2:55am

Tue March 6, 2012
Business

Let A Stranger Drive Your Car? More Owners Say 'Yes'

Originally published on Tue March 6, 2012 12:13 pm

It would be difficult for some people to let a stranger drive off with one of their most valuable possessions. But not for Stanford graduate student Katie Hagey.

Hagey is one of a growing number of individual car owners who have started renting their wheels to people they don't know through car-sharing startup companies resembling the better-known Zipcar.

Hagey makes an extra $150 a month by renting out her car via Wheelz, a Silicon Valley car-sharing startup. Wheelz allows Hagey to name a price for others to "borrow" her silver BMW when it would otherwise be sitting unused in a campus parking lot.

"This was a great option to at least slow the hemorrhaging of money that is business school," Hagey says. She's so happy about the extra cash, she doesn't even mind when people adjust her seats or her stereo.

"One time the seat was really low and it was playing rap, like really, really loud," Hagey says. "I thought that was pretty comical because this isn't really a riding-low kind of car — it's a chick sedan."

To Borrow, Rather Than Buy

People can access Hagey's car much like a Zipcar or other shared vehicle. Renters hold a card up to a sensor on the windshield to gain access to the car. They then open the glove compartment, where a box containing the car keys is located. But unlike Zipcar, cars rented through Wheelz are owned by individuals, rather than by a company.

Stanford undergraduate student Jesse Clayburgh is a Wheelz user. He doesn't own a car, and dreads the idea of trekking to a rental counter — not to mention the extra fees he would pay for being younger than 25.

With Wheelz, Clayburgh can pick from more than two-dozen different cars kept right on the university campus. That came in handy recently, when he picked up a pretty girl at the airport.

"I may or may not have been trying to impress [said] lady friend," Clayburgh says. "What I found was an Audi TT, which is a small two-seater — a little coupe that goes pretty fast. She was very impressed."

Wheelz founder Jeff Miller says there is a growing shift among American consumers away from owning assets, like cars, "to purchasing a service that helps you achieve the same end."

Miller says people already regularly loan cars to their friends and family. His company, he argues, just makes it safer and easier. The service screens customers to make sure their driving records are clean. Members are also required to sign up through Facebook, so the rentals aren't completely anonymous.

"It's actually a very personal transaction, and people respect the fact that it's another person's car," Miller says. "We've had zero [damage] claims to date, and thousands of reservations. And so far, so good."

But the concept of so-called "peer-to-peer" car sharing is still new. Wheelz just launched last year, as did Getaround, a service operating in three West Coast cities and Austin, Texas. RelayRides and JollyWheels have been operating for a little longer — but not by much.

An 'Uncertain And Unknown' Concept

Susan Shaheen, a transportation researcher at University of California, Berkeley, says car sharing is still "an uncertain and unknown and developing area. ... There's a lot of excitement and interest in it," she says, "but I think it's important not to put too many expectations on it as it's starting out."

Shaheen says the concept faces several hurdles. A big one is clarifying insurance laws. Another is developing a profitable business model. Shaheen estimates that peer-to-peer car-sharing companies could be profitable within five years if they increase their cut of the revenue for each transaction. Right now, participating car owners receive at least 60 percent.

That's a fair split as far as Hagey is concerned. After all, she's the one putting her car on the line.

"At this point, if the car got a dent and the dent was fixed, that's fine with me," Hagey says. "We'd be having a different conversation if the car was totaled."

Big companies, including General Motors and Zipcar, have taken notice of peer-to-peer sharing. They have invested millions in these startups, and that is fueling some ambitious expansion plans. Wheelz is scheduled to roll out on three more campuses in California by the end of the month.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

STEVE INSKEEP, HOST:

Here's a fact that may reveal something that's going on in the country. The population in the nation's capital, Washington, D.C., has gone up by about 40,000 over the last decade and yet, the number of cars has not climbed.

It turns out that in many places across the country more people are beginning to opt out of ownership of cars. They may share vehicles instead, for example, and not just through established companies like Zipcar.

Charla Bear reports now, that some startup companies are helping owners to start renting their cars out to complete strangers.

CHARLA BEAR, BYLINE: For a lot of people, it would be tough to let a stranger drive off with one of your most valuable possessions. Not so for Stanford graduate student Katie Hagey.

KATIE HAGEY: This was a great option to, at least, slow the hemorrhaging of money that is business school.

BEAR: She makes an extra $150 bucks a month by renting out her car through Wheelz - spelled with a Z. The Silicon Valley startup allows her to name a price for others to borrow her silver BMW when it would otherwise just sit there in a campus parking lot. She's so happy about the cash, she doesn't even mind when people adjust her seats and stereo.

HAGEY: There was one time when the seat was really low and it was playing rap, like really, really loud. And so, I thought that was pretty comical because this isn't really a riding low kind of car - it's a little chick sedan.

BEAR: Hagey explains people access her girlie mobile a lot like a Zipcar or other shared vehicle. It's just that the car is owned by an individual and not a company.

HAGEY: I've got my card and I'm going to put that up to the sensor on the dashboard.

(SOUNDBITE OF BEEPING AND DOOR OPENING)

HAGEY: And then all I'm going to do is I'm going to reach across to the glove box and there's a Wheelz box that I recognize. And I open that...

BEAR: So, then you have your key there...

HAGEY: Yeah.

BEAR: And you just pop it in and drive away?

HAGEY: And drive away.

BEAR: One of those people driving off is undergraduate Jesse Clayburgh. He doesn't have his own car and dreads trekking to a rental counter just to pay extra because he's under 25. With Wheelz, he can pick from more than two dozen different cars right there on campus. That came in handy when he picked up a pretty girl at the airport.

JESSE CLAYBURGH: And I may or may not have been trying to impress such lady friend. And what I found was an Audi TT, you know, it's just a small two-seater, a little coupe that goes pretty fast. She was very impressed.

JEFF MILLER: There is a massive migration from ownership of assets to purchasing a service that helps you achieve the same end that you would if you owned that good.

BEAR: Wheelz founder Jeff Miller says people already loan cars to their friend and family, his company just makes it safer and easier. The service screens customers to make sure their driving records are clean. And members have to sign up through Facebook, so rentals aren't completely anonymous.

MILLER: It's actually a very personal transaction. And people respect the fact that it's another person's car. We've had zero claims to date, and thousands of reservations, and so far, so good.

BEAR: But the so-called peer-to-peer car sharing is still new. Wheelz just launched last year. So did Getaround, a city-based service in San Francisco. RelayRides and JollyWheels have been operating on the East Coast a little longer, but not much.

SUSAN SHAHEEN: This is an uncertain and unknown and developing area.

BEAR: That's Susan Shaheen. She's a transportation researcher at UC Berkeley.

SHAHEEN: There's a lot of excitement and interest in it, but I think it's important not to put too much expectations on it as its starting out.

BEAR: She says the concept faces several hurdles. A big one is clarifying insurance laws. Another, is developing a profitable business model. Shaheen estimates peer-to-peer car sharing could be in the black within five years if it increases its cut of the revenue. Right now, car owners get 60 percent.

That's a fair split as far as Katie Hagey is concerned. After all, she's the one putting her car on the line.

HAGEY: At this point, if the car got a dent and the dent was fixed, that's kind of - that's fine for me. We'd be having a different conversation if the car was totaled.

BEAR: Big companies, including GM and Zipcar, have taken notice of peer-to-peer sharing and invested millions in these startups. That's fueling some ambitious expansion plans. Wheelz just rolled out at UC Berkeley this week and expects to launch at two more campuses by the end of the month.

For NPR News, I'm Charla Bear, in Silicon Valley. Transcript provided by NPR, Copyright NPR.

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