The recent success of ride-hailing apps such as Uber and Lyft has begun a trend among tech companies – these businesses are eager to break into new fields, and become the Uber of various industries. Airbnb, for instance, has become a household name by acting as the Uber of lodgings. It’s no surprise, then, that startups have debuted car-sharing services designed to offer peer-to-peer rental experiences.
Alternative car rental questions
The appearance of these new “sharing economy” players raises serious questions. After all, there are long-standing rules, regulations and norms surrounding car rentals. The reality of disruptive services may fall short of their promises. It’s worth putting car-sharing apps side by side with the offerings of established rental companies to determine the differences between these two models.
Source of vehicles
Renting a car from a traditional service means receiving a vehicle from an actively maintained fleet. Car-sharing services let individuals rent out their vehicles and therefore have less control over which cars are available at a given location. This raises a few questions – for instance, whether the shared vehicles are part of an active recall. The Washington Post noted that one vehicle-sharing app is targeted in Maryland by a new bill that would make it illegal for the app to list cars for rental if they are under recall – however, the car-sharing service does not know whether it is offering recalled cars, as it does not have access to members’ vehicle identification numbers.
Access to airports
Airports are some of the top locations to pick up rental cars, and rental companies offer locations at or near major airports due to deals they have struck with airports’ operators. Car sharing services have attempted to go around these exclusivity agreements using an argument they have applied to other issues: Since they don’t own the cars they offer, they claim not to actually be rental businesses. This has led to legal challenges, and the future of the issue is uncertain.
Status of insurance
While standard auto insurance covers a driver handling a rental vehicle, how do the laws apply to cars that are rented from services that claim not to actually be rental organizations? This question remains unsettled, and has been a cause of legal issues for car-sharing apps, especially in New York. One of the leading sharing providers was forced to leave New York state in 2013 due to an incompatibility with the state’s insurance laws. App-based rentals are still available elsewhere, but the experimental nature of their business model makes them an insurance question mark.
The convenience factor
The difference between car-sharing and rental may come down to something very simple: convenience. While a rental organization offers well-stocked lots of cars in major cities around the world, a sharing app’s economy is dependent on individual owners who choose to rent out their vehicles. This model may deliver a car when and where a user needs it, but the certainty that comes from renting from a professionally maintained fleet isn’t there.
Rewards and business programs
Customers who have an existing relationship with a rental company may be eligible for loyalty perks and rewards programs. These may be issued to individuals or granted to companies for business trip usage, but their purpose is largely the same: To give thanks for repeat business. Rental customers who have amassed perks over time with established rental providers may want to keep adding to their histories by remaining with the same companies.
Car-sharing companies are all relatively new, and may not have established relationships with international rental providers. Working with a legacy rental company means working within a network of organizations that reach many countries and territories around the world, which is helpful for planning out international business trips or globe-spanning vacations.
Fees and charges
When drivers rent a car, they expect a fairly regular set of credit card charges – fee structures with alternative and start-up providers may differ, however. Paying for extras or facing additional costs assessed by vehicles owners may add an unexpected wrinkle to a trip using one of these services.
Rental companies and individual owners
One of the major objectives of any trip, whether the goal is to meet business contacts or simply discover a new locale, is to make the transactions along the way as quick and easy as possible. While a wave of tech companies have made some fields more convenient, in complex matters such as auto rental, they may be having the opposite effect in the short term.
Working with an established rental company means picking up a new car from a fleet of professionally owned vehicles at a convenient location. Tech companies attempting to become the Uber of car rental offer an alternative to this model, but with added complications regarding vehicle selection, insurance status and more. Drivers that have established relationships with favorite rental companies may find it easier to continue with these companies rather than renting individual car owners’ vehicles.