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.)
GM, which invested an undisclosed sum in RelayRides and will work with the firm beginning next year, isn't the only auto manufacturer to embrace car sharing. Daimler's Car2Go, which rents only Smart cars, operates in Austin, Hamburg and Vancouver, and is coming to San Diego, with registration starting Nov. 4. Rates are higher than peer-to-peer, costing $35 for registration and $12.99 an hour. BMW's DriveNow offers luxury vehicles in Munich.
Arranging a reservation is a different experience.
To do so, users must go to the company's website, register via Facebook — "It helps us to detect and remove any fraudulent users from our service," Getaround says in its FAQ — and search for cars in your neighborhood. Contact the owner, arrange a pickup and you're off and running.
••With Getaround and Wheelz, you open the car door with an iPhone app.
••With RelayRides, a membership card opens a box in the car that has the key. Renters who opt for a GM vehicle will get to use GM's OnStar system to unlock the car in place of the $500 device Relay currently uses.
••HiGear allows for direct contact with the owner, who hands over the keys.
Commissions vary but are in the 35%-40% range.
To open shop, Jeff Miller, the founder of Wheelz, says peer-to-peer car-sharing firms have a major advantage: no inventory. "We don't have the capital expenses Zipcar does. We can go to markets that wouldn't support traditional car sharing, without having to worry about how many cars are being used."
The problem with most private car sharing, however, is that you don't know what you're getting.
Susan Shaheen, co-director of the University of California's Transportation Sustainability Research Center, believes the social-network model of rating and reviewing cars will help consumers shop. For instance, the sites feature the cars, pictures of the owner and ratings from renters. She predicts that private car sharing could be in the top U.S. cities within the next three years, because the costs to enter are so few.
Comparing peer-to-peer car-sharing services
Locations: San Diego and San Francisco area (including Palo Alto and Berkeley).
Pricing: Membership is free. the average rental fee is $6-$8 an hour, the company says. Includes insurance but not gas.
Requirements: Facebook account.
How to reserve a car: Go to website, pick a car, get directions to the location, and use iPhone app to open door and get key.
Locations: San Francisco and Boston.
Backing: Google and General Motors.
Pricing: Starts at $5 an hour, including gas and insurance, or $55 a day for an all-day reservation for 160 miles of driving.
Renters are allowed 20 miles per hour of driving, or up to 160 miles per day. No annual fee.
Bonuses: $10 credit for signing up.
Requirements: Membership key card to borrow cars.
Locations: San Francisco area now and Los Angeles by early this month.
What makes it different: Rents only luxury cars on a daily, not hourly, basis.
Backing: BV Capital, 500 Startups and Battery Ventures.
Pricing: Free membership; insurance costs $20-$40 daily, plus $1,000 security deposits for first rentals.
Mileage limits of 150 miles daily. Rentals range from $80 daily for a Porsche to $499 daily for a Tesla Roadster.
Who can join? Not everyone. Members are screened and must be at least 21 years of age.
Requirements: Renters pick up the keys personally from the car owner.
Locations: Only on the Stanford University campus in Palo Alto, Calif. Plans to expand to other campuses.
Pricing: Set by owners, ranges from $3.50 to $10 hour.
Backing: $2 million in funding from Social+Capital Partnership, Felicis Ventures and Red Swan Ventures.
Who can join? Stanford students.