Turo peer car-rental firm lands $92 million

San Francisco’s Turo, which helps people rent their cars to other people, has landed $92 million in funding, co-led by Germany’s Daimler and South Korea’s SK, a major conglomerate. The investment brings total backing for the peer-to-peer marketplace to $193 million.

“Daimler and SK have very strong footprints in Europe and Asia, so we are looking forward to accelerating our international expansion,” Turo CEO Andre Haddad said in an interview. Turo currently operates in 49 U.S. states — with a heavy concentration in metropolitan areas — four Canadian provinces and the United Kingdom.

As part of the deal, Turo is buying Daimler’s Croove, which it said is the leading peer-to-peer car rental marketplace in Germany and will facilitate its rapid expansion in that country.

The $35 million investment by Daimler, the parent company of Mercedes-Benz, underscores how carmakers seek to adapt to a rapidly changing transportation landscape.

Daimler and SK will both add representatives to Turo’s board. Insurance company Liberty Mutual, which provides Turo’s insurance for its car rentals, also participated in the round.

Haddad, who is armed with statistics on how people can pay for their vehicles by renting

them out on Turo, hopes that Mercedes — and other carmakers — will pass that message along to car buyers.

“Daimler’s motivation is to make cars more accessible and affordable,” he said. “They know a lot of customers would like to buy their cars but can’t make it work financially. We don’t have any specific co-marketing or commercial announcements with dealerships just yet, but we’re working on it.”

Turo changes the economics of car ownership by enabling hosts to earn enough money to pay a substantial part of their costs, he said. For instance, the premium Tesla Model S can bring in about $1,000 in just one week of Turo rentals, covering its typical monthly car payment, he said. Lower down the car chain, Honda Civics can cover their monthly payments of $283 in 11 days on Turo, he said.

Turo takes a 25 percent commission on rentals. For renters, its cars cost about a third less than traditional car rentals, Haddad said. While Turo, like most startups, loses money, Haddad said its gross margins “are extremely positive and promising.”

Turo now lists some 171,500 cars for rent and has almost 4 million people who’ve signed up as renters at some point. That’s minuscule compared to car-rental giants like Enterprise, with 1.29 million cars in the U.S. in 2016; Hertz, almost 500,000; and Avis with 375,000, according to Auto Rental News.

Turo’s main U.S. competitor for peer-to-peer rentals is Getaround, also a San Francisco company. Turo rents cars by the day, week or month. Getaround offers hourly rentals, as well as longer-term ones, and installs a device on cars allowing them to be unlocked via a cell phone. Turo requires its car owners and renters to meet in person to exchange keys, unless the car owners have installed remote unlocking themselves.

Getaround also has financial backing from mainstream carmakers, such as Toyota, and has had partnerships with the likes of Audi promoting it to people buying or leasing cars.

Another peer-to-peer rental company, San Francisco’s FlightCar, which specialized in airport rentals, abruptly shut down a year ago. Mercedes-Benz bought its remaining assets. TravelCar, a French company also focuses on peer-to-peer airport rentals, recently launched in the U.S.