We've recently had a lot of car rental companies ask us about adding a car sharing service to their operations, what are the challenges, what are the opportunities, how do they go about it? While we're always delighted to share our expertise with customers we thought it might be even more helpful to talk to a Car Rental operator who's added car sharing to their operations. Below is an interview we did with Matt Best of Sunset Rent A Car and Student Car Share
You started out as a purely car rental operation, why did you decide to add car sharing?(RD)
I was at a business dinner and someone from a local university was complaining about the lack of parking on campus, that students were parking illegally and getting a lot of fines – no one was happy with the situation. The person asked me about running some car rental from the university to try to stop students bringing their own cars. I said we’d do it but not traditional car rental, I said we’d provide car sharing. Which incidentally is car rental just with a shorter term and less paperwork. Also the university had a high density of people who had a need for short term rental, that was very important. (MB)
What drew you to car sharing as a model?(RD)
Car Sharing can be worked from and app, is mainly self-service and is available 24/7. The public are used to that level of service, so I wanted to provide that service to my car rental customers. Car sharing is car rental for the 21st century.
I’ve always had customers who would want to rent a car for a few hours, but with traditional car rental that wasn’t easy. In traditional car rental there’s lots of paperwork even for a short rental, there’s car cleaning, there’s staffing the pick up desk etc. So we were always trying to push up the number of hours on the booking to justify the costs. That didn’t suit our customers and I know we lost lots of bookings over the years because of it. Car Sharing makes it much easier to provide short term rentals in a profitable way. (MB)
What was the biggest challenge of moving from a traditional Car Rental Model to adding in Car Sharing? (RD)
For us car sharing was a new service and we created a new brand to do it. So there was a lot of marketing costs. You have to raise awareness and you have to educate users about how easy car sharing is and get them to try it. When we started it took us 6 months per new university to get the utilisation up to profitable levels. (MB)
Have you any tips for people starting a new service in terms of things you’ve learned about marketing car sharing?(RD)
The number 1 thing is to get the buy-in of the location or partner your setting up the car sharing with, be it a corporate customer, a hotel or a university. Some universities put us on all their social media and even their websites, they make sure students are aware the service exists. These are the universities we have the highest membership and utilisation in.
Another thing I’d say is that when you launch you can get some local TV and newpaper coverage and that’s great for getting members but you only get that once so be sure you’ve everything in place and then do a good media launch – have your press release ready!
These days we also do promotions whereby we give free membership at certain times of the year and that works well. (MB)
So you charge membership, that’s interesting, many of our most successful operators don’t charge a membership fee, what do you feel the advantages of membership fees are? (RD)
Well to be clear we charge a membership fee for our student car sharing, not for hotels or other segments of the market. The students are very price conscious, however at the start of term they have some money so we charge a one-off $35 membership fee and then use that money to allow us to lower our hourly rate slightly across the year. Seeing a low hourly rate for students is really important. But I understand why for most other car sharing customers charging a membership fee doesn’t make sense. As I said marketing is the biggest challenge so charging a membership fee which can create a barrier to people becoming members of your operation isn’t something I’d normally do. One of the great things about car sharing is you can tailor your service to the needs of different customer segments. Membership fees work for students but probably not other segments. (MB)
Coming from a traditional car rental perspective what is worst thing about the car sharing business model? (RD)
Inspection of cars between rentals isn’t possible if your cars are spread over a wide area, that’s a difficult adjustment. For major damage people own up because they assume they’ll be caught anyway. So the main issue is minor things like small credit card sized scratches but over time they do add up.(MB)
How are you dealing with that issue?(RD)
Well the damage reporting in the GTS app is very good, customers use it which helps us to keep track of things and focus our attention on particular cars. It’s also good because as soon as people realise that the next customer may take a photo of the car then their behavior improves. We’re thinking of adding some dash cams to the cars to see if that would see further improvements in terms of damage limitation. But ultimately we accept that there will be slightly more minor damage in car sharing and we charge a little more per hour to cover the cost of touch ups and keeping the fleet looking well. (MB)
Finally, what advice would you have for someone moving from Car Rental to Car Sharing? (RD)
Partner with your locations if your dealing with Corporate, Hotels or Universities. Get agreement in advance that they’ll push your service to their users. After all what’s the point in having a service if nobody knows about it or uses it?
Also recognise that different users need different set ups, like the membership fees, rates, rules on late returns etc. Study your users and adapt your rules for each segment of the market. (MB)
If you need help to add a Car Sharing Operation to your Car Rental Operation book a meeting with one of our Car sharing consultants today or download our guide to car sharing below.