The US car rental business is not an easy sector to get excited about. Both Advantage and Hertz filed for bankruptcy protection this year after the onset of Covid-19 triggered a collapse in reservations and used-car prices.
Yet against the odds, the industry is showing signs of life. Bookings began to recover over the summer as Americans eschewed air travel in favour of staycations in nearby towns and villages. Shares in Avis Budget — the only remaining major publicly listed car rental company — have more than quadrupled from their March lows.
These trends have also boosted the appeal of peer-to-peer car-sharing companies such as Turo.
Founded in 2010, the San Francisco-based start-up offers an Airbnb-like platform that allows people to rent out their personal vehicles at any price they choose. Turo takes up to a 40 per cent commission from each booking. It reached unicorn status last year when it raised $250m at a reported $1bn valuation.
Revenue — at its low point in the early days of the pandemic — was down 60 per cent in March and April year over year. But the decline slowed in May and booking growth turned positive in July. At Avis, US rental demand — while up sequentially — remains 39 per cent lower during the third quarter.
Even before the pandemic, Turo’s main selling point was convenience. In contrast to the long lines and remote locations of traditional rental agencies, users can look for cars for rent in their own neighbourhoods and can have vehicles delivered to them.
The appeal has grown during Covid-19. Many people who had previously relied on public transport to get around turned to car-sharing apps to run errands and take short weekend trips, as bookings data indicate. On the supply side, more people are working from home, meaning their cars are sitting idle in their driveways. Others who are stretched financially have turned to Turo to supplement their income.
The company says it now has more than 14m members and about 530,000 listed vehicles. That is up from 12m and 453,000 at the end of 2019. It forecasts revenue to grow 30 per cent this year despite the pandemic.
There are competitors such as Getaround and Maven, the General Motors shared vehicle platform, playing in the same field. But the biggest threat is legislation. Rental car companies have rallied defensively, just as taxi drivers did against Uber. They allege Turo and its ilk should be more heavily regulated. If lawmakers grow more active against tech upstarts, Turo’s advantage may dwindle.
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