When mass shutdowns began in March 2020, car manufacturers expected a huge decrease in demand for new cars and began reducing their orders. As a result, microchip manufacturers scaled back on production and were unable to meet the increasing demand that actually happened. Rental companies also sold many of their cars because no one was using them. Once things returned to normal, there was a high demand for rental cars, but very little supply, resulting in prices that are about 75 percent higher than pre-pandemic prices.
Because of higher prices and lack of supply, car sharing companies grew in popularity. Car sharing is when you rent a car for a short time from a private owner, through a third party rental company. According to Global Market Trends, the car sharing market size exceeded 2 billion USD in 2020 and is expected to grow at a compound annual growth rate (CAGR) of over 24% until 2026. Companies like Turo, Car2go, Zipcar, and Getaround gained more users and more car listings because it is more convenient and affordable for the average user.
- There are 15,577 car rental businesses in the U.Ss as of 2022, an increase of 0.6% from 2021. (ibisworld.com)
- The U.S. car rental industry achieved overall revenues of $28.1 billion in 2021. (autorentalnews.com)
- A recent report shows that the rental vehicle inventory levels are at an all-time low. (IHS Markit)
- Average December 2021 costs of rental cars were about $81 per day, up from $46 per day in 2019. (Kayak)
- Through car sharing services, like Turo, the average cost to rent a car is $72 per day. (automoblog.net)
- Rental cars or car shares are the top choice for getting around the city (78%) and going to business meetings (72%), while ridesharing (Uber, Lyft, etc.) is used to get to restaurants and bars (68%). (autorentalnews.com)
- Minnesota has the highest taxes and fees on rental cars of any state at 14.2%. (thecentersquare.com)
What is Turo?
Turo is an American peer-to-peer car sharing company based in San Francisco. The company allows private car owners to rent out their vehicles via an online and mobile interface in over 56 countries. It has been called ‘the Airbnb of the rental car industry’ because users can choose from a wide range of cars and customize the rental reservation to suit their needs. There is also a direct line of communication between the owners and the renters through the app where the cars are listed.
Vehicle listings on Turo include pictures, descriptions of the car’s features, information about pick-up services offered by the owners and ratings of the owners and renters. The ratings protect both the owners and renters from doing business with anyone who may be untrustworthy. In the app, owners are also able to set their own prices, minimum age, number of miles allowed and amount of gas required to be in the tank upon return.
Car sharing insurance
Most personal auto insurance policies do not cover commercial use, so if you are listing your vehicle on a car sharing platform, like Turo, it is important to make sure that you are covered through the company.
Turo offers various levels of car insurance policies: 60,75,80,85 and 90. Each of these plans comes with a standard $750,000 in third-party liability insurance from Travelers. Renters are not required to have their own insurance policy, but are required to purchase a protection plan if they are uninsured.
Read our full review on Turo car insurance to learn more about how it works.
The history of car sharing
According to the Transportation Research Board, one of the earliest car sharing projects was in Zurich, Switzerland in 1948. This project, which was based on a timeshare model, attracted people who could not afford to own a car outright, as sharing a car was a much more cost-effective way for them to get around. Because this project gained a lot of attention, more car sharing businesses began popping up around the world and the industry began to shift towards the model used today. Some car sharing models still operate like these first projects, and some have a more personalized model where individuals list their cars for rent.
The future of car sharing
The car sharing model has proven very successful and is experiencing rapid growth in the field. The benefits such as lower age requirements, less restrictions and more flexibility make it more appealing to a wider population than traditional rental cars and play a large role in the growth of the industry. Global Market Trends cites data that the car sharing industry is currently valued at over 2 billion dollars, and is expected to reach at least 6.5 billion dollars by 2027.
Some users on car sharing apps purchase cars just to list them. About 73% of people who list at least three cars on Turo think of it as a small business and have noticed an increase in bookings since the beginning of 2021. The majority of these users also plan to buy another car to list on the app within the next year.
As gas and insurance costs increase in 2022, car sharing companies may have to charge more in fees to cover these costs, so it will be interesting to see how the prices compare to more traditional rental agencies throughout the year.