Airbnb for cars is here. And the rental car giants are not happy.
They have fleets with hundreds of thousands of vehicles and command multibillion-dollar streams of revenue.
But in the rapidly shifting transportation landscape, even the Goliaths of the rental car industry — some of the best-known brands in the world — worry about being left behind.
That may explain why some of the largest rental car companies have spent several years waging a quiet legislative war against start-ups led by a company called Turo that are trying to change the way people rent and own vehicles. Turo is a peer-to-peer car-sharing company — think Airbnb for cars.
Like Uber versus the taxi industry before them, this fight is a clash between an old-school business model and a modern technology platform inspired by the sharing economy.
The traditional model is run by hulking corporate brands that promise safety and predictability. At any airport in the land, for instance, a customer is assured he will get a car (“Nissan Sentra or similar”).
The new model offers a more customized experience. In a process that mimics online dating, a customer can choose that flashy Tesla for a joy ride or that Ford F-150 to haul garden mulch.
While each offers a way to rent a car, the ultimate factor in their long-term success might actually depend on changing attitudes about the value of car ownership.
In America, the average price of new vehicles has zoomed over $33,000, leaving people to wonder whether there’s a way to get more value from them.
Turo, and other car-sharing companies, say they offer car owners a way to maximize the value of these expensive assets (or even help to pay for them) by earning money off them when they might otherwise sit parked. For drivers, they offer flexibility and convenience.
If you’ve rented a car at an airport, you may understand why such start-ups think they should come out ahead. After landing and baggage claim, you wait in line for a shuttle that drives you to a rental car company, sometimes miles away.
Once there, you may encounter another line, as well as paperwork and prices that can vary depending on the city and demand. Sometimes the process goes smoothly, but other times — when inclement weather or rowdy children strike — picking up a rental car can be the punctuation mark on an exhausting day of travel.
Jon Norris, 42, a former rental-car company employee who lives in Bethesda, Md., and works in cybersecurity, believes that sort of unnecessary stress explains the growing appeal of Turo, a peer-to-peer car-sharing network that he’s been using since November to rent out two Audis he owns. He often meets his customers at the airport, handing them the keys to their rental as soon as they walk outside. There’s no paperwork, no credit cards and no hassle, Norris said.
“When I do curbside delivery, everything is downloaded to the app beforehand, and, literally, within two or three minutes, they’re in the car and on their way,” said Norris, who earns about $1,500 a month renting out his vehicles. “At the airport, people want to get the car and go.”
The ease of the transaction, all of which occurs using a smartphone, may explain why airports have become the front lines in an emerging war between companies such as Enterprise and Hertz and Turo, a relatively unknown Silicon Valley upstart with about 180 employees.
Turo allows its 200,000 members who are car owners to post vehicles online and rent them out for as little as $10 a day. Turo officials say their company is a technology platform that allows car owners to earn extra cash, not a rental car company. Because Turo doesn’t own any vehicles, they say, the company shouldn’t be subject to the same regulations as traditional rental companies.
Those rental companies — represented by the American Car Rental Association — say that car-sharing companies such as Turo are clearly car-rental companies. The only difference between Turo and Enterprise, officials say, is that Enterprise complies with state and federal laws governing rental car companies, while Turo has so far avoided them.
“If you’re renting a vehicle to another person for compensation — that is a car-rental transaction,” Gregory M. Scott, an ACRA lobbyist said. “Just because I tell you it’s not a duck doesn’t mean it’s not a duck if it looks and acts like a duck.”
Instead of waiting for the competition to comply, the rental industry has introduced bills replete with new regulations for car-sharing companies in more than a dozen state legislatures across the United States — including a bill under debate in Maryland’s General Assembly. If turned into law, those regulations would treat car-sharing companies like traditional rental car companies.
ACRA officials, who support attempts to regulate car-sharing networks, say their goal is to level the “playing field.” The networks enjoy an unfair advantage and put public safety at risk, ACRA says. Their members might bypass annual inspections and not track recall notices — making the roads more dangerous. They also operate freely at airports instead of in designated areas, which adds to chaos and congestion.