Introduction: As of September 2017, peer to peer car sharing platform Turo raised an additional USD 92 Million from its investors completing their series D round of funding. The company utilizes a business model of peer to peer matchmaking by providing a platform for users with vehicles to list their own cars on the platform to make money to meet customers looking to rent a car for a short or a long period of time. This trend is gaining traction as Car Rental Industry Market Research reveals that the cost of owning and maintaining a car has increased significantly. Turo is accompanied by companies like Hyrecar, Hiyacar and Getaround to provide feasible solutions for car rentals at reasonable rates via their mobile application / web based platform which uses a matchmaking software to connect customers with car owners, the application allows customers to co ordinate the pickup and drop portion of the vehicle delivery so they can decide on a time and location that is convenient for them. Turo also provides added insurance for the vehicles and every car is vetted before listing and the information exchange works simply by customers and vehicle owners sending digital copies of their identity information and vehicle information needed. The emergence of applications like Turo is changing the short term car rental industry for the better but is simultaneously hurting the business for traditional car rental firms
Market Threat: The global car rental market is poised to grow significantly from its value of about USD 56 Billion in 2016 to over USD 124 Billion by 2022 with a CAGR of about 13% for the period. While this growth outpaces a majority of industries, there is major scope for expansion being hindered through the introduction of peer to peer car rental. Peer to peer car rental makes a majority of the approximately USD 5 Billion car sharing market which is forecasted to grow to over USD 11 Billion by 2024 with a CAGR of over 20% for the period 2017-2024. This signals a major threat for the car rental market as short term car rental is expected to be soon replaced by peer to peer based car sharing platforms. The average annual cost of maintaining and servicing a car is approximately USD 8,609. The added expenses for fuel which is volatile based on constantly changing fuel prices has been demotivating consumers from purchasing vehicles of their own. An increasing number of consumers prefer to avail car sharing services for short and long term rentals and the reasoning is evident. Recent research indicates that in the U.S, using car sharing services saves consumers anywhere between USD 145- 435 per month. The added benefit being that comparative to a rental car company, Turo provides users with insurance for their rental cars which is not standard in traditional rental car companies and moreover, Turo costs approximately USD 52 lesser than traditional providers on a monthly basis. Another major factor in the increasing popularity of applications like Turo is the variety, as Turo allows owners to list any car of theirs and also helps aspiring customers purchase a new car there is a much larger selection of vehicles when compared to a traditional rental car company which usually handles only a handful of models. Turo lists cars from the 2016 Ford Mustang to a 2018 Porsche Carrera. A similar range of benefits is observed in companies like Zipcar and HeyCar, although not all the companies provide the wide range of vehicles compared to Turo
Conclusion: The traditional car rental business model is in danger of being replaced by peer to peer models which reduce the operating costs for businesses making a majority of their costs variable and changing the business model to be light on fixed assets. Another major factor influencing the growth of the online platform based model as opposed to traditional rental companies is the level of convenience that is brought about by using technology based platforms and although companies like Enterprise are lobbying for there to be strict regulations imposed on Turo similar to traditional rental car companies, the satisfaction of the customers is significantly higher through apps like Turo and Zipcar and that is even without tight regulations ensuring high quality stands. Turo is effectively changing the rental car industry in the same way Uber changed the taxi industry by increasing the size of the market but by running taxis out of business due to lower prices and better customer service and experience .
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Ankur Gupta, Head Marketing & Communications