If you believe the math, there’s magic money to be made in peer-to-peer (P2P) car rental.
According to P2P car lending platform Drivy.com, you could earn a healthy £560/month ($703) renting out a 2016 VW Golf. Apparently, that’s money direct to your pocket after Drivy have taken their 21% commission on each booking.
Now, given a 2016 VW Golf might cost £150/month to buy on finance (according to autotrader.co.uk), that’s upwards of a £400 profit ($502) to fund a car that you might otherwise choose not to buy. Or look at it another way, if you buy a fleet of Golfs and multiply the profit, that’s a pretty decent income.
The case for car renting seems equally convincing when considering the simple fact that most cars are sitting idle for 95% of their lifespan. In other words, most of the time there’s an unused asset sitting on your driveway that could otherwise be earning cash.
Taking this concept to its extreme, services like carandaway.com in the UK, specialise in renting your car while you’re on holiday. So rather than paying to park at the airport, you can be generating cash as you bask on your sun-bed.
Perhaps it all sounds too good to be true, but the simple fact of the matter is that Mobility as a Service (MaaS) – digital platforms that connect buyers and sellers to on-demand public and private transport – is expected to account for a quarter of all journeys by 2028, with the percentage climbing to 40% in urban areas.
According to Cox Automotive, car sharing, is part of a trend towards MaaS and a new era of integrated "fractional-usage" mobility. As the sector evolves, connectivity and autonomous transportation will further enhance the picture, with vehicles intelligently managing journeys and drop-offs to deliver both service and environmental benefits.
While technology provides the enabler to change, demand will be driven by public appetite working alongside government policies to reduce congestion and pollution. By 2028, the global MaaS market will be worth $1.75 trillion, according to BIS Research.
With numbers of that magnitude it’s little wonder that manufacturers and transport providers are trying to muscle their way into the action.
Volkswagen Group have announced that new mobility services will represent a key pillar in a broader investment of €44bn in e-mobility, autonomous driving and digitalisation in its vehicles and supply chains.
BMW and Daimler are spending over $1bn on joint mobility ventures including car-sharing and ride hailing.
GM have benefited from well-timed investments in Uber rival Lyft, as well as investing in autonomous car company Cruise Automation, the latter working towards the launch of their so-called “robo-taxi” business.
Within the traditional car rental sector, established companies are moving across the value-chain, Avis acquiring Zipcar, while Europcar have invested in Ubequo, the “pay by the hour” car-hire platform.
Rental business Sixt have even taken the MaaS concept into the world of company cars, launching a new mobile App that allows employees to hire cars using an allocated travel budget, as an alternative to owning a company car.
While most of these services are in their infancy, research on DriveTribe suggests the majority of consumers are yet to wake up to a new world of mobility on demand. In May 2019 less than 3% of users surveyed had rented their vehicles out via a P2P car hire platform.
Of the remainder, opinions were polarised, with 30% claiming they would consider renting their car as a way to generate cash, while 67% were apparently against the idea.
Of those opposed to hiring their vehicle out, many seemed vociferously anti the idea; describing their car as a personal space not for sharing with a complete stranger. Others suggested it’s a recipe to having your car stolen, damaged or generally treated with disregard.
Despite these strong opinions, these views were more than inverted when users were asked whether they would hire from a P2P platform, with 71% confirming they would be happy to do so, while 21% said no.
While a joined-up world of MaaS is some way off, consumer acceptance of P2P car-sharing could well mark an important stepping stone towards an era of on-demand mobility.
DriveTribe's survey suggests that while many would be hesitant to rent-out their own car, on a proportional basis, 30% would provide enough of an interested minority to fulfil the supply-side in a marketplace model. Moreover, with over 70% open to the idea of hiring via a P2P car sharing platform, it looks like the demand side would be equally-well satisfied.
The missing ingredient to catalyse and kick start the car sharing model is perhaps market awareness and word of mouth recommendation.
With the likes of car sharing platform Turo.com now advertising on the London Underground, it seems likely there will be a battle amongst platforms vying for consumer attention.
Perhaps we’ll see this battle head the same way as Air BnB, with dominant players racing to own regional global markets, as specialist operators lay claim to different micro segments: holiday rentals, performance cars, learner drivers and so on.
Joining the fray would be manufacturers and dealers, providing car sharing models alongside a broader “omni-channel” mix of car buying and subscription options. With Chinese brands like Lynk & Co already pioneering such models in their home markets, it seems highly likely that car sharing models will proliferate sooner rather than later.
Whichever way the market shakes out, we're likely to see a fragmenting sea of choice as partnerships are forged and consolidation inevitably takes hold.