near the end of the year Zipcar
announced another overseas investment, in Avancar, Barcelona, Spain.
The exact terms of the investment are a sketchy but it's going to give Avancar the ability to grow and there's certainly plenty of potential in Barcelona, as well as other cities in Spain. Laying the groundwork for this expansion was an analysis and
press release claiming a world wide potential for carsharing at 37 million members and over 10 billion dollars in annual revenues.

Ikea — You might have missed it, but back in March, there was a minor flurry of speculation that multinational retail giant Ikea might be getting into the car business under the brand name of Lesko, around which they developed a stealth marketing campaign. Speculation ran from manufacturing a vehicle to operating a carsharing service. It turns out Lesko IS a carsharing service - but in the UK sense of the word - and what Ikea did was set up a "covoiture" ride board on their web site so people could hitch rides. (How they would get all their stuff home is not explained.) If they'd waited just a little longer they could have bought Saab or Volvo!

Next big things

The big news in my mind was the launch of
car2go in Austin. It's a very gutsy move on Daimler's move to launch in an archetypal US city. As I have said elsewhere, I don't believe that car2go is necessarily targeting the classic market, so it has the potential to be the game changer that American urban transportation needs.

I haven't (yet) written about it (since I'm directly involved with it), but another start up that announced itself in 2009 promising to unveil another operating scheme -
RelayRides - the first peer to peer (or person to person) carsharing service. It will enable private car owners to make their vehicles available for carsharing for a day or more at a time with the possibility to earn a substantial chunk of money each year. Of course, the operational challenges are significant since you now have to manage both the member/driver and vehicle owner sides of the equation. But, heck, what's technology for, anyway?

So, what did I miss? If so, please click on the
Comment button below and remind me what's been happening in your carsharing world. Best wishes for 2010.