Peer-to-peer car sharing gains investors, users

SAN FRANCISCO -- Thousands of drivers are borrowing cars from newfound friends for an hourly fee — and companies, both big and small, want in on the trend.

Google and General Motors have followed venture-capital firms in investing in the burgeoning peer-to-peer car-sharing movement, where start-up firms such as Getaround and RelayRides — the two most popular services — are changing the way consumers rent cars.

Wheelz, which is targeting college students, launched in September at Stanford University. And HiGear, which rents only high-end luxury cars to the well-heeled (daily rates can go as high as $500), is expanding this month into Los Angeles.

It is no accident that San Francisco is ground zero for the car-sharing movement. The relative ease of finding investors makes it a natural, says Shelby Clark, co-founder of RelayRides. "We were in Boston first, but there was just no appetite from the venture-capital firms. It's way easier to raise money in the Bay Area." And California has passed a law that prohibits insurers from canceling the policies of drivers who share their cars. The law ensures that owners are not liable for damage when their cars are used for personal vehicle sharing.

Clark says he expects car sharing to make its way to more cities soon as other states resolve insurance and liability issues. Relay is also available in Boston, and Getaround in San Diego. He declined to disclose

plans but adds, "We're looking at 15 million cars on the road that are eligible. This deal changes the way we can grow and helps us serve more people in way more areas."

Peer-to-peer car sharing differs from Zipcar, the most popular car-sharing company, which has been around for more than a decade. Zipcar boasts a fleet of cars in 170 cities and charges users an annual membership fee that starts at $60. With peer-to-peer, you rent cars from individuals — and don't know what you're getting. There's rarely a membership fee, and rentals are about on par with Zipcar, which starts at $7.25 hourly.

There are 1 billion cars on the road now, and that number will reach 2 billion in the next 20 years, says Getaround co-founder Jessica Scorpio, 24. "Cars are idle 92% of the time. We saw an opportunity to enable car owners to share them when they're not using them."

The advantage for car owners: extra money. "The car is paying for itself and another car," says Sandy Martino, who has one car in the Getaround rental pool. She never worries about it being stolen. "They have a GPS setup in the car. They can tell where the car is."

For renters, there's the freedom of not having to deal with the car every day and night. "In a city like San Francisco, it's not a good idea to own a car, because the parking is horrible," says Apoorva Mehta, a co-founder of San Francisco-based LegalReach.com. "And you get to drive cool cars."

For renters, it is also a way to pick up a car closer to your home or office — sometimes within a few blocks — than at traditional Hertz or Avis locations. (Avis recently nodded to car sharing by offering hourly rentals.)