Three years ago Jackie Capozzoli purchased her dream car, a
silver 2006 Jeep Wrangler. But her graphic design job at Groupon
and her side business making and selling jewelry keeps her so busy
she rarely drives it.
Now the 23-year-old Chicago resident has a shot at making money
with her unused car.
The latest twist in the car-sharing market has companies helping
owners of private vehicles rent them for short periods to people in
their neighborhoods. Last month, San Francisco-based RelayRides
entered the Chicago market as part of a national rollout, and
Capozzoli signed on.
RelayRides lets car owners set their own rental pricing but
suggests they charge about $5 an hour, or $40 a day, for a full-
size sedan; specialty vehicles might command higher rental prices.
Renters are responsible for returning vehicles in the same
condition they were in when picked up, with the same amount of gas
in the tank.
Under the RelayRides banner, the owner of the vehicle receives 60
percent of the rental proceeds and grosses an average of $250 a
month, said Shelby Clark, who founded the company in 2010 and is a
2004 graduate of Northwestern University.
For years, car-sharing enterprises Zipcar and I-Go have appealed
to city dwellers looking to save money. They rent their vehicles
for short periods; the vehicles are available at parking lots or
stations across the city.
Making the argument that using a car-sharing service works for
the occasional driver isn't hard. The average cost of owning and
operating a sedan 10,000 miles a year is $7,632, according to a
2011 study from AAA, a nonprofit drivers group.
Still, renting out a personal car and thereby not having it ready
for use at any time is a huge psychological barrier for some
people.
"Old habits die hard. Transportation habits in particular die
hard," said Dave Brook, a car-sharing consultant with Team Red
U.S., who has worked with RelayRides in the past. "(People)just
sort of automatically go for the keys."
Peer-to-peer car sharing faces other hurdles as well: Car owners
have to accept that if their vehicle is trashed or crashed that
damages will be covered.
RelayRides, which advertises its service online, said that its
car owners are covered by a $1 million insurance policy and that it
checks that each renter has a valid driver's license that matches
his or her credit card. A renter who gets into a fender bender is
responsible for the first $500 in repairs.
The company said it charges the renters and reimburses car owners
for minor damages such as stains from spilled coffee or pets.
Inconsiderate renters are often rated unsatisfactory by fellow
users and can be kicked out of the program, RelayRides said.
Still, car owners worry. Before Capozzoli listed her Jeep on
RelayRides, she was nervous the car might get scratched.
"I love my car, and I take care of my car," she said. At the same
time, money from renting her Jeep will offset the $500 to $600 a
month the vehicle costs her.
"I think the benefits outweigh the risks," she said.
Some people who have signed up to rent their cars like the idea
of helping neighbors. Kevin Patton-Hock, 52, who said he has been
involved with RelayRides in Somerville, Mass., since 2010, said he
earns $200 to $300 a month renting his 2009 Hybrid Ford Escape.
"Initially it's sort of been about getting some extra cash," said
Patton-Hock. "[Now] it's just sort of a nice thing to do in your
neighborhood."
In January, the reputation of peer-to-peer car sharing took a blow
when HiGear, which focuses on luxury vehicles, made headlines after
thieves using stolen identities drove off with four of its users'
cars. Last month, HiGear was acquired by Rent2Buy, a luxury car rent-
to-own business. Rent2Buy said it has retained most of HiGear's car
owners and was beefing up security, though a spokesman declined to
be specific.
Clark got the idea for RelayRides as a student at Harvard
Business School. One wintry day, he couldn't locate a Zipcar to
drive to a Thanksgiving family gathering.
"I'm slugging through the sleet and the snow, very unhappy that
I'm biking in the snow ... [wondering], "Why am I passing all these
cars to get to a car?'" said Clark.
RelayRides started in Boston in June 2010 and entered the San
Francisco market that year. The company has raised more than $13
million in venture capital funding from investors, including Motors
Ventures, Google Ventures, Shasta Ventures and August Capital.
Frost & Sullivan, a consulting firm that tracks car sharing
in North America, projects it will grow from 1.3 million users this
year to 4.4 million users in 2016. Revenue will top $3 billion by
the end of 2016 from about $700 million this year, according to a
study Frost & Sullivan is expected to release this year.
