Car Sharing: Part-Time Ownership, Full-Time Savings

  • Flexcar Lot

    Flexcar Lot

    Flexcar offers a diverse fleet of vehicles for part-time usage, everything from Mazda Miatas to pickup trucks. | March 18, 2010

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Why own a car full-time when you drive it only part-time, sometimes very part-time? From this question a business model has emerged, fueling a revolution of sorts in car ownership and operation. A small revolution, perhaps, but growing: It's called car sharing.

The car-sharing concept has been a hit in Europe for more than a decade. Now that costs for car ownership and operation are increasing dramatically in the U.S., savvy consumers and a few visionary entrepreneurs have begun thinking outside of the traditional box (which includes not only the price of the car, but insurance payments, repair bills, gas, registration and taxes). The two leading U.S. companies, Flexcar and Zipcar, have been in operation since the beginning of the millennium, and the concept is finally starting to take off on this side of the pond.

What exactly is car sharing, and why is it important?

Think of car sharing as a combination of condo time-sharing, traditional car renting, a loaner library or tool rental yard, with maybe a bit of good ol' American altruism thrown in for good measure. Rather than owning a car and paying all the insurance, maintenance and fuel costs, why not pay for the vehicle only when you're behind the wheel? This saves time, resources, aggravation and, perhaps most importantly, money.

How much money? Kerry Shea, a Zipcar customer from Boston, estimated she saved $3,000 during the first six months of 2006 when all her auto-related costs were considered.

And convenience is a big factor, too. Notes San Francisco-based Flexcar customer Beto Vargas, "When I bought a desk from IKEA and needed to get it back to my apartment, I used a Flexcar Honda Odyssey. Using Muni or a cab just won't work for trips like that."

How is car sharing different from car renting? In four big ways:

  1. Billing. Tired of paying Hertz for a full day when you only need the car for an afternoon? Most car sharers pay incrementally for usage by the hour, with the average use running four or five hours.
  2. Convenience: All transactions are done over the Internet. Once your background and profile have been approved — and this is done almost instantaneously — you need never deal with a live human again, unless you want to. Everything, from vehicle locating to reservations to invoicing, is done online.
  3. Distribution/Decentralization: Traditional car-rental companies aggregate their fleets in large flotillas at massive distribution points (airports, hotels, near car dealerships) because it is convenient for them. Car-sharing companies bring the fleet to your neighborhood, because it is convenient for you. If you're reading this in a large metro area where a car-sharing company is currently doing business (and it is expanding rapidly), you're probably no more than a 10-minute walk from an available vehicle.
  4. Membership: Car-sharing companies typically have much longer-term relationships with their customers. You pay a nominal annual membership fee ($40-50), and immediately begin saving time and money. Most members are repeat users, not one-time customers.
What companies offer car sharing?In North America, there are currently two major companies offering car-sharing services, and Zipcar has cars available in Boston, New York, San Francisco, Toronto and Washington, D.C., while Flexcar is currently operating in Atlanta, Los Angeles, San Diego, San Francisco, Seattle, Portland and Washington, D.C. However, both of these companies have had large infusions of capital recently and are expanding rapidly. Zipcar, for example, has grown tenfold in three years, and is currently tracking 100 percent growth annually. Look for new cities to come on board quickly.

There are also at least three community-based nonprofits offering similar services. These are: (San Francisco Bay Area), (Minneapolis-St. Paul) and (Philadelphia).

How does it work?Since this is a new concept, we'll walk you through a brief car-sharing scenario, to show you exactly how it works.

Let's say you live in San Francisco and are a paying member of either Zipcar ($50 per year) or Flexcar ($40 per year), both of which operate in the Bay Area. You don't own a car, because storage is outrageously expensive in the city, but you need a vehicle for the afternoon to run some errands. Here's what you do:

  1. Log onto the company Web site.
  2. Click on your home profile (you can store several different profiles: home, work, etc.).
  3. A screen will pop up, showing the vehicles located closest to you. Click and reserve the one you want.
  4. Walk down the hill (there's always a hill in San Francisco) until you find the car (usually 5-10 minutes away).
  5. Wave your radio frequency ID card across the windshield, unlocking the vehicle.
  6. Retrieve the keys from under the steering column.
  7. Start the car and exit the parking lot.
  8. Run your errands.
  9. Return the car to the same spot when you're done.
  10. Exit and lock the vehicle, immediately stopping your billing.
That's it, you're done. Your cost? For both Zipcar or Flexcar, roughly the same: $8.50 an hour. ($42.50 for five hours usage).

Here are a few other convenient things about car sharing:

  • Fuel. You don't pay for it. Both companies' cars carry a fleet fueling card. Gas and go; it's on the company.
  • Insurance. No additional fees. You're completely covered by the company's policy.
  • Roadside assistance. On the house. If the car you are driving breaks down, a tow truck will be sent to help you, free of charge.
Oddly enough, even people who used to sell cars for a living are getting into the car-sharing game. Case in point: Seattle-based Flexcar recently named Mark Norman as its new CEO. Norman, former CEO of DaimlerChrysler Canada, cited his reasons in a recent interview with Edmunds that car sharing offers "dramatic savings versus rental or traditional ownership" and "the most utilization for the most vehicle."

Scott Griffith, CEO and president of Zipcar, offered many of the same sentiments. In a recent interview, Griffith said, "The reason the category is expanding so quickly is because the user experience is so positive." He added: "We offer a great service but also a good deal."

With such a convenient system, it's no wonder car sharing is catching on so quickly. In fact, convenience, more than cost, may well be the hallmark of this newest and most creative way of driving in North America.

And what about that Yankee altruism we mentioned earlier? As it turns out, that also may be one of the bigger attractions of car sharing. Not only does car sharing help lessen the impact on your bottom line, it also reduces the toll on our infrastructure (bridges, expressways, traffic congestion), not to mention the environment. This was echoed by several consumers we talked to for this story, none more so than Paula Swenson, a Flexcar customer from San Diego, who said, "I've always been an environmentalist, so that's important to me. I walk a lot more since I've joined, so Flexcar has made me healthier, too. I save money, I help the environment, I'm healthier. How can I not love this?"

Zipcar's Griffith echoed these thoughts, saying, "What really excites us is that we're building a business while also serving the community."

To make it all the sweeter, a number of corporations and universities have recognized the goodwill and cost savings associated with car sharing. Companies as diverse as Starbucks, Nike and Wells Fargo have begun in-house car-sharing programs, while participating universities include Stanford, MIT, Princeton, Harvard, Cal Berkeley and UCLA, with many more certain to follow.

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