Here comes the Airbnb of cars
One of the joys of having a partner in Timaru is getting to enjoy the South Canterbury landscape. Getting into the MacKenzie Country backblocks, fishing the Rangitata and enjoying Southern Alps sunsets – all wonderful experiences far from the maddening crowds.
One of the pains is finding out how poorly served the regions are in transport. Air New Zealand flies into Timaru twice a day from Wellington and that’s it.
If you don’t want to fly to the capital then you are plumb out of luck. And if you leave your booking to the last minute you will pay for it. Shane Jones might be on to a winner here I reckon.
A bigger challenge is rental cars. I’ve just tried to rent a Mazda6 for two days and it was going to be on the thick end of $500 from any of the big chains.
You can darn near buy a car for $500 on Facebook. It’s too bad there’s not an Airbnb for cars, where instead of renting someone’s spare room, I could just rent their Corolla.
Well there is. In fact, there are a truckload – about 300 of them in the United States and 10 in Australia.
They are called car subscription services, where the subscription unit is typically a seven-day loan. This includes the vehicle, registration, insurance and roadside maintenance.
The kicker is the price. Prices in Australia starts at A$99 (NZ$103) a week for HelloCars and A$210 a week for their competitor, FlexiGo. That’s a hell of a lot less than rental cars.
It’s not all Auntie Muriel’s old Cortina either. Suppliers range from private owners (the peer to peer sector), through to commercial fleet operators with spare capacity and car manufacturers like Holden renting out demonstrators and loaners.
In Europe, car subscription services now account for almost 5 per cent of private vehicle sales with predictions this will double within the next five years.
Subscription periods across the ditch vary from hourly with metropolitan-focused GoGet through to yearly subscriptions that mimic car lease companies.
Unsurprisingly, this feral cat is running amok amongst the plump pigeon-like rental car companies. Companies that are now being forced to rethink their fat margins.
And now it’s about to happen here in godzone.
Two weeks ago, Turners CEO and digital trouble-maker Todd Hunter announced that they were entering the car subscription and car sharing business. A forwardfacing move for New Zealand’s largest seller of used cars.
Rather than trying to reinvent the wheel, Turners have done a deal with major Australian player Carly and will licence their brand while using the Collaborate platform (which they already own a slice of).
While local operational details won’t be released until March, across the ditch Carly’s business model is a monthly subscription that can be cancelled after the first month.
You pay the subscription every 15 days – typically around $250 – and you can change the type of car at any time. So if you are being a netball dad or a soccer mum for a week you can swap to a minivan, or if you are heading up to Ruapehu for some skiing you can switch to a Prado.
And you never have to worry about insurance or maintenance. All in all, it’s a pretty interesting offer that further breaks the historical association between the personal ownership of an item and the utility you get from the item. Good on Hunter for putting Turners at the front of the pack.
Hunter reckons they will have 200 cars available initially, with car dealers being targeted to grow those numbers. The nice thing about car dealers is that they naturally have a nationwide network, so it doesn’t matter too much if you are in Timaru or Te Kuiti.
Then there’s the other part of the car subscription market – the peer to peer piece – that’s really going to put the fear of God into the rental car companies. Here the range of supply is huge. The New Zealand national (light passenger
There’s disruption aplenty coming to the car rental business.
vehicles) fleet size is about 3 million.
If just 2 per cent of these were available as peer to peer rentals then that’s an extra 60,000 cars in market.
To make it scalable you’d need a common marketplace where you could match demand with supply, together with some trust and safety tools, integrated insurance and payment.
Overseas there are players already with the likes of Getaround in the US and Streetcar in the UK.
Locally we’re already seeing spasmodic supply and demand pop up on the Facebook regional marketplaces. Meanwhile, at a national level you’d have to say Trade Me would be in a good position to build a marketplace.
Just as Airbnb has ripped into the accommodation business, there’s disruption aplenty coming to the car rental business.
So long as it delivers me rental cars in Timaru for less than $500 it can’t come quick enough in my book.
Mike MOD O’Donnell is a professional director and an amateur car guy. His Twitter handle is @modsta and he’s probably trying to buy Aunt Muriel’s Cortina.