The car-shar­ing fu­ture With the cost of liv­ing in­creas­ing, and some peo­ple be­ing un­able to pur­chase their own cars, a new trend in car-shar­ing has emerged. South African car-shar­ing busi­ness Lo­co­mute af­fords peo­ple the con­ve­nience of rent­ing cars in vari

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as MBA stu­dents at the Nel­son Man­dela Metropoli­tan Univer­sity, Ntando Kub­heka and Tu­misang Marope had to draw up a busi­ness plan for a course project. Through their re­search, they found that a col­lab­o­ra­tive con­sump­tion econ­omy, or shar­ing econ­omy, was be­com­ing a grow­ing trend in­ter­na­tion­ally.

“In the US alone the shar­ing econ­omy has grown to over $3tr over the last four years. The sec­ond trend is peo­ple do not want to buy cars be­cause of en­vi­ron­men­tal and con­ges­tive is­sues, and debt lev­els don’t al­low [many peo­ple] to own cars,” says Kub­heka.

As the car-shar­ing trend picks up, ve­hi­cle man­u­fac­tur­ers seek­ing to gain mar­ket share where they are los­ing out on new ve­hi­cle sales have started in­tro­duc­ing car-shar­ing ser­vices. BMW and Di­amler of­fer car­shar­ing ser­vices in North Amer­ica and Europe, and Volk­swa­gen has been op­er­at­ing its Quicar ser­vice in Ger­many since 2011.

On the back of their re­search, Kub­heka and Marope de­vel­oped a busi­ness con­cept for a car-shar­ing ser­vice and co-founded Lo­co­mute in 2014. Lo­co­mute, which was of­fi­cially launched in May 2015, al­lows users to lo­cate the car clos­est to them from a pool of avail­able cars and then book it for ei­ther short or longterm use.

How it works

Cus­tomers regis­ter to be­come Lo­co­mute mem­bers. Dur­ing the reg­is­tra­tion process, Lo­co­mute asks for cer­tain bio­graph­i­cal de­tails and driver’s li­cence de­tails. Ver­i­fi­ca­tion is done through the elec­tronic na­tional ad­min­is­tra­tion traf­fic in­for­ma­tion sys­tem (eNatis) to check if the driver’s li­cence is le­git­i­mate and whether the ad­dress given is cor­rect.

“Then we would send you the lo­gin de­tails for the app. Once you have the lo­gin de­tails you are able to log into the app, and you will be able to lo­cate which ve­hi­cle is near­est to you, or near­est to the des­ti­na­tion to which you are fly­ing, if you are fly­ing. And then you would book or re­serve that ve­hi­cle.”

The app’s screen map will in­di­cate the ve­hi­cle clos­est to the cus­tomer. Cus­tomers have the op­tion to ei­ther re­serve the car 15 min­utes in ad­vance, or start the book­ing process di­rectly once next to the car.

When users ar­rive at the booked car, they un­lock the ve­hi­cle us­ing the app. Once inside, the key is kept in a key­box in the glove depart­ment. Users un­lock the car by en­ter­ing a per­son­alised pin, and eval­u­at­ing the state in which they found the car.

Be­fore dis­em­bark­ing, cus­tomers col­lect their be­long­ings, put the key back in the key­box, and tap the lock icon on the app to lock the ve­hi­cle.

The cus­tomer is then billed ac­cord­ingly via the card they reg­is­tered with, which can be ei­ther a credit card or cheque card. The cus­tomer is billed at R1.80 per minute and R3 per kilo­me­tre, but the first 20 kilo­me­tres of ev­ery hour are free, says Kub­heka.

“It all hap­pens on an app,” he says. “When you are done with the car or you have reached your des­ti­na­tion, you leave the car on the side of the road and it’s ready for the next cus­tomer. What we do in the back­ground is look af­ter the ve­hi­cle, make sure it has enough fuel, and clean it. “And we make sure our cus­tomers don’t pay for park­ing be­cause we take care of those costs, as well as e-tolls and fuel, so cus­tomers only pay for the time and mileage used on the car,” he says.

How does the ser­vice dif­fer from Uber, or other taxi ser­vices and ve­hi­cle rent­ing com­pa­nies? Kub­heka ex­plains that Lo­co­mute’s pric­ing is flat and its costs are quite low – mak­ing it more af­ford­able than Uber. He says they have in­no­va­tive tech­nol­ogy, no pa­per­work, and, un­like car rental com­pa­nies, re­quire no de­posit.

Lo­co­mute al­lows com­muters to use their ve­hi­cles for ei­ther a few min­utes or a few hours, de­pend­ing on re­quire­ments. Their fleet of around 300 cars is cur­rently avail­able in Cape Town, Jo­han­nes­burg, Ekurhu­leni, Pre­to­ria and Dur­ban.

“It’s ex­pen­sive to own a car and it’s even more ex­pen­sive to main­tain it. So our ser­vices come in handy be­cause we take care of those things and you only use the car when you need it,” he says.

Ac­cord­ing to The Bos­ton Con­sult­ing Group (BCG) re­port Car shar­ing will keep grow­ing, but it will not dis­rupt the au­to­mo­tive in­dus­try, Europe, North Amer­ica and Asia-Pa­cific com­bined see 2.5bn min­utes of car-shar­ing booked per year, which to­tals €650m in rev­enue.

BCG es­ti­mates that 14m peo­ple in Europe will be reg­is­tered for car-shar­ing ser­vices by 2021.

Lo­co­mute’s four busi­ness part­ners, in­clud­ing Marope, Sibu­siso Xaba and Vuy­isile Ma­jola, all dug deep into their own pock­ets to in­ject seed cap­i­tal to buy a fleet of ve­hi­cles that would get the busi­ness off the ground.

As they seek to ex­pand the busi­ness, the part­ners plan to head to Sil­i­con Val­ley with In­vestec in May to ap­proach ven­ture cap­i­tal­ists in the hope of rais­ing cap­i­tal to fund the next phase of the busi­ness. Plans in­clude al­low­ing in­di­vid­u­als and busi­nesses to make their ve­hi­cles avail­able for shar­ing, and tap­ping into the rest of Africa.

“It’s ex­pen­sive to own a car and it’s even more ex­pen­sive to main­tain

it. So our ser­vices come in handy be­cause we take care of those things and you only use the car when you

need it.”

Ntando Kub­heka Chief fi­nan­cial of­fi­cer

of Lo­co­mute

Tu­misang Marope CEO of Lo­co­mute

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