When the coronavirus pandemic put a halt to nearly all travel, Anwar Ali was forced to store a fleet of cars he rents out through car-sharing platform Turo in an unused gym in Kauai, Hawaii.
Now, his company, Ali'i Rental Cars, is booked solid for the month and has a waitlist. And that's even after adding 20 cars to his fleet, as travel demand rebounded and tourists discovered traditional auto rental places were booked solid.
In the Atlanta and Chicago area, car-share hosts have similar stories. Tatiana Pisarski, a Turo host in Atlanta, said she has rental requests two to three times a week. This year's bookings are more than the last three years combined, she said. In June, she felt confident enough to order a Tesla Cybertruck, and plans to rent it when it's eventually delivered by the dealer.
The lack of readily available reservations from the big car rental chains this summer as well as a desire for a unique rental experience are factors prompting travelers to turn to car-sharing platforms such as Turo and GetAround. In response to the higher demand, some car-sharing hosts are doubling down on their businesses by expanding their fleets. Some are finding success by providing customers with a personal touch that isn't possible for Hertz, Enterprise and other big chains.
"As summer travel surges, Turo has emerged as a critical platform supporting both increased consumer demand and entrepreneurial opportunity," said Turo's CEO, Andre Haddad, in July. "With traditional rental car companies having limited inventory and charging sky-high rates for the cars they do have, our hosts have been able to capitalize on this moment in time, building thriving businesses by listing their personal cars on Turo, and scaling their businesses to serve their goals."
On Monday, the Daimler-backed company confidentially filed paperwork with regulators for an initial public offering in the United States.
A pop-up ad sparks an idea
Ali was working as a youth pastor and his wife was expecting their first child when he listed a 1998 Isuzu Rodeo on Turo. Within 24 hours, the car, which he had nicknamed Ruby, was booked for the week. It was the family's second car, and living in Lihue, a hot spot for tourism on the Hawaiian island of Kauai, he had hoped he would make a little extra money.
Ali heard about peer-to-peer car-sharing through a pop-up ad on Mint. It was just the minimal capital business opportunity he was looking for. Other businesses he had considered needed a lot of capital to start. With this, he took an underutilized car he already owned, and made $200 on his first transaction.
Soon he added the couple's other vehicle to the platform and that income paid for the family's housing for the month. Now, seven years later, Ali said he made five figures during the first quarter of 2021. Based on his current reservations through the end of the year, he projects he will make well into six figures. He broke ground this spring on his family's new home in Kauai. He also plans to roll his profits from his car-share business into an Airbnb property.
For those looking to crack into the peer-to-peer car-sharing. Not all, platforms are the same.
Customers at rival platform GetAround often don't own a car, but need a vehicle to run an errand or pick up an oversized item in the neighborhood. These customers may only rent the vehicle for a few hours or the day.
Customizing the rental
Turo customers tend to look for a unique car-sharing experience rather than the usual pick up at an airport terminal. Hosts may receive requests to drop off a vehicle at a hotel, or they may be looking for a very specific type of vehicle.
When DeAnthony Hill rented a Tesla Model X for his son's eighth birthday, host Pisarski put the falcon-wing doors in the up position for an extra birthday surprise when she delivered the vehicle to Hill in Charlotte, North Carolina.
There's also an increasing number of bookings for car-share customers who are interested in buying an electric vehicle but unsure if it fits their lifestyle. They can rent a Tesla S, for example, for a week to test out their commute and see how quickly it recharges. While EV charging stations are becoming more mainstream at office buildings and public parking lots, there still can be recharging anxiety.
Car-share host Ryan Hagler uses Turo to provide what he calls "a luxury car rental experience." His seven-car inventory includes a Mercedes Benz C300, a Land Rover Defender 110 and several Teslas.
"I was initially just a fan of the site five or six years ago," he said, explaining how he started his business, Aloha Luxury Car Rental. Then, he had an idea: "Wouldn't it be cool to have some nice luxury cars and rent them on this platform because then I can have a luxury car that I would normally never buy for myself. And then I can drive it, and make some money on it — or at least pay for it."
Before starting his car-share business, Hagler owned a coffee shop franchise with multiple locations in Portland, Oregon. He sold the business in 2018, took a year off and moved back to Maui, where he had met his wife 20 years ago.
Hagler began testing out Turo by renting out a Tesla he bought for his wife in 2019. He hired someone to help run the day-to-day business so that he could rent out cars and get a sense of the business' overhead, while traveling. But then Covid hit, and travel — for himself included — was put on hold, and he briefly sidelined the business.
In October 2020, he restarted it, and gradually ramped up the number of vehicles he rents.
"For now, this is proof of concept for one location," Hagler said. "I plan to eventually have 15-20 EVs as 80% of my inventory and the remaining 20% hybrid vehicles. … Our mission is to get into a facility that is fully solar powered. My goal was to make $1,000 of profit, per vehicle, per month."
In June, Aloha Luxury Car Rental was 95% booked and made between $1,500 and $2,000 a month in profit per vehicle. Hagler's inventory in May was more than 30 days booked out, but in July the pace slowed to about 10 days out, as new people joined the Turo platform, Hagler said. His expenses also rose as he leased a lot to park the vehicles and added the equivalent of one full-time employee.
Rental rates for car shares fluctuate due to several marketplace factors, including what level of insurance coverage the user chooses and the length of rental. GetAround works with Apollo Underwriting, while Turo has a deal with Liberty Mutual for insurance.
Travelers renting through a car-share service will note that some vehicles allow for unlimited mileage, while others may have a daily or weekly mileage limit.
While tourist demand for car rentals has coaxed some to try these services, GetAround said its core business remains customers looking to replace car ownership and rent cars when needed.
"We're definitely benefiting from the uptick in travel ... but because we have both use cases (travel and everyday utility use), we see success on both sides of the equation," said Pat Notti, GetAround's vice president of marketplace and operations.
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An auto rental shortage sparked a boom in peer-to-peer car-sharing. Entrepreneurs are hopping on the trend - CNBC
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