Carsharing - Start Up Issues and New Operational Models

This paper discusses some of the decisions to be made in when starting a new carsharing service. These include selection of business type; pricing issues; identification of target membership markets; vehicle selection, financing & insurance; reservation/scheduling systems & in-vehicle telematics (on-board computer); parking, staffing, marketing, partnerships. A brief review of carsharing benefits and demographics is included. A simplified spreadsheet model to compare various pricing and expense scenarios is presented, along with a costeffective concept for a small market (under 50 vehicles) service, such as a university campus. Finally, a discussion is presented of the possibilities of franchising and outsourcing certain functions; as well as several innovative service models, including exclusive use vehicles, van shuttles, open-ended, and one-way reservations. This paper will be a useful overview of the industry for entrepreneurs considering starting a carsharing service, as well as public agencies wanting to partner with a carsharing service, both in North America or in developing nations of the world. TRB 2004 Annual Meeting CD-ROM Original paper submittal – not revised by author. Carsharing – Start Up Issues and New Operation Models By David Brook, Carsharing Consultant, Portland, Oregon INTRODUCTION Carsharing offers a solution of one of the most intractable problems of modern urban life – how to have the convenience and flexibility of a private car without owning one. By pricing the service on a per-use basis it sends a more accurate price signal to consumers about the cost of each car trip, consequently “leveling the playing field” with other modes of transportation. Carsharing could also play a major role in meeting future mobility in developing nations by reducing the need and desire for individual vehicle ownership. Carsharing started in the United States in March 1998, with the launch of CarSharing Portland Inc. in Portland, Oregon. Earlier in North America, Benoit Robert launched in Quebec City in 1994 and Tracey Axelsson started the Cooperative Auto Network (CAN) in Vancouver, British Columbia in 1997. Since then several other carsharing organizations (CSOs) have been formed in North America, more recently in Chicago and Philadelphia. Two forprofit companies, Flexcar based in Seattle and Zipcar based in Boston, accounting for approximately 90% of the vehicles in service in the US, or 80% if Canadian CSOs are included. These services are based on a European model, which started simultaneously but independently in 1987 in Berlin and Lucerne, Switzerland, and focus on individual members, and charging for usage both by time (hourly or halfhourly) and distance (mile or kilometer). Vehicles are geographically distributed in reserved parking spaces, typically off-street, through neighborhoods, putting one or more vehicles within easy walking or bicycling distance of the primary users, individual household members. Gasoline and insurance coverage is included in these rates. Suffice it to say, as exciting and potentially transforming carsharing may be, it is still a highly speculative business venture. In order to succeed, carsharing companies need all they help they can get to grow fast and keep expenses down. Four years ago I wrote a short paper attempting to lay out the issues facing start up carsharing organizations (“So You Want To Start a Carsharing Service?”). At that time, reasonable estimates for many of the costs needed for a start up business were still uncertain. Based on 4 years of experience, working both small CSO and the major national carsharing service (Flexcar), this paper provides an updated look at the carsharing world, useful for startups as well as government agencies and others wishing to encourage the growth of carsharing. Benefits The attraction of many to carsharing is the potential to offset the need for private ownership of a one, or possibly all vehicles, in a household. Based on European research suggesting 50% reduction in private car use, it was hoped that even a fraction of these amounts, and consequent energy and greenhouse gases (CO2) reductions, might occur in the US, as well. Other anticipated benefits include reduction in parking congestion in dense urban neighborhoods, support of “car-free” or “car-lite” lifestyle, encouraging the use of “environmentally-friendly” modes of transportation, walking, public transit bus/rail and bicycling. To date, only two detailed research projects have been undertaken in North America, in Portland, Oregon and San Francisco (and none, to this author’s knowledge, from Canada). Because these studies focused on CSOs in their immediate start up period, they likely include a high percentage of “early adopter” members, many of whom didn’t own a vehicle before joining, and thus the results may not be representative of membership in more mature CSO. Although slight reductions in vehicle miles traveled (VMT) have been observed, they were not statisticallysignificant. Members did report significant changes in transit usage, as well as walking and bicycling after joining a carsharing organization. Perhaps most importantly at this stage, these projects have revealed a great deal of useful information about member demographics and usage behavior. TRB 2004 Annual Meeting CD-ROM Original paper submittal – not revised by author.