Peer-to-peer car rental start-up Turo heads to Germany
PEER-TO-PEER CAR rental site Turo announced a US$92-million funding round led by Daimler that also will see the tech company take over the automaker’s German peer-to-peer company Croove.
The Series D round brings Turo’s total funding to US$193 million, and includes new investors such as South Korean conglomerate SK and Liberty Mutual Strategic Ventures as well as existing investors such as Kleiner Perkins, GV and Shasta Ventures.
Turo’s Croove deal gives the tech start-up a foothold in Europe, where car and gas prices are high. Company officials also said new investor SK will look to pave the way for a possible Turo expansion into Asia.
Founded in 2009, Turo now has 170,000 privately owned cars on its site (in every state but New York due to group-coverage insurance laws) and around four million members. Compared to 2015, that represents a tripling of cars and a quadrupling of members.
“We want more and more people to realise that they have at their disposal a platform that can change the economics of car ownership,” Turo CEO Andre Haddad said. “With 1.1 billion cars in the world, we’re just scratching the surface.”
Daimler’s head of mobility services Jorg Lamparter said the investment in Turo “just strengthens the S in CASE”, the automaker’s strategy to lead the way on connected, autonomous, shared and electric cars.
“Last quarter, Mercedes-Benz cars achieved the highest half-year unit sales in the company’s history (1.1 million, up 13 per cent year over year),” said Lamparter. “At the same time, the world of mobility is changing, people want access anywhere and at any time.”
Turo’s raise comes as automakers increasingly are trying to hedge against the shift towards ridehailing and ride-sharing and away from car ownership, which according to AAA costs an average of US$9,000 a year for an asset used less than 10 per cent of the time.
Ford bought San Francisco-based shuttle van start-up Chariot, General Motors has dropped US$500 million into Uber rival Lyft, and BMW has invested in car-pool app Scoop. But by investing in Turo, Daimler at least is hitching its wagon to a company that has car ownership at its core. In fact, Turo is being pitched as a way to defray car ownership costs or even afford a more expensive car than your budget allows.
Turo statistics show that the owner of a new Honda Civic can cover a US$283 month finance payment with 11 days of renting, while new Tesla Model S owners can cover their US$1,020 payments in seven days.
Turo listers need to present a car in good condition and can opt between having the car picked up or offering delivery. Turo renters must return vehicles in as-found condition and full of gas. Certain fees may apply if the vehicle is deemed to need cleaning or is late.
Turo CEO Haddad said that unlike rental car companies, Turo offers a range of speciality and even exotic vehicles. “You have more freedom of choice,” he said, adding that Turo algothims and insurance data help ensure that both renters and rentees are happy with their experience.
Among those less than thrilled with the boom in ride-hailing and -sharing are car rental giants such as Avis and Hertz, not to mention taxi fleets.
Last quarter, Uber and Lyft both increased their share of the business transportation market by two percentage points, according to Certify, which culls credit car receipts from expense reports. Over the same period, car rental companies saw their share of the market drop two percentage points to 29 per cent, while taxis dropped two points to eight per cent.
Turo’s model has encouraged other players in the private car-rental space. Recently, classic car insurance company Hagerty also got into the same car rental game with its purchase of Classics & Exotics, which it has renamed Drive Share.
“People are talking about the end of driving and all that,” said Haddad. “But we beg to differ.”