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We tried the 'Airbnb for cars,' and it could upend the car-rental industry

Harrison Jacobs/Business InsiderIt’s easier than renting from Enterprise, but that doesn’t mean it’s better.
  • Turo is a person-to-person car-sharing service that’s most easily described as “Airbnb for cars.”
  • I decided to try the service on a recent trip, renting an SUV for hundreds less than it would have cost through a rental company like Hertz or Enterprise.
  • I had a generally pleasant experience, but the sign-up was frustrating, and I was left with a lot of questions about what happens if something goes wrong.

I’ve long been a sharing-economy aficionado. I stay in Airbnbs or HomeAways rather than hotels, take Lyfts or Ubers rather than taxis, and hire for my freelance business through TaskRabbit. I’m something of a millennial cliché.

But I’ve never rented a car through Turo, a person-to-person car-sharing service that is most easily described as Airbnb for cars.

Despite Turo’s easy sell to venture capitalists, it hasn’t caught on quite like Airbnb. Originally founded around the same time under the name RelayRides, Turo now operates in 4,700 cities spread across the US, Canada, and the UK with 170,000 cars listed. But that could soon change.

The company announced in September that it had raised $US92 million in additional capital, primarily from Daimler AG. The money, along with its purchase of competitor Croove, is intended to expand the platform to Europe.

I decided to put Turo to the test on a recent trip to Seattle. Here’s how it went:


I signed up for Turo using Google the day before my trip. I was pretty excited to use the service. My last run-in with a car-rental company was less than pleasant.

Source: TechCrunch


I checked the dates and narrowed it to the Seattle suburb I would be staying in. There were about a dozen options in the price range I was looking for ($US30-45/day).


I was looking for functional, not fancy. I settled on a 2007 Honda CR-V, as I knew it might snow.


My host, Q Truong, is a 36-year-old Seattle native who has hosted on Turo and Airbnb for years. He said most issues result from renters’ unrealistic expectations. “That’s why I clearly state on my profile: I don’t have brand new cars,” he told Business Insider.

Truong used to own a used car dealership in the area, but started using Turo after a friend told him about the service.

He said his 22-car fleet, which is mostly Toyota Priuses a decade old or more, is aimed at the economy crowd.

Turo spokesman Steve Webb told the New York Daily News in March that economy transactions dominate the platform.

“The vast majority of transactions that occur on Turo are for almost a utilitarian trip experience,” Steve Webb said. “People just looking for a great car to get them from point A to point B on a vacation. The average rental period is five days and these people, in most cases, are travelling.”


Truong’s cars had been booked many times and the reviews were good, so I decided to give it a shot. Many of the other listings in the area only had one or two bookings, which made me wary.


Turo offers basic and premium insurance for renters from Liberty Mutual. Usually, I’ll go for the cheaper option because I know my credit card provides liability insurance for car rentals. But Turo says it is “high unlikely” such coverage extends to Turo.

A little more about the insurance options, from Jalopnik:

Premium: A renter’s out of pocket expenses is limited to a $US500 deductible. If the damage is under $US500, the renter is refunded the difference.

Basic: A renter’s out of pocket expenses is limited to a $US3,000 deductible. If the damage is less than $US3000, the renter is refunded the difference.

Decline Coverage: A renter’s out of pocket expenses are only limited by the value of the car. If the car is lost, stolen, or totaled, the renter is responsible for paying the entire value of the car.

The value of the car is determined by the Littleton Group, a third-party administrator.


Turo says their customers save an average of 35% over a traditional car rental. The total for Truong’s CR-V came to $US175, more than 50% off a comparable car from Enterprise.

A few caveats:

The Enterprise SUV would have been only a year or two old versus Truong’s decade-old CR-V.

Enterprise had unlimited mileage, whereas I would have to pay $US0.20/mile if I drove more than 600 miles in the CR-V.

If I was opting for a compact car instead of an SUV, the prices would have been much closer.


Just as I was about to check out, I got a message that I wasn’t allowed to rent a vehicle. I was confused because I had gone through the whole sign-up process and provided all the information they asked for.


There were a couple complications with my verification. The instructions on how to fix online were terrible, but once I opened a ticket via email, the Turo team cleared things up in a couple hours.


I was picking up the car the morning after I arrived in Seattle because I knew I was arriving late at night. Turo sent me a reminder the day before.


On the morning of the rental, we drove to the meeting place. Like many hosts, Truong offers free delivery to the airport and nearby, but we were in the neighbourhood.


It felt like a clandestine spy meeting, but that’s probably more because we got lost. Truong owns the mechanics’ shop in back and had the car ready when we arrived. Truong said if I had any issues with the car to give him a call as he could fix it.


When I checked in with Truong, the app suggested taking photos of the car to record its condition. Truong had already taken a bunch, but I double-checked to make sure everything was accurate. The whole process took 2 minutes, far quicker than my rental car experiences.

For reference, the last time I rented a car was from Enterprise on a business trip to Los Angeles. I ended up stuck at the rental office for several hours until 2 a.m. while overworked clerks tried to check-in 40 or so irritated travellers.

I also found out that the price I was quoted online was hundreds less than I would have to pay due to additional fees.

It wasn’t a pleasant experience.


I decided to give the car a second glance before leaving. Truong said that he plans to consolidate his fleet to 10 higher-end cars next year so he can make more on each rental. His initial plan for Turo to was to go after volume, but he said it’s too much work to make a living.


Truong said he makes about $US80,000 each year after Turo takes its 25% cut. Turo gives hosts three options: 35%, 25%,15%, and 10%. Here’s what the company takes care of at each level:

Jalopnik

Truong said he has found the 25% cut to be the most efficient up until recently.

He’s had a few issues with customers, but no major wrecks. The worst, he said, was when a customer put diesel gas into one of his Priuses, which could have ruined the engine. Luckily, he caught the issue early.

He said he plans to switch to the 10% cut in 2018 when he irons out a deal with his car insurance company for commercial insurance.


The CR-V had plenty of dings. Turo pitches itself as a way to defray the cost of a new car — even one out of your price range, like a Tesla. But Truong was sceptical.

“We want more and more people to realise that they have at their disposal a platform that can change the economics of car ownership,” Turo CEO Andre Haddad told USA TODAY in September. “With 1.1 billion cars in the world, we’re just scratching the surface.”


“When it comes to renting out cars, you can’t be attached to the cars or you’ll never make it work,” Truong said. “People f— up the cars. That’s just the nature of the beast.” With 22 cars and four years of experience, Truong knows what he’s talking about.


The CR-V seemed ready to go. At 143,000 miles, I would have been nervous to take it out if my host wasn’t a mechanic or the car wasn’t long-lasting like a Honda. Turo caps mileage on the platform at 130,000.


The car rode great. Over the course of three days, I drove it all around Seattle and even took it on a mini-road-trip through the mountains. But considering the mileage, I was wondering what would happen if the car broke down.


When I asked Truong what happens if the car breaks down, he said that it’s basically on him. Turo told Jalopnik it’s a bit of a “grey area” but, in general, mechanical failures from wear and tear are on hosts. But that doesn’t solve who helps me on the side of the road or gets me a replacement car.

On Turo’s website, it says that if the car is covered under one of their insurance plans, they offer 24-hour roadside assistance, but that you may be stuck with some of the fees for towing, a battery jump, etc.

If your host has his or her own commercial insurance, you have to go through their insurance for help. So it’s best to ask about that before renting.

While I had no issues during my rental, I’m not confident about how things would shake out if there was a problem.

Source: Jalopnik


It was time to return the CR-V. It had treated me well. From a renter’s perspective, the platform’s convenience and affordability was hard to beat. Like all sharing economy platforms, the success or failure relies on the hosts who run their small businesses on it.


Truong had me drop off the car in his auto-shop lot. I had a great experience, with Turo but I can see it going badly if someone didn’t do their due diligence on the host and the car.


I had a lot of questions about how good of a business it is for hosts. $US80,000 per year doesn’t seem like a lot for 22 cars, which I suppose is why Truong is moving toward higher-end cars.

But considering the vast majority of rentals are for people looking for a bare-bones experience, I wonder if the cash is worth the miles and maintenance put on the car.

I imagine it is for Truong because, as a mechanic, he can handle most issues that arise with his cars. But for the everyday host, costs likely add up quickly if you’re unlucky.

And that’s before you get into the horror stories about crashes, drivers who lie about their age, and everything else that comes with being an ad-hoc car rental company.

I’d definitely rent again from Turo. But I won’t be putting my own car on the platform.

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