Car-Sharing: A Growing Trend But Is It For You?
There are pluses and minuses to car-sharing and on-demand rentals
Friday, July 6, 2012
If you’ve noticed, car-sharing companies are growing in popularity, and many find them to be a more convenient alternative to rental car agencies.
Companies like Zipcar or City CarShare are pulling in new consumers by the thousands, and the customer base is primarily made up of those who live in big cities, and don’t need a car every day. Also, a big portion of these customers just don’t want to own a car.
Rental companies like Thrifty and Budget may provide the convenience of having access to a wider selection of vehicles, and a bigger network of repair and support services, but some are also known to have really poor customer service.
Many traditional rental car companies are of colossal size, which can many times cause rushed, impersonal or even rude service. The global rental company Avis is a prime example.
“While on business in Miami, I needed to speak with the Avis office at Miami airport,” said Edwin of New Jersey, in our ConsumerAffairs Complaints section.
“I spent over 30 minutes on the cell phone with the automated attendant that simply loops in circles and does not offer human contact. When I selected the manager at Miami airport, I received a voice message to call the front desk and yet another phone number. Of course, no one answers the phone! I will never, ever use Avis again, as they simply do not know the meaning of customer service."
And Edwin doesn’t suffer alone, as many people have turned to car-sharing as an alternative option to bigger and sometimes indifferent car renting companies. Some have chosen to use car-sharing services instead of owning a vehicle themselves.
In a 2009 report conducted by automotive experts Frost & Sullivan, researchers concluded that each car that's shared takes the place of 15 personally owned vehicles. This is ideal for larger U.S. cities that have an overabundance of cars on the road and taking up space in garages. The environmentally conscious segment of consumers are especially fond of the car-sharing concept.
Many are also attracted to the self-service aspect of using a shared-car company. Customers don’t have to deal with a grumpy rental car agent, or wait in annoying lines to get a vehicle when they need one.
Cars are typically picked up in accessible public locations like mall parking lots, parking garages, and local neighborhood streets, and many times gas and insurance is included in the sharing fee.
Major rental car players Enterprise and Hertz have also thrown their hat into the hourly rental ring.
Enterprise, already having its car-sharing service WeCar, recently purchased sharing companies Mint Cars On-Demand and PhillyCarShare, in efforts to expand its car-sharing division, and cash in on the newly formed consumer craze.
The fact that Enterprise, the biggest rental car chain in the U.S, is focusing on its car-sharing division, shows how much this particular industry looks to be more of a future consumer necessity than a fleeting consumer trend.
Hertz hourly car service division, called Hertz On Demand, is also expanding by adding more vehicles and locations to its service.
Both Enterprise and Hertz are big enough to have a wider selection of hourly cars for consumers to choose from. Also, the companies already hold the prime pickup locations that could help them oust Zipcar from its comfortable number one spot.
But what are the drawbacks of dealing with a car-sharing company, whether it's Zipcar, City CarShare, or Hertz-On-Demand? As we all know there have to be some glitches.
Most car-sharing companies charge a yearly fee that you may not want to commit to, especially if you plan not to use the service that match.
A friend of mine signed up for Zipcar a few years ago, but only used a car once. To this day he complains of not getting his money’s worth.
The fees aren't that high, averaging around $60 and $50 a year at Zipcar and City CarShare respectively, but memberships can be hard to cancel sometimes, and one always has to be concerned with automatic renewal tricks.
There’s also an additional costs for the initial application, and local and state taxes may apply depending on where you live.
Deciding exactly how often you’ll use the hourly car is most important. If you’re a person who plans to use the car a few times a year, a traditional rental car location may be best for you.
Also, some of the locations where cars have to be picked up aren't in the safest areas. Customers sometimes have to go to secluded parking garages, or walk down isolated streets to pick up a vehicle. Picking or dropping off at night can also be stressful in these kind of places.
And if you're a disabled driver and need certain accommodations, you have to give many car-sharing companies notice far in advance.
Sharing companies also don't offer the same car variety as rental companies. Many times customers have to wait for the previous customer to drop off the car in timely fashion.
Many sharing locations only have one or a few cars, so if the person is tardy or inconsiderate, you could be stranded and out of luck.
But even with some imperfections, car-sharing is still a pretty good idea for those who live in big cities, or for those that feel having a car isn’t worth the costs, the parking hassles, or the responsibilities.
Sharing is also popular among college students, as many shared-car locations are on college campuses.
At the moment there are no ConsumerAffair reviews or complaints listed about Zipcar, Hertz On Demand or other sharing companies, which either means good service is being provided, or not enough people know and use these types of companies.
Another corner of the hourly car rental industry is also peer-to-peer car-sharing.
Especially popular in the Bay Area, car owners charge hourly and daily rates for complete strangers to borrow their car. Individuals are now getting extra cash by using social networking sites to advertise their vehicle and offer it for temporary use.
In some areas, car owners have even joined independent car-sharing companies, and reported making several hundred dollars a month.
The personal car-sharing company Getaround offers owners the chance to use its brand, and charge a sliding fee to borrowers depending on the make, model and year of the car. GPS systems are used to track mileage and distance so car owners can confirm charges and the overall use of the vehicle.
The question of liability remains a little sticky. Companies insist that their insurance provides adequate coverage but others aren't so sure. Before deciding to rent out your car, consider the risk. If someone is killed in an accident involving your car, you could face expensive and ongoing litigation.
Automakers get in on the act
Even big automotive makers believe in the overall concept of car-sharing.
Earlier this year General Motors finalized a partnership with car-sharing company RelayRides. GM customers that have OnStar will now be able to use RelayRides cars by being able to unlock them with their smart or cell phones. Most sharing companies send a personal membership card that unlocks the door.
Nick Pudar, Vice President of Strategy and Business Development at OnStar, feels the car-sharing industry is just beginning to grow and will continue to thrive, but only in specific areas.
“I see sharing growing in importance," he said. But “It really depends upon the density of commerce and humanity in the cities. The evolution of sharing is going to be geographically differentiated.”
Self-Service You don’t have to make your way over to the rental car place, which can be a hassle. Companies like Zipcar often have pickup locations somewhere in your neighborhood. You just go, unlock the door, then drive away.
A Money Saver Compared To Owning You won’t deal with any of the perpetual costs associated with car ownership like maintenance fees, gas, and insurance. Many consumers, the younger ones especially, pay a lot for a car they don’t actually need. Car-sharing allows you to pay a small yearly fee, along with the daily cost of the rental. Gas and insurance are often included.
Reduces Traffic and Good For Environment Most big cities are filled to the brim with traffic and congestion, which has its effect on the environment. The more people who car-share, the less people own cars, and the less impactful it is on our surroundings.
Limited Amount of Miles Many traditional rental companies offer unlimited mileage, but Zipcar for example only gives you 180 miles per day, and after that you’ll have to cough up $0.55 per mile. If you were planning to use a car-sharing company for your next long road trip, you may want to plan again.
Not For The Spontaneous If you’re one who likes to plan your excursions as you go along, car-sharing companies may not be for you. Many times members have to book weeks in advance for a car, especially in bigger cities like New York or Chicago. With a traditional rental place, you can practically wait to the last mille-second and still get a vehicle.
Not Always Conveniently Located A good portion of car-sharing pickup locations are in very accessible areas, but not always. At times you may have to travel further than a rental car location to get there. There have also been reports of pickup locations being in desolate and unsafe areas. With no employee or security guard to watch out for you, it might be safer just going to a brick-and-mortar rental place.
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