Getaround: Using Digital Technology to Maximize Car Utilization
Getaround utilizes advances in technology to connect car owners with people looking to rent vehicles.
Cars: expensive and underutilized, but oftentimes necessary
We have a large problem in the United States: there are a lot of cars that aren’t being utilized very efficiently, but most households still purchase cars because use of a vehicle is required in many situations.
There were 240 million cars in the United States in 2014, a figure that has remained relatively constant over the past several years, and over 90% of U.S. households have at least one car. [1][2] The average total annual cost to own a vehicle is $8,698. [3] Despite widespread adoption and relatively high expense, the median driver only uses their vehicle for 22 minutes per day, meaning those drivers’ cars sit idle for all but those 22 minutes. [4]
Exhibit 1: Cars in the United States [1]
Although car ownership is expensive and potentially inefficient, vehicles are required in many situations, and traditional alternatives to car ownership are frequently less than ideal. Rental agencies introduce a high degree of friction to rent and are frequently located far away from the renter. Transportation services, including Uber and taxis, are relatively expensive and only work for very short trips.
Getaround uses technology to solve these pain points
Getaround promises to solve these pain points by providing an online marketplace that makes it easy for people who require use of a vehicle on a sporadic basis to rent from nearby car owners, and the Company delivers on this promise by utilizing the internet, mobile phones, and a telematicsa box located in the vehicle.
How does Getaround work?
Once a vehicle owner decides to list on the platform, Getaround installs a telematics box in the vehicle that enables renters to find the vehicle location using GPS tracking and unlock the car with their mobile phone. Owners then set an hourly (or daily) rental price, provide a schedule of when the car is available, and post the car to the online marketplace. [5]
Renters search the online marketplace for vehicles that are located close by and available in their preferred time slot and price range. Once the renter selects a vehicle, Getaround provides the vehicle’s precise location, and the renter is able to unlock the vehicle using his mobile phone. If there is any damage to the vehicle, the renter takes photos of the damage with his mobile phone and provides the information to Getaround. Owners can track the vehicle throughout the rental and contact the renter at any time using the Getaround mobile application. Upon completion of the rental, the renter signals the end of his trip via the mobile device, and Getaround uses GPS tracking to ensure the vehicle is in the correct location. [6]
Exhibit 2: Screenshots of Getaround Platform [7]
What are the key benefits of the model?
Getaround benefits several groups for different reasons:
- Vehicle owners: Lowered cost of ownership as Getaround can provide owners with up to $800 per month [8]
- Renters: Reduces need to purchase vehicle and more convenient than other car-replacement alternatives
- Society as a whole: Potentially fewer cars purchased as a result of the sharing model
- Getaround: Ability to make money by facilitating transactions without having to take on vehicle inventory
Next Steps for Getaround
There are two primary steps Getaround should take in the near future:
- Getaround should create a version of telematics box that owners can install themselves: Today, automotive technicians at Getaround are responsible for installing a telematics box on every car. This model adds friction to the onboarding process, increases labor costs to Getaround, and limits Getaround’s expansion opportunity as technicians must be present in every operating city. If vehicle owners could install the box themselves, it would create a simpler onboarding process for owners and enable more rapid expansion to anywhere in the United States.
- Try to get an edge with self-driving cars: Automakers have announced a target launch of fully autonomous vehicles by 2021. [9] It is imperative that Getaround establishes relationships with these automakers to ensure continued adoption of the Getaround platform. The Company could enter partnership agreements with the automakers that make it easy for vehicle owners to join Getaround, similar to the partnership they recently entered into with Toyota. [10]
Despite being founded in 2009, Getaround is still relatively small today with only ~100 employees, a private valuation of ~$150 million, and operations in four major metropolitan areas. [11] The Company provides a great option for vehicle sharing, and with a couple of tweaks to their strategy, I am confident they will grow substantially and achieve long-term success.
a) Telematics refers to the use of wireless devices to transmit real-time data back to an organization and is typically used in the context of automobiles. [12]
(799 words)
[1] Reflects light duty vehicles. Source: Bureau of Transportation Statistics, “Number of U.S. Aircraft, Vehicles, Vessels, and Other Conveyances,” accessed November 2016.
[2] Dr. Jean-Paul Rodrigue, Dept. of Global Studies & Geography, Hofstra University, “The Geography of Transport Systems,” https://people.hofstra.edu/geotrans/eng/ch6en/conc6en/USAownershipcars.html, accessed November 2016.
[3] Erin Stepp, “Annual Cost to Own and Operate a Vehicle Falls to $8,698, Finds AAA,” American Automobile Association, April 28, 2015, http://newsroom.aaa.com/2015/04/annual-cost-operate-vehicle-falls-8698-finds-aaa-archive/, accessed November 2016.
[4] “American Driving Survey: Methodology and Year One Results, May 2013 – May 2014,” American Automobile Association, April 2015.
[5] Owner Guide, Getaround website, https://www.getaround.com/tour/experience, accessed November 2016.
[6] Primary market research conducted in San Francisco from 2013-2016.
[7] Getaround – Instant Car Rental, Google Play store website, https://play.google.com/store/apps/details?id=com.getaround.android&hl=en, accessed November 2016.
[8] Benefits of Sharing Your Car, Getaround website, https://www.getaround.com/tour/benefits, accessed November 2016.
[9] Jamie Condliffe, “2021 May Be the Year of the Fully Autonomous Car,” MIT Technology Review, August 17, 2016, https://www.technologyreview.com/s/602196/2021-may-be-the-year-of-the-fully-autonomous-car/, accessed November 2016.
[10] David Kiley, “Why Toyota is Hitching Up with Car-Sharing Firm Getaround,” Forbes, October 31, 2016, http://www.forbes.com/sites/davidkiley5/2016/10/31/why-toyota-is-linking-with-ride-sharing-firm-getaround/#4c2e39767e69, accessed November 2016.
[11] Source: Pitchbook.com, a division of Morningstar.
[12] IT Glossary – Telematics, from Gartner website, http://www.gartner.com/it-glossary/telematics/, accessed November 2016.
This is a very cool model capitalizing on an ever-increasing sharing economy! A couple of players have come up in the space of peer-to-peer carsharing in addition to getaround, like turo, flightcar, drivemycar and justshareit. I think a huge challenge to overcome in creating a sustainable model in this space will be creating trust between the carholder, the car renter, the insurance company and the broker. Car sharing has the benefit of a low barrier to entry for the carholder and cost savings for the renter, but unlike a traditional rental company, if something were to happen to a private carholder’s vehicle, their headaches are significantly more costly in terms of the time they need to devote to resolving the issue, the loss in productivity in their own life unless they have backup cars, and the lack of scale to streamline administrative work they may have to go through. If getaround can overcome those challenges while providing an attractive set of terms for all parties, I think the model can provide significant value.
http://www.marketplace.org/2014/08/19/your-money/you-can-rent-your-car-out-airport-cash
Wow, I didn’t realize GetAround was founded 7 years ago. I really like the concept of GetAround and it was super useful to my life in San Francisco. While Uber and Lyft and other car-sharing options are great in the city, I often needed to take trips that were out of the immediate vicinity. While ZipCar is an option, there are more advantages with a service like GetAround. Often cars are much closer, you have a much large range in what you can pick, the experience is cheaper, and it feels like your own car. I totally agree that having a telematics box that can be self-installed would be a game-changer and may lead to the company’s rapid growth. I’m interested to see what the company does in the near future and if they will still be around. I am not sure how well-positioned they are to compete in the self-driving cars sector, so I think their best bet is to try and acquire as many users as possible. Thanks for a super interesting read!
Thank you for your post. This is another great start up idea to build on the trend of car sharing business explosion. I think the reason behind the slow growth of the company could be the customers’ concerns about safety and security. The idea of letting a stranger drive your car around can be foreign if not impossible to so many of us still. Also, many of us own cars not because we need to be on the road all the time but more for the convenience it offers of being able to move around any time we want. Renting out your car means to some extend a limitation to how flexible you can be in driving around. However I believe this business model will work with many other customers who are on a budget and 800$ earnings a month from car leasing means a lot to make them sign the deal. Recently, Toyota decided to hitch up with Getaround which indicates big potential for this business. I strongly trust that partnering up with a big name such as Toyota will make the future of Getaround brighter since Toyota as a big name will very much help when a customer is worried about security when renting their cars. Also, this cooperation serves as a perfect free marketing for Getaround and I believe we will see the company grow much faster in the coming future.
You can find a brief review about this partnership here:
http://www.forbes.com/sites/davidkiley5/2016/10/31/why-toyota-is-linking-with-ride-sharing-firm-getaround/#1189d9037e69
Getaround seems a well-thought alternative to the traditional car rental model. No one has been able to create the “airbnb” of cars until now. As the previous comment mentions, most of the friction for potential car lenders are accidents and insurance issues.
With home rentals, airbnb owners take some risk in allowing other people into their homes but it’s limited, a dirty apartment or a new stain on the wall are the expected problems. With cars the story is different. People need to learn how to drive a car and, as most of us would tell, having a licence does not equal being a good driver. A car accident is not unusual for even the best drivers, and the associated costs can go up into the thousands of dollars. Only the less risk-averse owners will be willing to put their cars in the platform.
It’s not clear how Getaround will address this issue in order to scale their model. Giving drivers reviews on the app might help, but it’s not enough to reduce risk in case of an accident. If some sort of alliance with an insurance company could be formed and all car lenders get coverage, it would help to increase the number of lenders and users. The first start-up that achieves this will capture the market.
I agree with you that traditional car ownership is under threat given the rise of car sharing schemes, like Getaround and Zipcar, although the model only works in dense urban environments where there is sufficient supply to make it convenient to potential users. I understand the benefit of being able to earn extra cash renting out your car whilst it is not being used, however as some of the comments above mention, there has to be a great deal of trust on the part of the car owner in letting a stranger use their vehicle. I imagine this coupled with the potentially high costs of something going wrong have limited the number of cars available and therefore the company’s growth.
I’m not entirely sure of the value of a service like Getaround in a world of autonomous vehicles; presumably fleet owners (whether they be the auto manufacturers themselves, or services like Uber) will manage their vehicles centrally (employing a direct-to-consumer model), rather a Platform model (like Getaround) which is necessary to match the many potential car owners with the many potential renters.
The concerns raised by commenters regarding insurance are among the largest immediate issues facing Getaround. New York State, for instance, doesn’t allow for Getaround (or its main competitor, Turo) to operate due to insurance concerns. Assuming insurance issues get worked out, the benefits and proliferation of vehicle sharing programs like this will only be accelerated by the introduction and spread of autonomous vehicles.
Autonomy will remove the largest pain point associated with sharing cars, which is the delivery and return of the vehicles. In the future, you will be able to schedule a rental and have the car pull up in front of your building exactly when you need it. I think @bl1884 makes the correct point that autonomy will change the nature of vehicle ownership in ways that we don’t yet know. Fleet owners may become the norm, but surely there will be some individuals for whom it still makes financial sense to own their own cars. However it shakes out, I do believe that companies like Getaround and Turo will have a short life unless they can prevent disintermediation or purchase assets.
Thanks for this interesting post!
The business model is attractive, but I am skeptical on the scalability of the business for 3 reasons:
1. I guess regulation on insurance is different across different cities. How is Getaround dealing with the insurance issue? Are renters covered with the insurance of the carholder?
2. Having a GPS system that locates the car at all times adds a privacy issue, since I can imagine many carholders hesitant to share their location at all times with Getaround. Do you think Getaround could limit this problem by enabling carholders to “turn off” the GPS when they are driving?
3. As you mentioned in the post, the fact of having to install the device by Getaround’s technicians limits the growth potential and growth speed of the company.
There is a similar service at airports that allows you to drop your car off when you are flying somewhere and it will be rented out to customers during the days you are away. You get a cut of what the service makes, and you car is cleaned by the company. They take you from their lot to/from the terminal in a black car. I love the idea of increasing utilization of stagnant inventory – huge companies like Uber and Airbnb have strived to do this with their service. Insurance policy becomes a huge piece of this business, as well as threat of rental car companies creating lots within cities and matching the average price on getaround.
Thanks abcdefg for this interesting post!
I’m convinced that the historical model of individual car owning is not meant to stay forever, and a service like Getaround is probably a good alternative in the short term,
However as noted above there are still some elements to consider:
– privacy issues linked to GPS tracking
– insurance issues
– frictions linked to the installation of the box
– low bareer entries for other actors willing to enter this market
but in any case, this example is a great opportunity to challenge our views on car ownership!