Turo: Airbnb of Auto
Want to drive Erlich Bachman’s Aviato-themed Ford Escape from the show ‘Silicon Valley?’ You can rent it in LA for $49 / day. How about a Tesla Model S? You can order it on-demand for $199 for a Saturday. Turo, the leader in on-demand car sharing, offers these aspirational driving experiences in addition to your everyday needs for renting a car, both for business and professional purposes. As Airbnb has created a platform for individuals seeking housing with those looking to make additional income from their homes, Turo has developed a platform for drivers to rent cars for their everyday needs and special driving experiences, often at a lower price than traditional rental car services, while also allowing car owners to make additional income from their cars. It is estimated that an American car isn’t being utilized for about 92% of the time, thus Turo is not only going after an existing car rental market but also seeking to expand the market by creating additional opportunities to rent cars for both necessity and experience.
Platform Value Creation
Turo is an app platform linking car renters to car owners. It is currently available in more than 3,500 cities. Besides having the convenience of grabbing a car in your local neighborhood, many cars on the platform provide for free delivery to your location or to the local airport, which can be a huge appeal to business travelers needing a car. No matter what your car rental purpose, it is estimated that Turo prices are 25-50% lower after taxes as compared to traditional car rental services. Value plus convenience help drive car rental demand to the platform. On the other side, Turo provides a quick and easy way to monetize a car for the owner. You are allowed to set whatever rental price you want, but Turo can also assist you to dynamically set the rental price based on car market value, location, and time of year. Turo also provides $1 million in insurance and 24/7 assistance to cover the car while it is being rented out on the platform. According to Turo employee Pushkar Modi, renting a Tesla Model S for a week out of the month will cover the cost of ownership. For those of us with less luxurious cars, renting on Turo can likely cover the cost of a lease: renting a $20,000 car a week per month (essentially weekends) will earn an estimated $3,500 for the driver per year.
Platform Value Capture
Turo does not charge users to access the platform, but charges 10-35% of the fee of the rental, depending on the level of insurance coverage the car owner possesses (having commercial insurance for your car will allow you the lowest fee of 10%). Turo also captures valuable data of car rental prices in various geographies across a wide variety of car types, which can be utilized to help car owners maximize value on the platform and therefore drive incremental revenue for Turo. By providing a straightforward fee to car owners and not requiring anything besides a few photos to set up a car listing, Turo was able to achieve scale quickly.
Turo’s largest competitor in app-based on-demand car rental is Getaround. Getaround does not match Turo in terms of delivery service and is available in only a handful of major cities. However, Getaround installs a piece of technology in each of its cars that allows the user open and lock the car through their app during the rental period. This offers great convenience as on Turo the renter must meet the owner in person to hand off the keys. Despite the additional convenience, this limits Getaround’s ability to scale quickly as the process to onboard cars on Getaround is much more time consuming, and it also adds more costs on the car owners on Getaround’s platform. Thus, Turo will be well positioned to scale more quickly than Getaround and take advantage of increased network effects of both more renters and car options on the platform. Multihoming will certainly be important and prevalent in this market, as renters will seek out the lowest prices for their cars, but Turo is in a good position to offer best prices by having the largest and therefore most competitive platform.