Carsharing Year in Review - 2011

2011 has been a landmark year for carsharing in the US and worldwide. Here's my annual review of developments in carsharing for 2011.

Before getting into specific developments, I'd like to make two general observations:

Are we seeing a demographic tipping point? — This was the year when the mainstream marketers admitted that many in Gen Y ("the Millennials") weren't thinking about cars the same way their parents were - they'd rather have their iPhone than a car. Car registrations and VMT are down; significantly fewer teenagers waiting before getting their driver's licenses; and especially an explosion of bicycle use in cities (even those without bike-friendly reputations).

I've always thought this 2009 headline in the Globe and Mail (Toronto) newspaper captured this shift in thinking about cars very nicely - "Object of desire or necessary evil?"

Parking is fundamental - Parking is a fundamental but often under appreciated aspect of car use. It wasn't until Donald Shoup layed the cards on the table in his landmark "The High Cost of Free Parking" that most of us realized just how fundamental parking really is. And carsharing operators also know how fundamental parking is to the success of their business. That's why designated parking on public streets has been such a holy grail - convenient access and great marketing exposure. And, as you'll see in several items below, some carsharing companies are slicing the parking issue in new ways - car2go and Zebramobil, as well as RelayRides in San Francisco are opting for floating parking (among other things).

And while on the topic of parking, I can't ignore the really goofy decisions that led to a bidding war for dedicated on-street parking spaces for carsharing companies in Washington DC during 2011.  DC has had a troubled history with carsharing parking, almost from the start in 2001 on-street parking seemed to generate more negative publicity than I've heard in any other city.  I'm sure the companies don't mind paying for such a valuable resource but for something that supposed be good for the city, the "bidding war" seems like a terrible to try to backfill the DDOT budget.  And if press reports are any indication, Zipcar probably didn't handle things as smoothly as they might have.

Now on to the big news of 2011:

Zipcar IPO — it finally happened!  After several years of speculation, Zipcar's new life as a publicly-traded company started in April.  And it got off to rousing start jumping from the $16 asking price to over $30 for a few days and then back to the mid teens, where it's been most of the time since then.  Since then investors have been debating the underlying fundamentals of Zipcar, and trying to understand carsharing, in general.

I think the significance of the IPO is, first and foremost to legitimize carsharing as a valid business model that investors can and should take seriously - a sort of "coming of age" for carsharing and new mobility.  So far profitability seems to be just out of reach for Zipcar, but they seem to be close enough and seem to have a big enough scope that investors continue to be cautiously optimistic. The market has spoken — certainly for North America but to some extent worldwide, as well.

Auto Manufacturers Enter the Carsharing Space — Daimler's car2go service started rolling out new cities at an amazing pace in 2011 — with gasoline-powered Smart cars in Hamburg, Germany, Lyon, France and Vienna, Austria in Europe and Vancouver, BC in North America and all Electric Drive Smart service in San Diego, Calif. and a day later in Amsterdam, Netherlands.

Meanwhile BMW launched it's look-alike one-way service in Munich and Berlin, Germany, albeit with larger (but still small) vehicles - 1-series and Minis.

On this side of the Atlantic, GM announced a partnership with RelayRides to integrate the OnStar vehicle telematics system with the peer-to-peer carsharing service - providing a potentially powerful marketing channel and at least partially solving RelayRides technology dilemma.

New Operational Models — As far as re-thinking the internal operations of traditional carsharing, peer-to-peer has been getting most of the attention.  Changing the cost of fleet from a fixed to a variable expense that is paid only when an actual rental occurs, changes the finances of the operator significantly.  It also changes the internal management responsibilities significantly, redefining the fleet managers' job to a marketing job to sign-up and manage vehicle-owning members.  So far signing up car owners does not appear to be a major hurdle.

There are some other interesting experiments that got underway in 2011, as well. In Munich, Germany, Zebramobil has implemented a round-trip service without fixed parking locations.  Vehicles must be left within a several block distance of various zones.  As with car2go, members find a vehicles in each zone via the internet.  In Nice, France, a high profile well-funded all EV carsharing service, Auto Bleue, got underway.

Autolib — In less than a year from contract signing the Bollore Group began the roll out of the service in Novemeber and December.  Opreationally, Auotlib vehicles must be returned to an available Autolib charging bay, unlike car2go's electric fleets in Amsterdam and San Diego, which can be parked anywhere (legal) within the floating parking zone.  Rates are almost identical between Auotlib and car2go.

Autolib is in a category by itself given the major commitment from the City of Paris government and significant private investment (reportedly € 50 million) by Bollore Group itself. As with the Velib public bicycle system, the world is watching at this distinctively French undertaking.   London has already expressed Autolib envy.  But it remains to be seen whether Autolib will serve as a model for the development of EV auto mobility services in other cities.

New service models — While peer-to-peer slices the operational issue of fleet in a new and potentially very profitable way, as far as users are concerned it's still the traditional reservation-based, round trip carsharing service model. In 2011 on-demand, open-end, one-way carsharing really burst on the scene - in both Europe and North America.

I think it's under-appreciated just how completely new on demand, open-end, one-way carsharing services like car2go, Drive Now and Autolib, really are.  On-demand overcomes a significant consumer complaint about traditional carsharing - requiring a reservation and especially having to specify the end time of the trip. A few services in Europe have successfully implemented "open-ended" trips but the challenges of maintaining good utilization with this great amount of flexibility for the user is daunting for any company, and especially a smaller companies.

The implications of these on-demand services on other modes urban transportation are really unknown at this point and I eagerly any shreds of information from modal split research. I expect they will show that a significant number of trips are by "card-carrying" car owners who use the service simply because parking is so easy with these services. But some of these trips may be taken from transit, as well. In the long run, I think it will be another transportation option that leads people away from car ownership.

Smaller carshares doing just fine, thank you — With all the attention being paid to the "big guys" 2011 saw the entry and expansion of a number of smaller carsharing operators, as well.  New operators include Time Car focusing on university campuses in Oklhama and Texas, PATS Carshare in San Jose. And joining the P2P universe Wheelz in  In Australia new entrant Green Carshare took over CharterDrive and the UK continues to see the launch of new car clubs serving much smaller cities and towns than anywhere in the US and many parts of Europe. The industry is now at a place where just keeping track of the companies is a major commitment.

Although college campuses seemed to be where most of the expansion in North American carsharing was taking place, most surprising to me was the move by NYC-based Mint Carsharing moved into Zipcar's home turf in Boston/Cambridge, Mass. taking over a recent start up as their toehold in the marketplace.  I expect there's plenty of room for growth in the Boston market and entering a market where an existing operator has already started the education process simplifies things somewhat.

And long-time carsharing companies, Autoshare, CommunAuto, Modo, I-Go, HourCar, LAX Carshare and City Carshare continue to thrive.  They are joined by host of smaller community-based groups doing great work serving their local areas.

2012 promised to be even more interesting, which I'll sketch out in another post.  If you want to see last year's review, it's here.  Best wishes for the new year

Germany Proposes Law to Promote On Street Parking

The July 5, 2007 edition of Die Zeit included a story describing the conflict in Germany over a national law that would allow cities to designate on-street parking spaces for carsharing vehicles. The law was passed in June, 2005 by the Bundestag but the regulations are now being put forth. The article indicates that cities, which are actually the ones that would decide about the parking, have been reluctant to approve any on-street parking for carsharing because the Federal law was unclear about their authority to do so.

The article goes on to cite the benefits of carsharing to city congestion and as a money saver. It mentions that the number of carsharing vehicles in Germany rose by 7.4% to a total of 2,900 this year. But it mentions that Germany still has a ways to go since Switzerland has 8 times as many members as German carsharing companies.

The article quotes Willi Loose, president of the Bundesverband Car Sharing (German Carsharing Federation) calling for a clear definition of carsharing that will exclude car rental from being able to use these "public" parking spaces; as well as the possibility that clever citizens would figure out a way to get a carsharing space (for their personal car) designated right in front of their house. Loose suggests the definition needs to include "membership" and distributed/decentralized vehicle locations.

Finally, the article mentions that the German Automobile Association and the German Retail Trade Association supports the idea of on-street parking. Interestingly, the only opposition quoted in the article was from the "state" of Baden Würtenberg, which the articles points is where the major German automakers are headquartered.

You can read the article, in German here. There's more information on the on-street parking issue on the German Carsharing Federation website, including PDFs of the responses from the various German states about the regulations (in German, of course). My German is only slightly better than Google's so if I've misunderstood things in the article, let me know.

The High Cost of Free Parking

Making shopping areas less auto dominated is an important step to encourage people to walk and cycle more, making carsharing more practical for more people. Over the years Professor Donald Shoup of UCLA has promoted the idea that free parking is one of the ways our society, through its planning and zoning requirements, unwittingly provides incentives for people to drive.

Shoup argues that even cities with meters price their parking too cheaply, encouraging driving. Shoup showed the City of Pasadena how they could redevelop their downtown core using revenues from parking meters and wrote about it his landmark book "The High Cost of Free Parking".

I've mentioned Prof. Shoup's ideas to many people over the years and, if you're not familiar with him, here's a 6 minute video interview with him recorded during a visit to Manhattan. It's from an excellent website Streetfilms.org, a project of Manhattan Renaissance, which promotes "re-imagining the city's public spaces and making our streets safer for pedestrians, bicycles and non-vehicular modes of transportation."

(As an aside, if parking shouldn't be free then why shouldn't carsharing pay as well? My response is: why "tax" something you want to encourage? Arguably, carsharing has as much social value a bus stops and taxi zones, which don't pay. But if you feel you really have to charge carsharing companies for their on-street parking then be sure you're charging other non-public users of the curb space appropriately, as well.)


ADDENDUM

Salon Magazine has printed an excellent, short overview about parking that's well worth a read, quoting Shoup and others about the impacts of free parking.

Flexcar hits a few bumps in the road in Pittsburgh

In what seemed too good to be true, Flexcar's Pittsburgh launch is hitting a few bumps along the way.

The deal was this: local Pittsburgh businesses would step up and contract for a substantial amount of monthly car usage over a multi year period - Flexcar had a revenue stream from day 1, businesses had cars, Pittsburgh had carsharing. Flexcar's arrival with 20 cars on May 1 was championed by the Downtown Pittsburgh Partnership, a booster organization.

Cars are located in downtown and Oakland neighborhood, near Carnegie Mellon University and the University of Pittsburgh, although there's no special program established with either school yet. This is somewhat surprising for Flexcar, given that it has unique insurance allowing it offer membership down to age 18. The cars include hybrids, compact sedans, minivans, Honda Elements and a Mini Cooper, which, as usual, got most of media attention.

But along the way, the city's commitment of $10,000 has become a public political football between the supportive Mayor and a vocal City Council member. Councilman Bill Perduto claims he's a supporter of using carsharing to offset the city's fleet but just wants to see the city fleet actually get smaller in return for the money the city is paying Flexcar for vehicle usage. And Perduto wants the criteria for when city staff should use a Flexcar or the city fleet to be spelled out in advance. He also wonders why there wasn't competitive bidding for the relationship.

In the latest bump, KPXI , a local TV station, noticed that 8 of the 19 Flexcars already in place didn't have safety inspection or emission test stickers displayed, a violation of state law. They also discovered that one of the cars didn't have the required registration sticker on the license plate. Egg on the face of the local Flexcar staff. Flexcar assured the station that would have all cars up to standard within a week. The station also questioned why public on-street parking was "given" to Flexcar.

Thanks to PopCity for the picture (above). They've got a good description of Flexcar in Pittsburgh on their site.

How can local governments suport carsharing?

Robin Chase, founder and former CEO of Zipcar, recently posted a very good response to the question of how cities can encourage the growth of carsharing. Robin has graciously allowed me to reprint her response.

"Here is advice offered up to some city government officials in answer to the question: "how can and should a government support the development of Car Sharing Organizations (CSOs). As I write this, I note that many things revolve around the major cost items of running the business.

1. Car insurance. Insurance is very difficult to obtain in this nascent industry since the insurers have no experience with the risk basis, and it is a major cost to the CSO. It took years of accumulating data to finally get our insurance rates down in line with reality. Establishing some kind of pool for just the catastrophic incidents is an important way in which insurance risk can be tiered, making insurance affordable.

2. Parking. Parking ranks right up there as one of the largest variable costs. CSOs compete with individual's costs of maintaining and parking their own vehicles. If private parking is available on-street (cheaply), this makes the CSO service relatively more expensive than owning your own car and parking it on-street for free or close to free. Likewise, the convenience of on-street parking can make car-sharing (or private ownership) that much more (less) appealing than the alternative parked deep in large garages. This can swing both ways in supporting or creating an additional hurdle depending on where (and price) of the residential housing stock.

My best advice here is: Offer up some parking spaces (municipal lots or on-street) for one year agreements to whichever car-sharing company wishes to bid on them. In the early years, you will likely have only one company bidding, and their bid will be close to zero $/month. As the business gets more established, and as competition enters the market, the value for specific parking spaces to specific companies will rise: the city will enjoy the additional revenue, and more than one company can compete in specific locations (especially if you can offer up more than one space in a location). This seems like the most fair way to both nurture a budding industry, as well as accommodate success and competition.

3. Marketing. This is very very dear to both starting and existing companies. The city has lots of resources to get the word out to residents at very low cost. Providing this ability, whether the area has one or many competing companies is critical, and keeps the costs of providing the service down. For example, on bus, subway adverts, or information mailed out to residents that renew vehicle registrations, etc. Again, please make sure to offer this service if there is only one company, and quickly accommodate the addition of other competitors as they arise.

4. Taxing, Zoning, Plating, Parking Permits. Zipcar operates in many cities, counties, and states across the US and now Canada (Toronto). Obstacles have included: residentially zoned neighborhoods where the inclusion of a car-share parking space could be construed as "business" and thus not allowable; a business tax applied on each and every parking location as if it were a separate "business establishment"; per transaction taxes meant for car rental that make the economics of hourly rental impossible (i.e. $10/rental tax ... if you rent for just a few hours that makes it economically unreasonable); are these vehicles plated commercial or residential? In Boston, commercial plates pay a higher rate at the toll booths, and get to park in loading zones. We would like to pay residential rates at the tolls and not be allowed to parking in loading zones... In any event, you can imagine how these can cause issues, some of which are easier to resolve than others.

5. Geographic carve-outs. If my memory from 3 years ago serves me, London offered up its support for carsharing on a borough by borough basis (?). I think this is problematic because, like most businesses, carsharing does best when it can scale. Also, users very much stand to gain from competition (improved quality of service) and a large network (i.e. a member can pick up a car from both work or home, without having to join two companies). Again, this is an easy issue to correct going forward."

-- Robin Chase (Founder & former CEO of Zipcar)

If you'd like to see the orignal thread from the World Carshare discussion, click on the LINK below (YahooGroups ID required).

Portland Considers Changes to On Street Parking Policy for Carsharing

The City of Portland's two year old pilot program providing free on-street parking for carsharing has been evaluated and new guidelines have been proposed. The city has provided Flexcar about 70 parking spaces, 34 of them in metered parking zones. Most are marked with the orange "Options Zone" poles to represent multi-modal options at that location. The city estimates that lost meter revenue and cost of installing signage for the spaces cost them $60,000 last year.

The proposal is based on recovering lost revenues - averaging $1,700/year from parking spaces in the meter zones and the administrative costs for all spaces estimated at $264/year. A cap of 50 meter spaces for each of up to 2 carsharing companies is proposed (they anticipate that another carsharing company may open up in Portland) but there would be no limit on the number of parking spaces in non-meter zones. (Zipcar continues to list Portland as a future city but Enterprise Rent A Car appears to be angling for consideration as well.)

The proposal describes the rationale of the fees for metered spaces as follows:

"Rather than set the fee based on average revenue and costs, the recommended policy would allow individual permit fees to reflect the actual demand for each parking space. Using parking meter data, permit fees would be set and adjusted on an annual basis to reflect changes in demand (based on meter revenue) on each block face.

Based on average daily meter revenue for March 2006, the highest annual permit fee for existing metered Flexcar spaces would be $3046 ($2782 + $264) and the lowest fee would be $435 ($171 + $264). Phased in over two years, the total permit cost for Flexcar’s existing 34 metered and 38 unmetered spaces would be approximately $35,00 (50% of full costs) in the first year, and approximately $70,000 (100% of full costs) in the second year."

Using Flexcar Portland member survey data from the Nelson/Nygaard TCRP report, the evaluation looked at the success of the on-street parking program using four criteria:

• Public benefits - the evaluation cites substantial public benefit from reduced transportation expenses and increased mobilityfor residents, as well as reduced parking demand - perhaps the most direct benefit of all.

• Environmental benefits - sustainable land use, VMT reduction, reduced air and water pollution, increased use of transit, biking and walking.

• Operational and Enforcement issues - Mentions need by CSO for advance notice of street cleaning and street repair; better signage for the parking spaces; use of carsharing spaces by police vehicles; regularize procedure for requesting new spaces

• Administrative issues - The report mentions that both Flexcar and Zipcar have both received substantial investments and should no longer be considered startups deserving of special subsidies. It also mentions the Portland Office of Transportation is facing an $8 million budget shortfall next year and is seeking cost-recovery where ever possible, while continuing to support mobility options that benefit citizens.

The city staff wants to establish a formal parking policy to provide the dedicated parking spaces for carsharing as part of its commitment to carsharing as an important part of multi-modal transportation in Portland. At the same time the city has to strike a balance between competing parking users, including business owners in meter zones, most of whom put a very high value on short term parking, especially the spaces directly in front of their businesses.

To build support for lowering parking costs Flexcar recently sent members an email encouraging members to write the city about the proposed policy. It hinted that the additional costs of parking could necessitate a rate change in the future.

A local transportation policy blogsite has had extensive interchanges on the subject here. Several comments by local urban transportation professionals on the blog supported the idea that the city should not limit itself to making spaces available to only two companies and disagreed with the idea of trying to recover lost meter revenue because of the substantial public benefit of carsharing. One commenter agreed that the issue was lost meter revenue but it wasn't the revenue lost to Flexcar but that present meter rates were too low ($1.25/hour) since there were so few vacant spaces downtown. They suggested raising the rates and (shades of Donald Shoup) using the revenues to fund transportation improvements.

I will be posting my own comments about the policy soon.

The proposed policy is at the LINK below and you can download a copy of the report from the page. The city welcomes comments until May 26.

San Francisco May Mandate Carsharing Parking

San Francisco is about to mandate carsharing parking in new downtown residential buildings (C3 zoning district). It would be mandated at 1 carsharing space for every 200 dwelling units under a proposal passed by the Board of Supervisors last week, but not yet signed by the Mayor. Bicycle parking would also be mandated at 1 space per 2 or 4 units depending on the size of the project.

The heart of the proposal is to move from mandating minimum ratio of parking spaces to a maximums are 0.25 to 0.75 spaces per unit and for dwellings of 2 or more bedrooms and more than 1,000 square feet up to 1 space is allowed. Other requirements include unbundling the cost of parking from the sales price or monthly rent/lease cost, as well as changes to off-street parking requirements.

The advocacy group Transportation for a Liveable City, which has been promoting the idea, published a detailed report on "The Real Costs of San Francisco's Off-Street Parking Requirements". The group claims, "Despite the fact that nearly 30% of all San Francisco households and 40% of renters don't even own cars, and 50% of San Francisco commuters get to work every day without a car, for the past 50 years the City has required that at least one off-street parking space be provided for almost every new housing unit built throughout the City. Since every parking space adds $20,000 to $50,000 dollars to the cost of a housing unit, these parking requirements make housing for cars cheaper and housing for people more expensive!

Thanks to Adam Millard-Ball of Nelson/Nygaard for this tip. A link to a summary of the proposal can be found at the LINK below.

DC Increases On Street Parking

The Washington DC Department of Transprotation (DDOT) has authorized 50 on street parking spaces for Zipcar and Flexcar carsharing vehicles. Zipcar says they'll be using 27 of the new spaces.

It appears that about half of the new spaces will come from existing truck loading zones and metered spaces, and many will be in the Adams Morgan area. According to the Washington Times, one of the terms of the contract between the city and the companies requires them to put vehicles in all eight wards, including low-income neighborhoods, which have not traditionally seen high membership numbers.

The spaces will be marked with distinctive orange "mobility node" poles, which were first developed and used in Portland, Oregon. Technically, the spaces are not specifically reserved for one company or the other (but for a class of vehicles), which parking place is used by which company is defined by "gentleman's agreement" between the companies.

Like neighboring Arlington County, Washginton DC was interested in the environmental and low-income benefits, "Carsharing meets many of DDOT's goals - it reduces traffic congestion, air pollution and demand for parking while increasing demand for alternative forms of transportation," said Dan Tangherlini, Director of the Department of Transportation. The press release also mentioned the benefit that carsharing provides for low-income persons whose transportation needs may not be fully met by transit, taxis or traditional rental cars.

Arlington County, Virginia, which started a pilot on-street parking program with 20 on-street spaces in 2004, recently increased the number of on-street spaces when they made carsharing support a permanent part of its transportation program. Both Flexcar and Zipcar shadow each other with vehicles at the same Metro rapid transit stations in Arlington County as shown here.

Presently, other cities providing on-street parking for carsharing are: Portland, Oregon; Boston, Mass.; Brookline, Mass and Cambridge, Mass. The city of San Francisco provides parking spaces at city-owned garages to City Carshare and Evanston, Ill. provides spaces in city-owned garages to I-Go.

Operations: Pods vs single car stations

As member demand grows in a neighborhood, eventually an additional vehicle will be needed to serve the users in that area. The carsharing organization may have the option of either adding a vehicle to an existing location or creating a new car location between existing stations. Each has advantages and disadvantages.

Adding the new vehicle to existing location - This has the big advantage to members in that they are already familiar with the location. In the event of a vehicle or reservation problem it may be possible for the on-call staff to more easily substitute another vehicle at the pod in order to get the member underway quickly. However, unless the reservation system allows reserving a class of vehicle rather than a specific vehicle/location, there may be member confusion on which vehicle to use. In addition, if the member is confused about which vehicle they've reserved, they may take the wrong vehicle since not all systems actually check the reservation when the member arrives at the car.

Establishing a new vehicle location - This gets the new vehicle closer to some members but necessitates "educating" the member where the stations are. (Longer-term members can be notorious for continuing to use the vehicles they're familiar with, even when new locations are opened that might be closer.) And establishing a new location probably requires establishing a relationship a new parking space provider - not always an easy task. While there is clear evidence that the further away from a station the member is, the lower the usage on average. It seems likely that if the difference is only a few blocks this "closeness effect" could be minimal.

City Carshare in SF and Philly Carshare seems to favor pod expansion; Flexcar favors the single-vehicle concept; Zipcar seems to have a mix of pod and single vehicle stations.

The 1997 "Pay as You Drive report" by Graham Lightfoot for the EU included statistical calculations showing that 3 vehicles in a location (or nearby) provides an optimum balance of availability compared to individual vehicle stations. Of course there are other considerations in siting cars - not the least of which is the availability of a parking space to rent. And other factors, such as accessibility, night-time safety, etc., also influence choices.

The high cost of free parking

While carshares would like to get their hands on free parking to reduce their costs, it's a public subsidy for driving and car ownership - a huge one between $135-$386 billion a year. And it's one that is enshrined in zoning codes, reducing the affordability of new construction, both commercial and residential and providing incentives to drive more. Carshares will find a huge ally in this issue and need to support parking charges and maximum parking requirements in local building codes (most cities have requirements that at least a minimum number of off street parking spaces be built in new construction. If you're not familiar with it, Prof. Donald Shoup of UCLA has been studying the subject for some years and is a great resource, inlcuding a new book on the subject. He's been a tireless advocate for "parking cash out" incentives which allows employers to provide an equivalent subsidy to non-drivers (i.e. walker, bicyclists and public transit).

What's the problem?
• Drivers park free for 99% of trips
• Free parking increases solo driving by 60%
• Charging for parking reduces congestion as shoppers and employees use other modes to get do their business
• After instituting parking cash out program, 11% fewer employees drove to work
• If considered as an impact fee, minimum parking requirements in zoning codes increase development costs by more than 10 times the impact fees for all other public purposes combined.

For background you may want to review some very good material from Dr. Shoup that's available on the internet, including an early (1997) PDF version of his paper The High Cost of Free Parking Donald C. Shoup Reprint UCTC No. 351 Or, for a quick version of his argument in this Powerpoint presentation Dr. Shoup presented at TRB, which includes great before and after pictures of what happens to on-street parking when you start charging for it. TRB: The High Cost of Free Parking Dr. Shoup has also demonstrated how effective using parking meter revenues for urban redevelopment in Old Pasadena in his report Turning Small Change into Big Business.

Information about the his new book on free parking can be found at the link below.