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Car-Sharing Going More Mainstream

Car-Sharing Going More Mainstream

By Jeff Youngs, February 29, 2012

The new investment  in car-sharing ventures underscores the strong consumer appeal, fast growth and promising prospects of a five-year-old sliver of the centuries-old automotive industry. Car sharing began as a big-city, almost counter-cultural phenomenon that was colored green: Some folks wondered why individuals need to own or lease their own vehicles, which sit idle most of the time anyway, when there are ways to efficiently and happily share a small fleet of cars, given modern technology and growing environmental sensibilities?

The first answers to that question emerged in the form of a handful of ride-sharing services, which park cars at specified locations and then work out ways for consumers to borrow the vehicles for a while at hourly or daily rates. Zipcar and Relay Rides are among the car-sharing firms that have become "first movers" in a nascent ride-sharing industry.

There are two basic models. Zipcar is an example of the type that maintains its own fleet of vehicles, while Relay Rides and other "peer-to-peer" services rely on customers renting out their own cars and trucks as part of a network.

For obvious reasons, these emerging models have caught the attention of automakers as well. Every car manufacturer needs to figure out how best to tap into the Millennial generation (aka Generation Y) of those who are in their twenties and early thirties. Starting young drivers sharing their cars could be a good marketing move to get them eventually to buy one. Yet given that this demographic doesn't generally place buying and owning automobiles as high of a priority as previous generations, there's a good chance that car sharing-just sharing-might become popular with them.

So, Daimler AG, for example, parent of Mercedes-Benz , just finished a two-year test of a Smart Fortwo -sharing network with a startup called Car2Go in Austin, Texas.

GM's venture capital firm is one investor in RelayRides, of San Francisco. And Ford has partnered  with Zipcar in a two-year arrangement under which it will supply Zipcar with up to 1,000 Ford Focus  and Escape  vehicles for use by students at more than 250 college campuses across the United States. The program is expected to generate about two million hours behind the wheels of Ford  vehicles for college-age drivers.

One investment by private individuals, as well as by Zipcar, is in Wheelz, a Palo Alto, Calif., startup that will pick up $13.7 million in funding and devote it to building out a peer-to-peer car-sharing model on a handful of college campuses in California.
Though certainly not a mainstream practice, car sharing may be a viable option for urban dwellers, college students, or those who otherwise can't afford-or have no desire to-own and maintain their own vehicle.
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