Make Money From Your Car

Mar 28, 2012 by

Combine carsharing with other ways of getting around to save a bundle compared to owning car!

I’ve written here before about carsharing, a great tool for saving loads of money on transportation if you happen to live in a community with a carsharing program. Carsharing is evolving, and the exciting next generation business model will help car owners convert their own car from a money drain into a profit center, with the potential of dramatically expanding carsharing’s reach.

Conventional Carsharing

Traditionally, carsharing works like this: A central organization owns a fleet of cars. The vehicles are spread around a city in reserved parking spots, or hubs. After joining the carsharing organization, carshare consumers can book time on any of the organization’s vehicles. A carshare consumer might use a car for an hour or a weekend. Fees typically are applied per mile and hour, and some organizations also charge monthly or annual fees. Many organizations have “roaming” agreements; a member of City CarShare in San Francisco can drive HOURCAR vehicles when visiting the Twin Cities of Minnesota.

Unless you drive a lot, carsharing can save you a bundle. Why? All the fixed costs of owning a car are paid by the carshare organization. The organization insures the cars, keeps them maintained and clean, and even pays for gasoline. Though a half-day outing in a shared car might cost a carshare consumer $40, a guy could take a lot of $40 outings before approaching the average annual cost of just owning (not including driving!) a vehicle, which AAA estimates to be, for just a small sedan, about $4,400, or $12 per day!

Next Generation Carsharing: Peer-to-Peer

You may have heard the term “peer-to-peer” (or P2P) applied to the financial industry, where companies like Prosper and LendingClub facilitate the process of people like you lending money to, well, people like you. The same concept has been applied to many sorts of enterprises, including now carsharing. With young people losing interest in owning a car and industry behemoth Zipcar going public last April, big money players are now taking carsharing seriously and beginning to invest in its future.

With P2P carsharing, private individuals make their own car part of the carsharing network. When carshare consumers drive a privately owned car, the owner shares in the revenue. So with P2P, instead of your car sitting in your driveway costing you $12 (or more) per day for doing nothing, it can be meeting the short-term transportation needs of a carshare consumer and earning money for you in the process. Pretty cool!

Start-ups

P2P carsharing is in its infancy, and the model no doubt will be fine-tuned and evolve further. But among the companies already up & running are RelayRides (Google and GM are investors), Getaround, Car2Go (backed by Daimler) and Turo. The new model will spread as states resolve insurance and liability issues as California has done by prohibiting insurers from cancelling the policies of owners who make their cars available for carsharing and from holding the owner liable for damage done while the car is being driven by a carshare consumer.

→ RelayRides’ website says car “listers” can earn up to $7,000 per year!

→ Typically 60%-70% of revenue from a booking is shared with the car’s owner.

Would You Share?

Would you list your car through a P2P carshare network? What would be your concerns?

Here’s a short local newscast about Getaround, featuring a co-founder, 23-year old Canadian Jessica Scorpio:

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