Traditional car rental vs peer-to-peer vs on demand car sharing

Traditional car rental companies such as Hertz, Enterprise, and Avis typically maintain their own fleets of vehicles through ownership or leasing arrangements. They establish rental offices and parking facilities strategically positioned in key locations like airports and urban centers. Customers interested in renting a vehicle can reserve one through the company’s website, mobile application, or by phone. Typically, rental charges consist of a daily or weekly rate, supplemented by additional fees for mileage and optional services like insurance.

Avis – proving that traditional car rental is going strong

Avis, founded in 1946 in Detroit, has solidified its position as a stalwart in the car rental industry. Renowned for its iconic “We Try Harder” slogan, introduced in the 1960s, Avis has long been synonymous with a dedication to exceptional customer service. Over the years, Avis has expanded its operations globally, maintaining a strong presence in the market. In the second quarter of 2023, Avis showcased robust performance, reporting $3.1 billion in revenue and a net income of $436 million. Compared to the same period in 2022, the company experienced an uptick in usage, reaching 70.5%. Avis also exceeded Wall Street’s expectations, with earnings per share of $11.01, surpassing the estimated $9.79. As of the end of Q2 2023, Avis boasted approximately $1.1 billion in liquidity and an additional $1.1 billion designated for fleet funding. CEO Joe Ferraro attributed the company’s impressive results to its adept capitalization on the growing demand for travel, particularly during the bustling summer season.

Hertz – usage and fleet growth

Established in 1918 in Chicago, Hertz has evolved into a global brand catering to both leisure and business travelers. Despite undergoing various changes in ownership, Hertz has maintained a robust presence in the car rental market. In the second quarter of 2023, Hertz showcased impressive performance. With revenue reaching $2.4 billion, the company attributed its success to high demand, evidenced by a 12% increase in rental volume compared to the previous year. Additionally, Hertz saw a 9% growth in its average fleet size. During the quarter, each vehicle generated an average of $1,516 per month, driven by an impressive usage rate of 82% – marking a 230 basis points increase from Q2 2022. As of June 30, 2023, Hertz boasted $1.4 billion in liquidity, including $682 million in unrestricted cash.

Peer-to-peer car sharing

Peer-to-peer car sharing allows private vehicle owners to offer their cars for rent through platforms like Turo and Getaround. The vehicles are distributed across various neighborhoods and residential areas, offering a decentralized and more flexible system. Customers can use these platforms to find and reserve their vehicles of choice.

Turo – promising financials, uncertain IPO plans

Established in 2009 as RelayRides before rebranding, Turo has emerged as a leading player in the car rental market. Its online platform enables individual car owners to rent out their vehicles when not in use, providing renters with a diverse selection of cars for short-term use.

Turo’s popularity stems from its flexibility and often cost-effective nature compared to traditional rental services. Car owners benefit by monetizing their idle vehicles, while renters enjoy a wide array of options to choose from.

Valued at $1.2 billion in 2019, Turo has demonstrated promising financial performance. In 2022, the company reported earnings of $746.59 million, marking a significant 59% increase from the previous year, supported by a listing of 320,000 vehicles. Turo’s journey from substantial losses in 2019 and 2020 to a net income of $154.66 million in 2022 is noteworthy.

By the end of 2022, Turo expanded its marketplace, engaging with 160,000 active car owners and serving 2.9 million riders globally. However, the company anticipates increasing expenses in the future, which could potentially challenge its profitability, as indicated in its S-1 filing.

While Turo initially filed for an IPO on the Nasdaq in 2022, the plans were postponed, likely due to challenges such as the 2022 tech downturn. Nevertheless, Turo has recently revived its intention to go public and could potentially list its shares in the fall of 2023.

Getaround – an uncertain future

Getaround, often dubbed the “Airbnb of cars,” is a prominent peer-to-peer car-sharing platform established in 2011. Operating in over 1,000 cities across the United States and Europe, it allows individuals to rent out their personal vehicles when not in use. In 2022, Getaround generated $62.3 million in revenue. However, its EBITDA stood at -$25.0 million, indicating that operating expenses exceeded earnings, resulting in a net loss of -$46.8 million for the year. The company’s total assets were valued at $217.1 million. Upon its public market debut in 2022, Getaround experienced a significant decline in share value, dropping by as much as 65%.In March 2023, the company received a notice from the New York Stock Exchange due to failing to meet requirements. This was attributed to its average global market capitalization over 30 consecutive trading days falling below $50 million, coupled with reported stockholders’ equity below $50 million.

Overall, Getaround’s challenges in the stock market and weak financial performance cast uncertainty over its future prospects

On-demand car sharing

On-demand car sharing services like Zipcar and Share Now (formerly Car2Go) maintain their own fleets, which are parked throughout cities in designated spots or on the streets. Customers can access these vehicles in real-time using mobile apps. The pricing structure usually includes fuel, maintenance, and insurance.

Share Now – downsizing, acquired by Stellantis

Share Now, a German carsharing firm resulting from the merger of Car2Go and DriveNow, operates under Stellantis’ Free2Move division, providing car sharing services in urban areas across Europe. With over four million registered members and a fleet exceeding 14,000 vehicles, it operates in 18 European cities. In late 2019, ShareNow announced the cessation of its North American operations due to intensified competition, rising operational costs, and limited support for electric vehicles. Additionally, services in London, Brussels, and Florence were discontinued. On May 3, 2022, Share Now was acquired by Stellantis, with ownership now overseen by Stellantis subsidiary Free2Move, following the completion of the acquisition on July 18, 2022.

CityBee – a success story in Baltics

Founded in 2012 in Lithuania, CityBee initially targeted businesses with its car-sharing service before expanding to serve the entire Baltic region. Offering a diverse range of vehicles including cars, vans, bikes, and electric scooters, CityBee also incorporates electric and hybrid cars into its fleet. The company manages insurance, fuel, and parking fees within designated CityBee areas.

In 2022, CityBee reported sales revenue of €33,168,028, a slight decrease from the previous year’s €39,814,173. However, the company experienced a significant surge in profitability, with a profit before taxes reaching €2,193,820 – a substantial increase from €968,722 in 2021. This translated to a higher profit margin of 6.61% in 2022, compared to 2.43% in 2021.

CityBee’s net profit also rose to €1,857,517 in 2022, a notable increase from €876,986 in 2021. The company’s equity capital expanded to €4,688,176, indicating a strengthened financial position. CityBee’s success demonstrates the viability of on-demand car sharing when implemented with the right strategy in the appropriate market.

Source: ATOM