Sunday, May 09, 2010

The other next big thing: Peer to Peer Carsharing (updated)

(This posting has been updated 10-1-2010 to reflect new information.)

A couple of months ago I had in mind 2 "next big things" - car2go and peer to peer (p2p) carsharing.  I've held off writing about p2p in anticipation that RelayRides would go live and I could talk about it as it actually works not as a hypothetical.  (Full disclosure, I'm consulting with RelayRides.)

Since then p2p carsharing and car rental has been all over the internet — Spride, Gettaround and Go-Op in the US; Whipcar and Wombat Car Club in the UK.  For what it's worth, there's a parallel movement to peer to peer car rental going on, as well — Spagg (apparently now defunct) may have been an example, and there are similar p2p car rental companies in Germany and Australia.)

What is peer to peer carsharing?  It's traditional carsharing using privately owned vehicles temporarily made available to a carsharing company for others to drive.  Like traditional carsharing the vehicles are decentralized, they're available by the hour, and they include gas and insurance in the rates (ideally full insurance coverage, not state minimum coverage).

But first, a point of clarification: some of the services that claim to be carsharing don't actually meet what I would call the minimum requirements for calling themselves carsharing — most importantly lacking "unattended access", through a lockbox or electronic technology.  If you've got to meet the owner to exchange keys at the beginning and end of the trip I just don't see how that will provide sufficient convenience of access for drivers.

Here's why I think unattended access important: if you want to  claim to be carsharing I want to be sure it will deliver the benefits that so many of us have worked so hard to establish over the years — fewer cars on the road, fewer parked cars, VMT reductions, increased use of transit, bicycling and walking. If not, why should local governments support carsharing?   Car rental, even so-called hourly car rental, has never demonstrated these benefits.

Because of the lack of unattended access, in my mind, this excludes Whipcar as real carsharing at the present time.  Fortunately, the major players all appear to be talking about some sort of technology, so, by my definition RelayRidesSprideGettaround and Go-Op are bona fide peer to peer carsharing services.  (Caveat, the functionality of the technology offered by each service could be significantly different.  )

Why is peer to peer so attractive?  

Well, it's certainly a good deal for car owners, who can easily make several thousand dollars a year from their car ("Don't work for your car, make your car work for you," as Spride says.)  Need I say more?

For the carsharing member (driver or renter in p2p terms), some adjustments will be necessary — it seems likely that in most cases instead of knowing a couple of favorite vehicle locations near your home or office, you'll have to go on the internet (or ideally smart phone) to locate the cars that are available during the timer period you have in mind; and there may be a little anxiety finding the location the first time, particularly in cities.

For the carsharing company it transforms a major expense (leasing or owning the fleet) into a variable cost that they only pay when the car is actually making money.  And, the lower cost structure means that carsharing can be feasible in less dense, more suburban locations (i.e. lower hours per day utilization), increasing the benefits of carsharing beyond the center city and close-in neighborhoods of the relatively few cities in the US that presently have carsharing.  That's the heart of why I think is peer to peer a next big thing.  

A side benefit of p2p is that, in the same way that using carsharing instead of owning a car (or 2) can be a transition to car-lite lifestyle, renting a car out to others may also serve as a transition to a car-lite lifestyle for vehicle owners.  

Why now?

Until now the hangup in getting peer to peer off the ground has been insurance. The issue has been figuring out whether there's an issue (and how to resolve it, if there is) about where/when the vehicle owner's personal auto insurance policy ends and the carsharing policy begins in the event of a claim.  Apparently, the economic climate has loosed up the insurance underwriters' grips on the reins at insurance companies.  (Whatever it takes, I guess...)

Another reason may be the explosion of interest in the iPhone and smart phones in general, which I think will make finding and booking p2p vehicles much easier and more spontaneious than having to log on to a carsharing company web site at home or work.  And, no doubt, the down turn in the economy got the juices flowing with all sort of unorthodox start ups.

Finally, in this survey of peer to peer carsharing, I would be remiss not mention the unsung pioneer in the peer to peer carsharing world: a little community car club in the UK with the unlikely name of Wombat Car Club.  They figured out the insurance years ahead of anyone else and have a very generous payment plan for car owners.  Thanks for leading the way.