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)
As of July 2009, 26 US car sharing programs have 323,681 members and 7,772 vehicles. Several specific programs:
- ZipCar: The largest, with 6,500 covering 50+ cities in the US, including major metropolitan areas as well as over 140 college campuses.
- Austin Car Share: An Austin non-profit with 6 cars parked in Downtown, West campus and Hyde Park.
- Car2Go: Owned by Daimler and rolled out only in Austin, it is currently available to Austin city employees. It will be available for general use by late-2010. It currently has 200 cars and will allow drivers to leave the car anywhere within a designated area.
- Connect by Hertz: The major car rental company enters the business with 650 vehicles, 10,000 members and 300 locations worldwide. They compete directly with ZipCar.
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.
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.
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.
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…