Friday, July 31, 2015
You too can be a rental car company
Oil used to sit in the ground, unused. And then entrepreneurs started pumping it out and selling it.
The grab-a-natural-resource path to riches is fairly picked over at this point. But that doesn't mean there aren't untapped assets just waiting for someone to notice them.
There are a billion automobiles in the world. While it might seem as if they're all trying to merge onto the Ontario feeder ramp at 5 p.m. on a Friday, the truth is that most cars at any given car are parked somewhere.
The folks behind Uber realized that all those idle cars, along with their underemployed owners, were a resource that could be molded into a cab company. In just six years it has grown to a $40 billion company.
Airbnb did the same thing with empty apartments, using the Internet to organize them into virtual hotels. Next in the sights of the sharing economy: the rental car industry.
Meet FlightCar. Like Uber, it taps into the underutilized automobile pool, but rather than put their owners to work as cabbies, it borrows their cars, using the Internet to organize them into a rental fleet.
The clever twist behind FlightCar is it's centered at a place where people not only bring their cars and leave them for spans of time but pay for the privilege: airports.
FlightCar began operations in February 2013 at San Francisco International Airport, and Tuesday opened shop in Chicago, from the parking lot of a Best Western near O'Hare Airport. It's the company's 17th location nationwide.
"Overall, our national growth is very good," said Ryan Adlesh, FlightCar's head of expansion, who predicted the company will be in 25 cities by year's end. "Chicago is going to be a great market for us."
It works like this. You sign up and go park your car. FlightCar zips you to the airport. While you're gone, they wash your car and then offer it for rental. If nobody rents it, you've parked your car for free, saving the $14 to $35 a day it costs to park at O'Hare. If somebody rents it, you get 10 cents a mile. Renters who use FlightCar pay between 40 percent and 50 percent less than mainstream rental agencies.
The company was founded in 2012 by — brace yourself — three teenagers: Shri Ganeshram, Kevin Petrovic and Rujul Zaparde.
Not that they have the market to themselves. Relayrides, Silvercar and Getaround all operate similar services.
Is FlightCar the next Uber? Hard to say. Americans are weird about their cars, and while earning extra money for Uber obviously appeals to those struggling to make ends meet, handing over your car to a stranger for $10 or $15 a day plus free parking might not excite the average traveler with enough resources to buy a plane ticket. Who's the FlightCar market?
"Three main demographics," Adlesh replied. "Young, tech-savvy people who don't mind using his concept. Second, young families who see a huge savings over long-term parking. Lastly, surprisingly, senior citizens, on fixed incomes, who want to travel for less."
Companies like FlightCar represent a fault line in the American economy, between old-school, heavily regulated industries like taxi cabs, rental cars and hotels, and the Wild West online world of unbridled capitalism where anybody with an idea and an entrepreneurial spirit can go into business with a few keystrokes.
Rental cars are a $30 billion industry. Are they scared yet?
"We haven't seen much push back at all, they're obviously aware of us. I don't think we're cutting into their market share enough," said Adlesh. "We think the growth will continue."
The key question is: Do we need all that regulation? Do cabbies need all that training? Or was it merely creating monopolies and high barriers to participation in the market that jacked up prices needlessly? It'll be very interesting to see how this plays out, not just from a consumer point of view but politically. Republicans have embraced Uber — Jeb Bush was taking an Uber car to campaign stops — because it echoes their cry of getting the government off our backs.
I suggested I'd be reluctant to hand over my car to a stranger. Adlesh said the cars are insured for $1 million, plus they've noticed a surprising dynamic among their customers.
"People want to treat the cars nicely," he said. "There's a sense of community. The thinking is, 'They allow me to use it, I'm going to take care of somebody's assets.' Repeat users are very high. They like being part of the sharing economy."
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I don't own a car. But I'd rent out my wheelchair. But I would not charge money. Just a hug and a smile. Money is evil. Everything should be free. I would let anyone use anything of mine for free, and everyone should do the same!ReplyDelete
Since it's now been well established that Pope Frances is the Anti-Christ, you should check with him to make sure your rhetoric gets his imprimatur even though it comes right out of the Acts of the Apostles, of course.Delete
Yes, some born again fundamentalists, like John Hagee & co.,think the Pope is a devil. Idiots.Delete
I thought you were making it up at first. Astounding how reality clashes with assumptions. My vehicle is probably too old to participate, so let us know when you try it out, Neil.ReplyDelete
"People want to treat the cars nicely," he said. Nice marketing spin, but absurd. Besides, Americans love their cars too much to share with strangers. They'd sooner rent out their spouses than their beloved automobiles.ReplyDelete
Seems like largely a generational thing to me. "Three main demographics... Young, tech-savvy people... young families... senior citizens." I guess senior citizens are past the point of caring anymore! ; ) I'm not up for this idea, but then I think climbing onto a Divvy whose seat a dozen sweaty a$$es have just exercised on before me is a little gross, too. And that enterprise certainly seems to be quite successful.ReplyDelete
"They allow me to use it, I'm going to take care of somebody's assets." Pretty to think so, in the words of our favorite local wordsmith. Evidently this line of thinking does not apply to the owners of rental car companies, whose assets are famously abused by their users.
The "sharing economy" is certainly good for the environment and for the forward-thinkers who create the companies that cash in on its different aspects. I don't see how it bodes well for General Motors, the overall economy, or any company that makes things that people used to buy for themselves, but now share, however.
good point, J, about dirty divvies, no thanksDelete
No Uber in the far suburbs but most families have plenty of cars and need them.ReplyDelete
I wouldn't want to lend out my car, but I'd consider being a user of this service. Just as I wouldn't want strangers staying in my house, but I've had good experiences with VRBO and AirBNB. On the other hand, my sister was not particularly positive about having her neighbor rent out his place to 6 Irish students for a month. It will be interesting to see how these innovations play out, especially when things go wrong (accidents, theft, etc.)ReplyDelete
And what would insurance say about this car loaning? They might cover if a rel or pal does it but not if using for business by strangers.Delete
I checked out their site and tried the calculator for my car. My 2005 would get 5 cents per mile. So say they kept it to the 75 miles($0.40 after) I get a whopping $3.75 to somehow make up for wear and tear and the never ending thought of were they banging in the back. No thanks, not enough Lysol for that.ReplyDelete
Well, you also don't have to pay for parking or cab fare to the airport, so the financial benefit is greater than the mileage fee. But just how inviting is your back seat?Delete
Huh? How do you even know that they'd be drummers, Nikki? Sheesh, I was counting on the "sweaty a$$es" comment being the most revolting of the day, but I think you've topped it! ; )Delete
It's the type that the entire back folds down. I've carried plywood back there before. I'm telling ya, Not. Enough. Lysol. Drummers would only require more.Delete
If you're that squeamish, I guess we should all call off that trip to the Sybaris.Delete
Say it ain't so, Co! An odd turn of events, really, since we all are well aware that YOU'RE the prissy one. ; )Delete
I can't believe that place is still around. I imagine if you turned on a black light in those rooms it would look like the Milky Way galaxy. Strangers bodily fluids? You bet I'm squeamish. I even carry rubber gloves in my purse in case I come across an accident and someone's bloody.Delete
Yes, the fee is too low. So true about wear and tear.ReplyDelete
Not worth it, especially if have to get back seat cleaned.ReplyDelete
And they might leave drugs in the car or drink and vomit.ReplyDelete
Seems like a dubious enterprise. But that may just be me being out of touch.ReplyDelete
"Do we need all that regulation? Do cabbies need all that training?" Probably not, but, although people are tired of me reaching back to my ancient roots, I sometimes can't help lamenting the skills lost to the imperatives of technology-driven progress. When I arrived in London in the mid 1950's it was possible to hail any one of hundreds of black cabs and be transported unerringly to any spot in the vast conurbation, despite the convoluted medieval streets with changing names and bewildering traffic signs. The reason was that all licensed cabbies were required to pass a demanding street knowledge test designed to demonstrate an encyclopedic and detailed grasp of the cityscape. Colloquially known as "the knowledge," this body of expertise was so extensive that one had almost to be a Londoner born and bred to pass the test. Now days, I'm sure every cab is equipped with a GPS screen and even a Chicago cabbie, provided he remembered to drive on the right (left) side of the road, could survive,
There's no turning back the clock, of course, but there was a touch of romance to old time London cabbies that has surely been lost now that getting from here to there in the old time has become a more mundane activity. And there's no harm in regretting a loss of romance.
Tom, I never tire of your early days stories.ReplyDelete
Laura Washington of the ST, commented a columns back on how her cabbie guy was taking a long about route to pad a bill and didn't know where to go, or pretended he didn't, nor did he follow her directions. Then he made a slur to her about her race, though he was African himself, (although African born) Now she's a big Uber fan.ReplyDelete
( a few columns back)ReplyDelete
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