I read somewhere recently that our generation may be the "generation sharing" group. Sites like AirBnb (share your place), Couchsurfing (share your place for free), Zipcar, and Getaround (share your car) all seem to bank on that concept. 

I signed up for a bunch of these services out of curiosity to see how they functioned. I've done Getaround enough to feel comfortable about writing about it. This review is written from the perspective of a car owner, who is doing the renting. I've yet to use Getaround for renting. 

A quick explanation of Getaround: on Getaround, you can post your car for rent by the hour, day, or week. People request a reservation, then you confirm it. You meet up with the person and hand over the keys. Getaround does all the payment processing and insures the drive for you under their plans. Once it's done, you get the keys back and you're on the way.

Now, let me list the positives: it's a cool way to meet interesting people. The idea that I'm making money from something that I'm not using is a good one. And of course, I'm all the "sharing is caring" meme. If you are doing the renting, it is a fantastic deal. (I'm sure somebody's done the math on it) But, for car owners... not so good. Let me discuss why. 

Listing a car is relatively easy - took me only a few minutes. Once you log-in, you have an option of setting three price points for your car:

  • Price per hour ($3 - $15)
  • Price per day ($15 - $60)
  • Price per week ($60 - $240)

What stood out here was that this site is not targeted for medium-premium cars (for the sake of argument, I'm going to arbitrarily define those as 91 octane gas that cost about $25K - the Audis, higher-end Japanese cars, the BMWs, etc).

If we assume Zipcar has their business economics down, their baseline prices are $8/hour and $66/day. The cars available range from a Toyota Matrix (~$12K), a Honda Element (~$18K), and a Prius (~$20K). So if you drive a 89 octane car, you can charge a higher hourly rate than Zipcar, but a lower daily rate. But if you have a car that's more expensive than those daily beaters, Getaround doesn't make financial sense. 

(Warning: Math is going to get fuzzy here)

If you drive anything beyond a daily beater, then the economics fall down pretty hard. According to this calculator a mid-range deprecation for a $30K car is $4,500/year. Assuming you drive a car about 12,000 miles per year, you're looking at an average of $0.375 price per mile on the car. (The IRS allows for about $0.50 per mile of business deductions, which take into account insurance, taxes, etc.)

So the next question: how far can a person drive in an hour? Assuming the renter isn't just taking the car for a joyride, I would reckon about 15-20 miles per hour. (I had a three hour rental that went about 40 miles). That means you have a depreciation cost of $7.50 per hour. If you rent a car out hourly, you're only making $7.50/hour. And if you set a high rate of $15/hour, Getaround only disperses to you $10.50/hour after fees. I'm barely making any money! 

Before I can throw out the idea of simply raising the rates, one question is in the back of my mind: should people who use these sharing services expect a premium? Clearly, based on the pricing offered by Getaround, they think that cars on the site should be offered at a discount rate to sites like Zipcar and even traditional car rental agencies. 

AirBnb is another interesting case - would you pay a premium or a discount to stay at somebody else's place (with them not being there, of course) over a hotel? I'm not quite sure the answer to either question right now - but my feeling is that Getaround should position themselves by letting premium car renters to offer cars that most rental agencies do not allow. Heck, I rented a Audi A4 a few weeks ago and was charged close to $200/day - I would definitely have paid ~$120/day for a Getaround equivalent. I would have saved $80/day, and the car renter would have made a heftier ~$50 profit for the day (assuming you drove the Zipcar maximum of 125 miles in that day). 

So other minor gripes about Getaround:

  • They do not make it clear that the gas is the renter's responsibility. Sure, it's in the FAQ, but the last guy that rented my car on Getaround (who rented it twice) didn't fill up the tank TWICE. I'm not sure if he's being cheap or if he didn't know, but Getaround needs to put some soft incentives for renters to fill up the tank (like when car rental agencies jack up the price per gallon). I try to fill up the tank before I give the car to my renters - the least they could do is the same when they return it.  
  • Getaround seems to only process payments once a month, and it's not clear to the car owner that's the case. I would expect if they have accepted the payment from the renter, they could automate the payment or send me an email after the rental saying I'll get paid on ___ date.
  • Meeting up with people is a pain. I have to break out of my daily routine, meet them for the keys, then the same way on the way back. All for $7.50/hour? No, thanks. 
  • Most renters seriously request the rental 30 minutes before they need the car. Sure, I'm more flexible on my schedule than others, but what about those with real 9-5 jobs? Pain. 
  • They take a HUGE cut. I think for every $15/hour rental, I make about $10.50. That's nearly 33%! 

What would be really nice is if Getaround partnered with sites like Airbnb - it would be great if they could bundle the rentals together. People on Airbnb tend to plan a little more, and they're most likely gonna need a car, too. 

And of course, the rates. $15/hour is too low as a top-end. I realize they're trying to build a marketplace, and you need to favor the renters at first. (Plus I'm guessing there are some insurance reasons, and capping it at $15/hour helps keep certian cars away) But until then, I had to de-activate my listing - it's just not worth it

Posted by roy on July 13, 2011 at 01:34 PM in Ramblings | 2 Comments

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Comment posted on July 14th, 2011 at 08:03 AM
There's a tesla listed on getaround for $50/hr, I guess that's some sort of special deal?
Zipcar up here has a better selection of nicer cars: golf, A3, mini (+convertible), 328xi. Those range from 10-13.50/hr.
Comment posted on July 13th, 2011 at 06:12 PM
Do you still have the Mazda 3?