Car Sharing in the United States

Do you take the bus but occasionally need a car?  Do you hate the headaches of car ownership? Do you want to save money or the planet?  Do you occasionally want a big, cute or fancy car?  If so, you are a candidate for car sharing. 

The concept is simple: instead of owning your own car, you join a network that owns, operates and maintains cars for you-think of it like a gym or NetFlix membership.  The steps to using a car share are:

  • Join (yearly memberships ~$50; rates around $9/hr or$70/day, expenses included)
  • Reserve (via the internet or a mobile phone)
  • Unlock (using your electronic device provided by the car-sharing organization)
  • Drive (& return it to a designated parking spot)                                     

Competition:

As of July 2009, 26 US car sharing programs have 323,681 members and 7,772 vehicles.  Several specific programs:

 Customers :

In the original car-sharing model, the target customer lived in a dense city and doesn’t own a car.  Between the high cost of owning a car in a dense city and strong public transit systems, this initial model makes sense.  However, recently, car sharing has expanded into new markets:

  • College students: a particularly attractive market since many campuses don’t provide or permit parking.  Car sharing companies like students because they’re a good target for car-sharing programs when they graduate and move to big cities or they are potential future automobile buyers (as in Car 2 go by Daimler’s case). 
  • Corporations: As early as 2004, over 50 companies partnered with car sharing services to provide car(s) for corporate fleets.  This is a convenient, cost-effective and image-enhancing method for companies to provide necessary transportation.
  • Municipal Government fleets: Austin’s Car 2 go partnership with Daimler is one of several similar partnerships.  Chicago and Vancouver BC are just two cities with such partnerships.

Costs

The average cost of car ownership according to the AAA is $674 .  By saving an average of $154 to $435 per month it’s a clear cost advantage for an individual to join a car share. 

Public Benefit & Energy Savings:

Society benefits from car-sharing include reduced congestion, improved air quality and reduced greenhouse gas emissions.  ZipCar estimates their members have reduced gasoline consumption by 32 million gallons annually.  Assuming a 10% market penetration for car-sharing, this equates to 3 billion gallons of gasoline a year, or 2% of current US gasoline consumption.  If car-sharing continues its 61% Compound Annual Growth rate (2003-2008), it would reach 10% penetration by 2018.  While this is probably an unrealistic timeline, growth of the industry offers a cost-effective opportunity to reduce gasoline consumption.

Policy

Public policies regarding taxation and parking are particularly important.  By providing free/low-cost on-street and off-street parking, smart growth that encourages urban development, and not placing car rental excise taxes on car sharing, municipal and state governments can encourage the expansion of car sharing. 

Future:

What will the future hold for car sharing?  RelayRides, a start-up in Baltimore, is proposing an interesting tweak on the car sharing model: instead of the organization owning the car, individuals who own cars enter them into a car-sharing service.  The concept will allow car owners to offset part of their cost of ownership while car renters get convenient transportation access.  This might be especially appealing to someone who doesn’t use their car a lot right now but doesn’t want to sell it because they might need it in the future (how many UT students does this apply to?)  Will the model work?  Stay tuned…

Car sharing has worked well in dense cities like New York, Boston and San Francisco.  How can the model work in sprawling sun-belt cities like Houston or Dallas?  I believe car-sharing companies must target key neighborhoods where people do not need a car to get to work (i.e. Downtown or Midtown Houston) or couples who own one car but choose to car share for their second car.  Expanded public transit systems and ridership will also help, as car-sharing can fill-in the void to enable users to achieve the “last mile” of transportation effectively & efficiently. 

Finally, what lessons can we learn from other countries?  Maybe some of my classmates can fill-in based on their experiences elsewhere…

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6 Comments

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6 responses to “Car Sharing in the United States

  1. jtkennedy5

    The recent proliferation of car-share programs in cities around the country has been interesting. I have used zip cars in Chicago, and have access to the Daimler Car2Go pilot in Austin. What a great honor for our city to be chosen for this international honor. After a few months of use, I believe that the market for these types of solutions will grow.

    ZipCar rents standard make and model vehicles via the internet or smartphone, while Car2Go is more progressive by utilizing the tiny SmartCar. Although they are small, the Daimler vehicles feel solid. The transmission loses some power during gear shifts, which can lead to a rocking effect. But overall, the lightweight frame is propelled around city streets just fine with the 70 horsepower engine. There is an iPhone application which works great with GPS to point you in the direction of the nearest vehicle of the 200 in town.

    Car2Go staff clean and refuel the vehicles, in addition to moving them back to designated parking spots when they are not being used or are towards the edge of the operating area. Depending on how much these services cost a program operator such as the City of Austin, this could be cheaper than the standard procedure of reimbursing employees for milage on their private vehicles.

    One of the great features of the program is that you can park the cars in any metered city spot, or any traditional parking space if you are running errands and just need a “stopover,” which puts a temporary hold on the vehicle. You can fit these tiny cars in between two parked cars on many downtown streets– parking has not been an issue.

    These vehicles surely get good gas milage (although I would like to see diesels or pure electric engines utilized in these vehicles as opposed to just gas), and seem to do good things about some of our worst transportation problems: congestion, parking, energy dependency and air pollution. But the question for markets like Austin is: Can these programs make up for not having a car? Or is it just a nice thing for people who still drive their own vehicles from the suburban fringe to work downtown each day?

    A good news segment on the program in Germany.

  2. bhgully

    Car share programs seem to be a great idea, I’m glad they are being as successful as they are, which I was actually unaware of. It seems to present a particularly wonderful solution when applied to large truck rental systems so people have no need to own these vehicles and under-utilize them as daily drivers ..although I suppose those are already in place…

  3. juliaharvey

    I agree that the logic behind car share programs is sound, but I’m skeptical that the market impact will spread beyond what is has already infiltrated, at least not as long as the devotion to car culture retains its prominence in the American psyche.

    Also, I’m having trouble finding where in the AAA reference it states that car ownership averages $674. That seems low to me.

  4. rhallenbeck

    To get $674, I took the monthly average for a sedan driven 15,000 miles a year ($8,095/yr on page 4).

  5. juliaharvey

    So that’s a monthly charge. Thanks!

  6. Very cool. I remember reading about ZipCar awhile ago. They have an iPhone app that you can use to find a car to rent nearby and even unlock the car itself. I’ve also seen teh Car2Go cars around the UT area. They all seem to be Smart cars right now. Neat stuff!

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