Business Report

Collaborative Consumption Reaches the Garage

Peer-to-peer services that let strangers borrow your car could redefine auto ownership.

That Dodge Nitro sure looks like a sweet ride. Parked in an alley near Boston’s Symphony Hall, it’s just waiting to be boosted. My accomplice and I pull our winter caps low and sidle up to the white SUV. I pull out an electronic card, pass it along the windshield, and hear a reassuring click as the door locks release. We quickly duck into the seats, find the hidden ignition key, and start it up. No alarms. I step lightly on the gas and we pull away.

Share my ride: In some cities, websites now allow people to list personal vehicles for rent.

The owner of the car is fine with all this. She is Natalia Widulinski, a Northeastern University student from Stamford, Connecticut, and for $8 an hour she’s allowing complete strangers to borrow her car when she doesn’t need it. “I was looking for a way to pay for parking,” she says. She earns as much as $300 a month — more than her $175 parking bill.

She and I are both members of RelayRides, one of a handful of new car-sharing services backed by Silicon Valley investors who are betting on so-called “collaborative consumption.” That is the idea that people will share personal assets in order to cut the costs of ownership and be neighborly. Borrowers save money and reduce their environmental footprint.

Similar peer-to-peer services have been taking off in real estate and other industries. You can go online to share a vacation home, find temporary office space on Loose Cubes, or even rent someone’s spare bedroom for a night on AirBnB. But for now, peer-to-peer car sharing can best be described as an experiment. RelayRides, a two-year-old company that operates in Boston and San Francisco, currently offers access to a grand total of about 200 automobiles (there are 250 million passenger vehicles in the United States). Even so, industry observers say the availability of such services will lead some urban dwellers to give up their cars. Gartner analysts predict that within four years, 10 percent of the U.S. urban population will use some form of shared automobile instead of a personal one.

Car owners who join RelayRides have an door-lock override system installed that is activated by a radio-frequency card issued to members. RelayRides keeps 35 percent of the rental fee and handles all billing, payments, and insurance.

For a few hours of driving, peer-to-peer car-sharing services are cheaper than a standard daily rental. Peer-to-peer companies also don’t have to spend any capital buying a car fleet; that gives them an advantage over competitors such as ZipCar, which rents cars by the hour in cities including Boston and New York. Among the disadvantages, to judge from customer reviews on the company’s website, are cars that are dirty or in poor working order.

Some transportation experts think peer-to-peer car sharing could relieve pressure on parking spaces and other aspects of city infrastructure. It also appeals to environmentalists, because sharing cars that would otherwise sit idle most of the time could allow us to get by with fewer of them.

Peer-to-peer: Members of RelayRides, a car-sharing website, can rent Natalia Widulinski’s Dodge Nitro for $8 an hour. Analysts predict as many as 10 percent of urban drivers will use such services by 2016.

Surprisingly, General Motors is supporting the concept as well. In October it became an investor in RelayRides, which has so far raised $13 million; the company plans to use the money to offer services in more cities. As part of the deal, GM will adapt its OnStar communications service so RelayRide members can use it to open, and turn on, vehicles that owners want to share. Executives at GM say they entered the agreement in an effort to make car sharing into “a favorable business model.”

The government is also studying the peer-to-peer model. Last month, the Federal Highway Administration agreed to provide $1.7 million to another company, Getaround, to fund startup costs and research on the impact of car sharing in Portland, Oregon. Founded only last year, Getaround operates in San Francisco and San Diego; it allows borrowers to access cars by using a custom-designed iPhone App.

The car-sharing companies screen renters by making sure they have good driving records. Cars must have state safety inspection stickers unless they’re in a state that doesn’t issue them, in which case they get examined by company inspectors. The companies have umbrella insurance policies that cover members while driving the shared cars, although drivers may be responsible for a $500 deductible. Drivers pay tolls and parking tickets. Enforcement is easy because the companies can track car usage and identify drivers by their access numbers. Getaround’s price includes the cost of gas, while RelayRides recently started to charge users for gas. California and Oregon have passed laws recognizing car sharing as different from traditional renting, meaning that borrowers in these states aren’t subject to the excise taxes and convention-center fees that cities frequently levy on car renters.

Not everybody is enthusiastic about peer-to-peer car sharing. Rick Hutchinson, president of City CarShare, an 11-year-old San Francisco nonprofit that owns the cars it rents out, says the idea is interesting, but “it isn’t clear how much it will reduce cars on the road.” City CarShare tries to reduce car use by encouraging biking and public transportation, and its fleet is made up primarily of fuel-efficient cars and hybrids.

Other skeptics question whether there will be much demand for any kind of car sharing outside of a few large cities, since in suburban or rural areas the cars available to users might be too far away to be practical. And while sharing appeals to twentysomethings, many older Americans can’t imagine life without a car of their own.

Still, sharing makes sense “if you do the math,” says Peter Campisano, a 71-year-old economist in Boston who gave up his Cadillac a year after he moved into the city from the suburbs. A ZipCar member, he says: “For me, it’s the perfect solution for my transportation needs.”

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The Connected Vehicle

The cars we drive are about to change, and so are the ways we commute and do business. In this month’s Business Impact we look at the arrival of communication technologies that are linking motor vehicles to the information grid. From mobility apps to electric cars and vehicle automation, the connected automobile is rewriting the rules of the automobile industry and creating the chance to reorganize our transportation infrastructure.

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