Is carshare dead?

It's been a while since carsharing made headlines. Not since a few big names closed up shop. Is the market totally dead? Has it become a way of life for a very small small group and irrelevant to most? Or, is there a silent shift in the making?

Answer: There's a silent shift in the making.

Before we get into the shift, let's define a few terms:

• Carshare: Carshare is defined by sharing vehicles through a platform. Reservations are always digital.
• P2P Carshare: One person sharing their car or cars for others to use. The term was founded on the idea that anyone can make money on their underutilized asset. The most well known example of this is Turo.
• Hosts: Individuals or businesses sharing a car.
• Borrowers/Guests: Individuals using somebody else's car.
• Car Rental: A business with a fleet of vehicles that rents their vehicles directly.

The focus of this article is on P2P Carshare. Spoiler: Our prediction is that P2P will eventually transition to traditional carshare.

If it doesn't make dollars, it doesn't make sense

To be clear, the economics are why several P2P carshare companies shuttered. To be clear, the issue was never a lack of customer demand. Travelers always preferred carshare over long rental car lines. The urban carless relied on carshare for errands. And, every now and then, people just wanted a different car for a distinct purpose (think: date night, moving). However, between risk factors, insurance costs, and competing with traditional rental car companies to acquire new customers, the numbers just didn't add up for several first movers in the carshare space.

The numbers work differently when the customer segment changes. Aside from Turo (we'll get to them in a bit), most long standing P2P carshare players target Uber and Lyft drivers. New P2P carshare players enter the with the same target demographic and find success. Well, in part. Uber drivers can be reached via Craigslist and they are quite a viral group. Carshare companies targeting rideshare drivers don't have to compete with rental car companies for expensive Ad space. Plus Uber drivers rent vehicles for longer periods of time. This all leads to lower CAC. Non payment risks, vehicle abandonment, and some bad actor activity still exists with this segment, but dealing with these risks is outweighed by other favorable factors in the model.

Do rideshare-focused P2P carshare companies offer the vehicles up for the urban carless and traveler segments? Yes, but since they aren't competing with rental car companies to advertise to these demographics, few consumers know about their services. Ultimately this leaves a problem in the market. Consumers are left with limited options.

The options

In marketplaces, winner takes all. What that means for P2P carshare is that Turo spent the most money on acquiring users (and did a few other things right early on) so now they dominate marketshare. The idea that anyone that anyone could make money from an underutilized asset put rose colored glasses on the hardships of the business. But it worked. When there's a robust supply, borrowers find it easy to get to a vehicle near them and the marketplace gains liquidity.

Now that Turo won marketshare nobody is truly satisfied with their service. Hosts feel like Turo always takes the side of borrowers when there are disputes. Borrowers have suboptimal rental experiences such as last minute cancellations and poor vehicle condition. Simply said, Turo promoted itself to the job of a mobility mediator and the market is left to chose between rental car lines and suboptimal service.

Carshare 2.0

When there's consumer demand for something better, a solution will always present itself. Facebook took the market from MySpace. Amazon and Etsy were able to compete with Ebay. And, undoubtably, a new solution will come after Turo for carshare.

Careshare 2.0 will be a platform for small rental car companies to make themselves accessible to consumers. Small rental car companies will likley take the shape of Power Hosts on Turo (i.e., those who have a fleet and run it as a full-time business). Small rental car companies that exist outside Turo will list their service on the platform. Carshare 2.0 will aggregate professional companies and make reservations easy for consumers. It may even exist as a pooled marketing service for partner fleets.*

What this means in the future is that the idea of anyone making money off their underutilized vehicle asset will die. Elon Musk's carshare platform could be the path, but the idea of everyone sharing a Tesla isn't going to work.

If Carshare 2.0 does manifest as we predict, and marketing is truly a pooled resource for small rental car companies, the vehicle placement of current small rental car companies becomes more of a focus. Precise and targeted ads will be deployed based on the vehicle locations. This means being close to public transportation or heavy demand patterns is important. However, with a distributed fleet, knowing the risk and security of a neighborhood is equally important. Fortunately, Mobility Places has the data and support to help small rental car companies rest assured that they are making the right vehicle placement decisions.

*Regulations will need to shift for rental car companies, but that's another article.