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Eric Sink suggested pretty much this exact idea some years ago, but said he didn't think it would work because of the risk of people treating cars badly. http:/

Eric Sink suggested pretty much this exact idea some years ago, but said he didn't think it would work because of the risk of people treating cars badly. http://www.ericsink.com/Choose_Your_Competition.html http://www.ericsink.com/Choose_Your_Competition.html I tend to agree; I'd not be at all keen to loan my car to some random stranger. I'm more attached to it than the average person, but there just seem to be too many things that could go wrong; what if they smoke in it? What if they drive it into something? What if they steal it? Maybe those things aren't likely, but they'd worry me too much. And yes, they're apparently insured, but the inconvenience of having your car off the road for a week or two goes far beyond just the cost of getting it fixed. But if other people want to rent their cars this way, great. Sounds pretty good from the rentor's point of view. Also, the existing car rental companies could do with a damn good shake-up and if this gives it to them, so much the better. I guess I'm not in their target audience - I'm not anyway since I don't live in the States, but I'm interested to know if enough people are keen on something like this to make it work. My gut feeling has been 'no', but I wouldn't mind being proven wrong.

sarkozy 16y ago
I'd not be at all keen to loan my car to some random stranger Neither would I. Nor would I want to type "rental car" into Youtube if I ever decided to participate in this program. http://www.youtube.com/watch?v=AyjbmOVcbHI http://www.youtube.com/watch?v=AyjbmOVcbHI
brc 16y ago
The thing is with rental cars - it's not the major damage, but all the minor damage - the stuff that isn't worth claiming on for insurance. The scuffs were luggage is dragged in and out. The full ashtray, mysterious stains on seats. The service life of a car can be halved easily by an uncaring driver - redline shifts on a cold engine, vigorous attack of speed bumps, grinding wheels on kerbs - the list is endless. Every rental car I've ever had has had at least some of these faults. None are what I would be prepared to live with in one of my own cars. But I'm probably atypical. I would never own a holiday apartment for rental either. However, if it was structured right, you could get to the point where people purchase a car specifically for the intent of hiring it out for profit, in the same way that people do with yachts, holiday apartments and other high-value durables. Although I think you'd be better off with a private 'fleet' of several cars to spread the risk across several units of any one car being off the road at a time. I could see myself purchasing a vehicle specifically for rental. Maybe an insurance write-off that can be repaired and works OK but has very low market value because of the title history. Maybe a car that has an out-of-fashion color or cosmetic damage like hail damage that won't matter to the renting person, but makes the car pretty much worthless in the marketplace. I can think of 10's of strategies of purchasing a vehicle at below-market value and then putting it into a rental pool. If I didn't purchase the vehicle as a personal possession, but merely as an investment item, I think my attitude towards it would be different.
- jerf 16y ago
  "you could get to the point where people purchase a car specifically for the intent of hiring it out for profit, in the same way that people do with yachts, holiday apartments and other high-value durables." But, if it's profitable for me to buy a car for the purpose of renting it out, why shouldn't the startup cut me out and directly purchase cars to profitably rent out? And get economies of scale while they're at it? Maybe it's a way to bootstrap, but it seems like an unstable strategy, and that those purchasing cars to rent out are likely to find themselves on the receiving end of, ah, an uneconomical transaction.
  - brc 16y ago
    Because the capital costs of purchasing and owning cars is huge. No startup is going to be able to compete with that. They literally need to use other peoples money. You could ask why AirBnB doesn't purchase apartments in New York and San Francisco. A distributed model where other people contribute their money, and the business makes money as an agency is well established in other fields. I know of many holiday properties where each individual apartment is privately owned, but the building is managed by a single entity. The owners wear the depreciation costs and interest charges (if using borrowed money) but get to keep the majority of the revenue from rentals, and any capital appreciation from the property, or wear any losses from a drop in value. In the same way, a startup can allow others to contribute the capital value, wear any depreciation, financing and insurance, and just take an agency fee. This is really not much different to other rental car companies who presumably lease all of the rental vehicles either off some central owner of the vehicles, or directly from the manufacturer. Or, perhaps they just have a large, revolving credit line which they use to purchase the vehicles. They certainly aren't going to own them, so it really comes down to a definition of title. I think the blurring here is that most people see car ownership as a strictly private-use phenomonen, whereas in property or boats, mixed private/investment or pure investment is much more common.
    - jerf 16y ago
      I said "bootstrap", you described the "bootstrap", but as you may have guessed from the fact I distinguished the bootstrap case, what I'm really asking about is the eventual steady-state. The cases you come up with are, to my understanding, management being hired out by a collective, not the management creating the collective in the first place. You also talk about a lot of entities who can obtain advantages of scale by bundling a lot of cars together. I submit that despite the fact you think you are arguing against me, you're actually arguing for my point. This startup in the long haul is going to look more like the central owner of the vehicles from an economic point of view than a neutral aggregator. It's the one in the position to make the most of all those issues and I just do not see how it can possibly be more economically efficient for little bits of rental here and there in the long term. They'll be used to bootstrap, then bumped out of the way when it's finally economical. Though hopefully they'll make some sort of profit in the meantime.

sarkozy 16y ago

I'd not be at all keen to loan my car to some random stranger Neither would I. Nor would I want to type "rental car" into Youtube if I ever decided to participate in this program. http://www.youtube.com/watch?v=AyjbmOVcbHI http://www.youtube.com/watch?v=AyjbmOVcbHI

brc 16y ago

The thing is with rental cars - it's not the major damage, but all the minor damage - the stuff that isn't worth claiming on for insurance. The scuffs were luggage is dragged in and out. The full ashtray, mysterious stains on seats. The service life of a car can be halved easily by an uncaring driver - redline shifts on a cold engine, vigorous attack of speed bumps, grinding wheels on kerbs - the list is endless. Every rental car I've ever had has had at least some of these faults. None are what I would be prepared to live with in one of my own cars. But I'm probably atypical. I would never own a holiday apartment for rental either. However, if it was structured right, you could get to the point where people purchase a car specifically for the intent of hiring it out for profit, in the same way that people do with yachts, holiday apartments and other high-value durables. Although I think you'd be better off with a private 'fleet' of several cars to spread the risk across several units of any one car being off the road at a time. I could see myself purchasing a vehicle specifically for rental. Maybe an insurance write-off that can be repaired and works OK but has very low market value because of the title history. Maybe a car that has an out-of-fashion color or cosmetic damage like hail damage that won't matter to the renting person, but makes the car pretty much worthless in the marketplace. I can think of 10's of strategies of purchasing a vehicle at below-market value and then putting it into a rental pool. If I didn't purchase the vehicle as a personal possession, but merely as an investment item, I think my attitude towards it would be different.

jerf 16y ago
"you could get to the point where people purchase a car specifically for the intent of hiring it out for profit, in the same way that people do with yachts, holiday apartments and other high-value durables." But, if it's profitable for me to buy a car for the purpose of renting it out, why shouldn't the startup cut me out and directly purchase cars to profitably rent out? And get economies of scale while they're at it? Maybe it's a way to bootstrap, but it seems like an unstable strategy, and that those purchasing cars to rent out are likely to find themselves on the receiving end of, ah, an uneconomical transaction.
- brc 16y ago
  Because the capital costs of purchasing and owning cars is huge. No startup is going to be able to compete with that. They literally need to use other peoples money. You could ask why AirBnB doesn't purchase apartments in New York and San Francisco. A distributed model where other people contribute their money, and the business makes money as an agency is well established in other fields. I know of many holiday properties where each individual apartment is privately owned, but the building is managed by a single entity. The owners wear the depreciation costs and interest charges (if using borrowed money) but get to keep the majority of the revenue from rentals, and any capital appreciation from the property, or wear any losses from a drop in value. In the same way, a startup can allow others to contribute the capital value, wear any depreciation, financing and insurance, and just take an agency fee. This is really not much different to other rental car companies who presumably lease all of the rental vehicles either off some central owner of the vehicles, or directly from the manufacturer. Or, perhaps they just have a large, revolving credit line which they use to purchase the vehicles. They certainly aren't going to own them, so it really comes down to a definition of title. I think the blurring here is that most people see car ownership as a strictly private-use phenomonen, whereas in property or boats, mixed private/investment or pure investment is much more common.
  - jerf 16y ago
    I said "bootstrap", you described the "bootstrap", but as you may have guessed from the fact I distinguished the bootstrap case, what I'm really asking about is the eventual steady-state. The cases you come up with are, to my understanding, management being hired out by a collective, not the management creating the collective in the first place. You also talk about a lot of entities who can obtain advantages of scale by bundling a lot of cars together. I submit that despite the fact you think you are arguing against me, you're actually arguing for my point. This startup in the long haul is going to look more like the central owner of the vehicles from an economic point of view than a neutral aggregator. It's the one in the position to make the most of all those issues and I just do not see how it can possibly be more economically efficient for little bits of rental here and there in the long term. They'll be used to bootstrap, then bumped out of the way when it's finally economical. Though hopefully they'll make some sort of profit in the meantime.