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This Startup Company Has A Fix For The Car Rental Shortage - Forbes

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The car rental shortage is America's number-one travel problem of 2021. This summer, more people will have to make a difficult choice between car-sharing, relying on mass transportation or paying hundreds of dollars per day for a rental car — if they can find one.

But one startup company has another solution. Avail Car Sharing, which launched in late 2018 and expanded during the pandemic, is selling a car-rental type experience without the risk typically involved in car sharing. 

Its timing is good. The car rental shortage isn't ending any time soon. The major car rental companies aggressively downsized their fleets during the pandemic. But they can't buy new cars now because of the chip shortage. That means summer travelers will see hundred-dollar-a-day rates at least through August, and maybe longer. 

But is Avail the solution? I talked to Mike Osborn, Avail's CEO, to find out how Avail is positioning itself during this summer's car rental shortage — and what it means for consumers.

"Lucky" timing during the car rental shortage

We're in the middle of the carpocalypse — the biggest car rental shortage in the history of rental cars. It looks like Avail is in the right place at the right time. How did you manage that?

As my kids like to point out to me, it is often better to be lucky than to be smart. We certainly could not have forecast the severity of the pandemic, nor do we want to build a long-term strategy out of a once-in-a-lifetime event. But car rental's self-imposed fleet shortage surely doesn't hurt our efforts to build Avail in 2021.

When it comes to peer-to-peer car sharing, the field is already crowded, with established competitors like Turo and Getaround. Avail is owned by Allstate, an insurance company. But how is it different from the competition?

Avail tackles the hassles other car-sharing services require customers, both from car owners and car renters and borrowers. 

For instance, trained Avail employees oversee all vehicles on our secure lots, 24 hours a day, seven days a week, ensuring consistency and safety for our customers while removing any guessing or worrying about where and when to trade keys. 

We inspect, clean, and sanitize all vehicles on the Avail platform. The Avail staff helps customers with their luggage and gets them safely on the shuttle to the airport or on the road to their destination. And every vehicle comes standard with a suite of Allstate protection services, including full insurance coverage for both parties.

How Avail's solution to the car rental shortage is different

When I look at the Avail site, I see available cars and the cost is about 20 percent below the car rental rates. Other than a lower price and availability, how is your solution better?

We offer borrowers more flexibility than a traditional car rental service, with a broader selection of locally relevant vehicles because they're owned by locals. That means more SUVs to haul your ski gear in Denver, and more convertibles to enjoy the Southern California sun when you borrow from our lot in Los Angeles. 

We remove the little frictions that frustrate customers, with no lines or counters and no annoying paperwork to fill out. And, most importantly, with pent-up demand to visit loved ones, we don't include any of the hidden fees or upsells.

I guess the million-dollar question is, do you have enough cars to meet demand?

What makes this business interesting in the long run is the natural advantage of timing: people travel out of our markets roughly in sync when other people come into our markets to visit. Calendars are fairly well aligned around the big travel seasons: spring break, summer vacations, and major holidays that comprise the preponderance of leisure travel. 

Carpocalypse or not, our fleet increases at the right time to satisfy demand. We amplify that cycle with promotions to encourage those who have an underused vehicle to list their car during expected times of peak demand. Fortunately, these characteristics help us avoid issues associated with the ongoing car rental shortage, and, in fact, enable us to take advantage while the situation persists.

How about the regulatory environment for car-sharing?

Speaking of competition, even if you eliminate the other peer-to-peer car-sharing companies, you still have car rental companies. And they've been pretty aggressive at the state level in trying to regulate car-sharing. What's your perspective on that conflict, and how is Avail positioning itself?

We've positioned ourselves well in the hearts of our customers, who use our service repeatedly after they first try it and tell their friends about it. 

Recent history provides many examples of extreme disruption of legacy industries that prefer to defend their business through aggressive regulation rather than obsessive customer orientation. We prefer to spend our resources serving the customers, instead of on lobbyists and self-serving PR campaigns.

How to survive a pandemic as a startup

One of the most incredible things about Avail is your timing. You launched in the fall of 2018 and were flying under the radar, as they say. Then, just as the pandemic started, you opened a majority of your 15 locations. How did you succeed as people stopped traveling?

Travel is ingrained in the human experience, so we had confidence it would return. People are inherently social and exploratory creatures; our wellness is enhanced when we connect with our loved ones and with the world around us. 

The confidence in rebounding leisure and domestic travel only emboldened us to invest more in our service and expanding our geographic coverage. We opened up new locations during the pandemic and increased our marketing to both potential vehicle suppliers and those in need of a temporary vehicle. We wanted to be ready to serve Americans when they needed it most – when, more than ever, they needed to get out and explore.

OK, I don't imagine the pandemic was part of your business plan. What was driving this thing?

One other contributing factor that the pandemic presented to Avail was the mass market recognition of a well-studied problem – that Americans own $4 trillion in vehicles that, by one estimate, sit idle 95% of the time and consume nearly 15% of the real estate in major U.S. cities. 

What seemed abstract, particularly to those of us accustomed to commuting to work by car, now hit us right in the face: my vehicle is just sitting there, and my car payment, car insurance bill, and parking expenses are costing me every day. The pandemic caused a lot of Americans to look differently at car ownership and find a better solution to share their cars.

How much longer will the car rental shortage last?

As you look at the car rental and car-sharing landscape three months, six months and a year from now, what do you see?

I see huge growth for car sharing. I certainly can't prognosticate on the speed of car rental companies re-fleeting. And despite headline after headline decrying the car rental shortage, the car rental oligopoly doesn't have the incentive to do so in all due haste, as they are raking in record profits right now. 

After choosing to de-fleet to save costs, car rental services can turn around and make the customers pay – more than $200 a day is not uncommon right now. And, as usual, customers pay for the car rental companies' practices. 

Long-term solutions that create consumer surplus will win, especially now that social media and the focus on anti-consumer practices hold companies accountable.

So you're expanding?

Yes. Avail will increase the value we create for consumers by adding to our geographic coverage so people can lend and borrow vehicles in more places, by making it easier and cheaper to book our vehicles, and by giving people more confidence that the vehicle will fit their purpose. And we will never hide fees nor trick people into buying something that does not benefit them directly as a consumer. 

In a year, you will find people sharing Avail cars in dozens of cities across the U.S., in multiple locations in each city, and with the same consistent, reliable service and high degree of trust and protection that collectively differentiate Avail from other car-sharing services.

What travelers can do to get around during the car rental shortage

What kind of action can consumers take now to ensure they have the best mobility options when they travel? What kind of considerations should they be making, when it comes to ground transportation?

Do your research. There are many options out there, and every one of those, including many Americans' habituated choice of car rental, involve tradeoffs. 

When you consider a car-sharing service because you want to take advantage of the more locally relevant set of vehicles and more affordable pricing, you also commit to treating the other person in the sharing transaction as you would want them to treat you, and that goes for how you treat their car. 

Avail borrowers know that they are renting from someone like them, so that means driving safely, no smoking inside the vehicles, and bringing cars back in the same condition. By design, we make it easy for Avail borrowers to avoid the pitfalls they might face with a traditional car rental company. 

We simply won’t employ the practices that trip people up at the counter – no upselling on insurance that is redundant with their current coverage, no markup on toll charges, and no hidden fees when they want to share the driving.

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