Car-sharing market takes the fast lane
Annual revenues top $1 billion as industry explores new ways to lend vehicles to drivers
As city dwellers decide to shed car ownership or forgo the second family vehicle, car-sharing has turned into a big business.
According to Navigant Research, total car-sharing revenues will hit $1.1 billion (U.S.) this year, growing to as much as $6.5 billion by 2024, with use highest in North America and Europe.
Large corporations have entered this burgeoning market, especially as cost-conscious businesses and governments eliminate company fleets.
Toronto’s AutoShare, which started in 1998 with just three cars, was sold last year to Enterprise Holdings Inc., which operates car rental companies such as Enterprise Rent-A-Car, National and Alamo. As a privately traded company, financials of the deal were not disclosed.
Zipcar, whose roots are in Boston, launched an initial public offering in 2011, raising $174 million, even though it was not profitable. It then had a market valuation of more than $1 billion, though the stock price would then tumble. In 2013, it was acquired by Avis Budget Group for almost $510 million. German automaker Daimler launched Car2Go in Toronto in 2012 with two-seater Smart cars, and is expanding into Mercedes B-Class vehicles beginning Monday.
“With the Smart car, we hit your urban professionals, single users, empty nesters,” said Mark Latchford, Car2Go’s general manager in Toronto. “But with young families just starting out, you can’t put a car seat in a Car2Go.”
Also, some customers wanted more cargo space on shopping trips or a roomier ride when going out of town on the weekend, he added.
Daimler is trying out the idea with 25 of the larger cars in Toronto, Calgary and Vancouver, as part of the pilot project.
The company is also furiously lobbying Toronto city hall to allow the company to pay to park on city streets, including those requiring residential permits, with a special car-sharing permit — arguing if customers could access cars closer to their homes, it could ease the city’s traffic congestion.
Right now, the city has set aside 66 spots for the three main car-sharing companies — Car2Go, AutoShare and Zipcar. Companies pay fees for signs as well as a yearly permit that ranges from $762.48 to $4,727.66, depending on location.
Latchford said his company wants a more free-flowing model, instead of marked spots, in the area bounded by Jane St., Eglinton Ave., and Victoria Park Ave.
“We would like to be able to park on a first-come, first-served basis. We want to use the side streets,” he said, arguing that cars are in use so often that they wouldn’t necessarily take parking away from residents.
“If you look at a street with 29 houses and 10 permit parking spots, it gives the other 19 houses a chance to get access to a vehicle,” he said.
The public works and infrastructure committee is expected to debate a staff proposal, due in October, on whether to run a pilot project.
Councillor Mary-Margaret McMahon, committee vice-chair, acknowledges that access to parking is always a hot topic.
“It will be controversial and there will be some growing pains,” she said. “But we have to learn to embrace this concept — with the goal to having fewer vehicles overall in the city.”
She argued that the key is getting people out of their cars or sharing cars, which means making car-sharing services more convenient.
Kyle Sabie, corporate rental manager for Enterprise CarShare, says his company’s model is different, focusing on picking up and returning cars to the same location.
“We are committed to having more and more locations in more neighbourhoods,” he said. “If the by-product is extra street parking, that would be good.”
Nicola McLeod, Zipcar’s general manager for Ontario, says car-shar- ing appeals to all demographics. The company says its members range in age from 18 to 93 — with an average age of 36.
“They live in the cities, but often in the suburbs,” she said, adding that’s an expanding area, especially as downtown dwellers used to carsharing move to suburban areas. “It’s the freedom of having access to wheels when you want them.”
Although the car-sharing business is dominated by big players, Options for Cars operates a small, non-profit service in Toronto with a dozen cars and one minivan.
Run by the group known as Options for Homes, which helps lower-income residents own a home, the carsharing business began in 2011.
“We add a few vehicles a year,” said Michael Mastropietro, operations co-ordinator. “We’re also open to adding locations if there’s interest. If a group can provide a parking space and more than 30 members, we will try to look at adding a new location there.”
AutoShare
How it works: Members can reserve cars for just an hour or for days at a time. Once reserved, you go to the location and a special key card gives you access. But you must return the car to the same location. Size: Since AutoShare was acquired in 2014, membership has grown 40 per cent, with the company claiming 18,000 members in the Greater Toronto Area. It has more than 350 vehicles available in more than 200 locations. Cost: It costs $29 to apply for a membership. Then you can rent everything from a sports car to a cargo van on three different plans. For infrequent users, an annual fee of $45 will get hourly rates that start at $9.25 up to $13.25, depending on the vehicle. For regular users, the Metro plan costs $15 a month, but hourly rates start at $8.25 up to $12.25. For those who drive farther, there’s a plan that costs $25 a month, with hourly rates ranging from $8.25 to $12.25, but every rental includes 300 kilometres in mileage, up from the usual 200 kilometres. Tidbit: AutoShare has j ust teamed up with General Motors to start discounted programs for students at University of Toronto, Ryerson University and York University using Chevy vehicles.
Zipcar
How it works: With a membership, so-called Zipsters can reserve cars for a minimum of an hour or up to seven days. Users must pick up and return the car to the same parking location. Size: The company won’t divulge details for Toronto, but says it has just under one million members across more than 30 cities. Zipcar has been operating in the Toronto area since 2006 and has more than 800 vehicles across the GTA and Hamilton. Cost: A one-time application fee of $30, with three different types of memberships. For occasional drivers, an annual fee of $70 and hourly rates starting at $9.25 on weekdays and $13.25 on weekends. Or a monthly plan of $7 gets the same rental rates. Plans aimed at frequent users start at $50 a month, which goes toward the rental fees, which can be rolled over to next month if not used. Rental rates are slightly lower at $8.33 an hour on weekdays to $11.93 on weekends. Tidbit: Every car gets its very own name, with a logo in the back window. The company works hard to ensure no duplication in its entire fleet. Cars in Toronto include: Wiggles, Waggamama and Sven.
Car2Go
How it works: You can take any of the available cars in parking spots, or you can book online 30 minutes before you want to drive. There’s no requirement to return the vehicle to original parking spot. If no car is available at the time of request, the service can notify users when one nearby is free. Size: 44,000 members, 425 Smart fortwo cars and 25 Mercedes BClass vehicles Cost: Initial sign-up fee of $35, but no monthly or annual fee. Rates are 41 cents a minute or $14.99 an hour. Tidbit: Owned by German automaker Daimler, the company has launched a pilot program to bring in larger cars in North America, starting in Toronto, Calgary and Vancouver.
Options for Cars
How it works: Operating since 2011, it is a non-profit organization that provides car-sharing to community members as a co-operative. Size: About 600 members share 12 cars and one minivan in locations near Options for Homes buildings as well as housing cooperatives and private lots. Cost: An application fee of $25, plus $25 deposit for a smart key. Annual membership fee of $50 is waived for the first year. Annual fee is waived for those who buy condos t hrough Options f or Homes. Hourly rates range from $9 an hour on weekdays to $10 an hour on weekends for cars, and $11.50 a weekday hour for the minivan, $13 an hour on weekends. Tidbit: Three of the Options cars are hybrids because the non-profit is committed to green initiatives. An offshoot of the group is Options for Green Energy, which helps to finance and build greenenergy projects such as installing solar panels.