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Pimp Your Ride
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Guest contributor: Alan Durning.

Each time I walk to a FlexCar in my neighborhood, I pass scores of parked private cars. I sometimes fantasize about strolling up to one of them, swiping my FlexCard over the dash, and driving away. I’d be debited automatically; my neighbor would be credited, less a slice for FlexCar. And I’d have a vastly larger pool of vehicles at my disposal.

This fantasy is less fantastical than it may seem.

Advances in information technology and the growth of car-sharing could converge with trends such as high fuel prices, urban densification, and caps on carbon emissions to create a thriving market for private cars’ idle hours—for people to pimp their rides.

The benefits for consumers and society would be colossal, and the obstacles to such a market emerging do not seem insurmountable. But I’m getting ahead of myself.

The starting point for this line of reasoning is the fact that cars and trucks are everywhere. From wherever you’re sitting right now, I bet you can either see or hear at least one. The Pacific Northwest has substantially more motor vehicles than licensed drivers. There are enough cars around that everyone in the region could climb into a vehicle and no one would have to sit in the backseat. In fact, most of us would be alone.

What’s more, most of the time—23 hours a day on average—our vehicles are parked.

The degrading effects of this massive vehicle population on our climate, our communities, and our health are gargantuan, but forget all that for the moment. Just think like an MBA.

More than 12 million motor vehicles, each of them idle 23 hours a day—that’s a mind-boggling stock of underutilized capital, Aside from our homes, most of us Cascadians have more money tied up in our cars than in any other physical assets. And they’re just sitting there in the driveway depreciating, their resale value diminishing with every passing hour. (It’s true! Cars depreciate even they aren’t being driven.)

Anytime there’s such over-capacity in the economy, there’s also a profit opportunity for whoever can figure out a way to put the over-supply to productive use. So how might northwesterners reap rewards for their unused cars? Well, they could rent them out. Imagine parking at the office, flipping the “rent me? button on your dash, and earning a few extra dollars an hour until quitting time. Imagine leaving town for a week and coming back to learn that your vehicle had earned you $300 on the rental market? On the flip side, imagine that your car-sharing membership card gave you access, on a moment’s notice, to tens of thousands of private cars and trucks sprinkled around your city. You might shed one or more of your household’s own vehicles if you knew there were a hundred at your disposal within a ten minute walk.

Why hasn’t such a market for vehicles’ off-duty hours already developed? What are the practical or legal obstacles?

The practical obstacles are what economists call transaction costs, most of them having to do with information. How can potential buyers and sellers find each other? How can they conveniently ensure payment? How can they tend to liability and insurance?

Car-sharing companies such as FlexCar and ZipCar are hard at work reducing these obstacles. They’ve developed elaborate and expensive transaction and marketing infrastructure—smart cards, onboard computers and GPS trackers, online reservation and billing systems, refueling and car washing systems, advertising and member recruitment. The business challenge for them is to get adequate scale. You need a huge number of billable trips to amortize all that transaction overhead. To add trips, you need more cars, which are very expensive. The idea of creating a market for off-duty vehicles is a natural extension of the car-sharing business model. It’s also an idea that both FlexCar and ZipCar have toyed with.

From a car-sharing business perspective, what could be better than to extend your transaction infrastructure across not only the fleets of vehicles you own but also to private vehicles that might be plugged into your system? Even getting one private vehicle in a thousand plugged in would represent several orders of magnitude of growth in the car-sharing fleet. That's vastly more billable trips but no additional capital locked up in buying your own vehicle fleet.

The German car-share company Choice has gone from toying with this idea to proving it. It began road-testing a system called CashCar a few years ago. CashCar is a form of vehicle lease. Here’s how it works: I lease a CashCar, just like I might lease any other vehicle. But with Cashcar, I retain the option of turning the vehicle back over to the car-sharing company during idle periods. Whenever someone uses my CashCar, I get a credit toward my lease fees. (Unfortunately, neither I, nor my German-reading father, have been able to figure out whether CashCar has moved from road test to the consumer market. If you read German and have some time, please look into it and tell us what you learn!)

Many of the practical obstacles to ride-pimping are diminishing with the growth of car sharing. But there may still be barriers.

Legal barriers, for example, may be considerable. The car rental business is as regulated and taxed as any other, and those regulations and taxes are designed for the conventional by-the-day rental business. So I imagine that enrolling thousands of cars into a CashCar-like system will require at least a few friendly rule changes from state and provincial capitals. (If you’ve got any expertise on this subject, please enlighten us!)

Insurance and liability issues could also block ride-pimping: if I’m paying you, through FlexCar, for the use of your Hummer and I drive it over the top of someone’s Jaguar, whose insurance pays? If the brakes fail in my car while you’re driving it, who is liable?

In car-sharing, as in much of life in North America, liability and insurance concerns are killers of innovation. FlexCar’s first CEO Neil Peterson once told me that getting insurance coverage was by far the biggest obstacle to his company’s early success. I’m betting CashCar would be even tougher to insure, and under present rules, renting out your wheels to strangers would almost certainly invalidate your insurance. But I’m no expert on such matters, and I can’t see any problems that smart and creative attorneys couldn’t resolve in the design of pimp-your-ride contracts for owners and drivers. (If you’ve got expertise on this subject, please enlighten us!)

Last, I’ll mention the obstacle that many readers probably thought of first: many car owners are too emotionally attached to their vehicles to let strangers use them—even strangers with clean driving records like the members of FlexCar. I mention this last because I don’t believe it’s as big a barrier as you might expect. The beauty of the pimp-your-ride strategy (assuming we can lower the legal and liability barriers) is that it sets in motion a virtuous circle. It can start very small and grow steadily, unlike some all-or-nothing transportation solutions like London and Stockholm’s congestion pricing systems.

Even a fraction of a percentage of owners is enough to create explosive growth in the car-share fleet. As the fleet grows, so does the market for it. The more cars available, the more people will start renting them—because the system will become ever more pervasive and reliable. Meanwhile, the more money the owners are making, the more that other owners will want to plug into the system. And as the idle-car rental market becomes ubiquitous, it will grow reliable enough that many, many people will feel comfortable shedding one or more of their private cars. The newly car-less (or second-car-less) will become a more reliable group of consumers for the whole ride-pimping system. As the virtuous circle keeps turning, emotional reluctance to share your car with strangers is likely to diminish. Once your neighbors are all pimping their rides, you’re far more likely to do so yourself.

Furthermore, if external trends such as high fuel prices, regulations or fees on emissions of greenhouse gases, rising parking costs, and denser urban development continue, the virtuous circle is likely to turn faster.

A welcome side-effect of this virtuous circle would be to nudge the transportation economy from a market in which we buy transportation by the vehicle to one in which we buy transportation by the trip. A trip-by-trip transportation market results in fewer car trips, because of the first law of car-lessness: when you don’t have a car, you think more and drive less. My family, for example, cut our mileage by about two-thirds when we went car-less.

So fostering an hourly market for off-duty cars could make a big contribution to creating healthy, lasting prosperity. It’d give more people ready access to a car without having to buy one (or a second one). It would help shrink the over-capacity in the vehicle fleet and drive steep reductions in how much driving we do—in ways that generate profits (or savings) for both car owners and nonowners. Along the way, it would help stabilize the climate by preventing greenhouse gas emissions, help stabilize the Middle East by reducing oil imports from terrorism-financing nations, help reduce traffic congestion by eliminating discretionary trips, help liberate parking spaces for other uses, help create jobs by keeping dollar circulating locally (rather than leaving the region to buy vehicles and fuel), help save lives (by reducing car wrecks), and help make us all fitter and trimmer (by spurring us to walk more).

Not a bad deal, all around, or that’s how it seems to me.

Would you, personally, rent your car during off hours? Would you car-share if there were more cars available?

Alan Durning is the founder and executive director of Sightline (formerly Northwest Environment Watch). He's spent the year chronicling the experience of car-free living with his family. We've covered several installments of his series here. This is #21.

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Comments

Getting rid of your second (or third) car is a great selling point for this type of service. Another point: think how nice it would be to walk out and choose a van when you need to go to the airport to pickup your relatives (without having to own one for the rest of the year). Same with pickup trucks for moving applicances and lumber from the local big box store. You can already do this through traditional car rental companies. It would be nice if it was available in easily in our local neighborhoods though.

On the flip side, watch out for the Auto manufacturers. More rentals of the existing car base means lost sales revenue for the car companies. I do not think they will be let this go without a fight. Look what they did to the trolley and train systems seventy years ago.


Posted by: Walt on 27 Nov 06

I think this is a great idea, and this is something I would gladly participate in. I'm one of those who keeps a second car for "just in case" scenarios.
As for the last point about emotional attachment, the market will always find the most appropriate price, compensating those who find it hard to let go.


Posted by: Foster on 27 Nov 06

One of the best reasons to expand the flexcar program is that the new cars sold each year represent about 3% of the entire fleet. Even if we increase gas mileage substantially with the new vehicles, it will take decades to replace the existing fleet and have much of an impact on overall fuel consumption.

With flex car, everyone could immediately start driving cars with good gas mileage. The fact that the existing fleet averages such low mpg could become irrelevant if people chose those cars with the best mileage.

So, fuel consumption could be cut two ways, one based on the fact that people would drive less and two because the cars driven could have much better gas mileage.

With flexcars, we would also get more rapid turnover of the fleet, thus encouraging innovation. While there would eventually be less registered cars clogging up our cities, parking lots, and driveways, the more rapid turnover might compensate the auto companies for the reduced need for total cars.


Posted by: tom on 27 Nov 06

So ... making the ownership and use of cars is a good thing? So, instead of my mini-van sitting in the parking garage of my work all day, someone can be tooling around in it, driving their kids and/or stuff all over the city?

I dunno. For me (and them), this sounds great. But history is pretty clear that as the cost of something goes way down, its popularity goes way up. And I am not sure that making cars more popular is all good news for soceity as a whole.

Can't we use our ingenuity to make the use of cars MORE difficult and MORE expensive as they are used more. E.g. why can't my insurance be tied to the distance I drive each year, rather than just a lump sum payment? This would encourage me (and that other person that wants to rent my vehicle during the day) to both take the bus.


Posted by: a doubter on 27 Nov 06

Insurance is a killer- our carsharing co-operative here in Vancouver BC (the Cooperative Auto Network) had similar difficulty when starting up. I can't help but wonder, though: vehicle insurance laws are by province here (and I believe they are by state in the States as well), and a variation of what our neighbouring Alberta has in place might do the trick. Their laws are configured such that it is the driver, and not the vehicle, that is insured. Something to chew on, anyway.


Posted by: AJ on 27 Nov 06

I guess the main problem I see is that part of the reason we have personal vehicles is convenience - sure it may be parked 23 hours per day but when we need it, it's there. If the car can disappear for arbitrarily long periods without us being involved then maybe when we need it, it's not there.

I support the general idea but why is ubiquitous ridesharing not a better idea?


Posted by: M on 27 Nov 06

I guess the main problem I see is that part of the reason we have personal vehicles is convenience - sure it may be parked 23 hours per day but when we need it, it's there. If the car can disappear for arbitrarily long periods without us being involved then maybe when we need it, it's not there.

The larger the fleet size, the less likely nonavailability occurs, assuming that one has properly estimated peak and average demand. It's the reason that it's rare one can't get a rental car, but is somewhat common that you can't get the specific make and model you were hoping for.

It's easy to envision a service scenario where the principal user/owner would be able to have priority access to a specific vehicle. If you look at Flexcar's business options, they have some service categories that broadly match that ideal.

http://www.flexcar.com/default.aspx?tabid=169

I support the general idea but why is ubiquitous ridesharing not a better idea?

That's a whole other ball of wax. There's the technological hurdles (eg, sufficient penetration of location-aware media devices like GPS-enabled cell phones), as well as liability and payment transfer issues. Then there's simply the fear and hassle factors balanced against the upsides. Trust, network scale, etc.


Posted by: Joseph Willemssen on 27 Nov 06

But history is pretty clear that as the cost of something goes way down, its popularity goes way up. And I am not sure that making cars more popular is all good news for soceity as a whole

Though the cost of carsharing is less than that of owning a car, and in a dense urban environment with difficult parking, carsharing is much more convenient than owning a car, consumers don't usually think rationally about money or their cars. :)

One big difference between car sharing and owning a car is that when you purchase a car, the biggest costs--the cost of the car and car insurance--are essentially sunken before you ever start driving. The typical consumer will not consider those sunken costs when thinking about how much it costs to drive--they will only think about immediate costs: gas, parking, tolls. It will seem that owning a car is cheaper, even though it's not.

When you switch to a carsharing model, the startup costs are reduced, but replaced with costs that are directly linked to driving. Drive more, pay more. Even though the true dollar costs of carsharing are less than that of owning a car, linking costs directly to driving provides an emotional barrier that makes consumers think more about each trip. Additionally, some carsharing services (like the nonprofit one I use, City Car Share in the Bay Area) have pricing systems where consumers pay by the hour AND by the mile. This further reduces the amount of miles traveled by consumers.

All that said, before I started carsharing, I only rode my bicycle and didn't own a car. So for me personally, by joining carsharing I put more cars on the road. However, non-car owning bicyclists (or pedestrians) are a small percentage of the population. I imagine that most of the carsharing market is couples/families who join carsharing in lieu of buying a second car.


Posted by: Lauren Buckland on 28 Nov 06

There is something I like about combining the downtown carpark garage with this whole idea. Imagine an enterprising garage owner who offers free parking in exchange for the right to rent out your car for you. The garage owner handles all the transaction costs, it's already in place actually.
(ok there is something out of balance with this idea)
I wonder also about the market for 1 way car rental, a self serve taxi, of sorts, a kind of "disconnected on demand tram" (with parking lots all around the city's destination areas)

Just loose thoughts.


Posted by: jason wilson on 28 Nov 06

I would love to see a situation like the one you describe, where I can walk out of my office, swipe my card across any car I choose and ride that one home, paying per ride according to distance and quality of car. I think there would be strange emergent social effects as well - for example, how would a car snob who wouldn't be seen dead in anything but the latest and greatest handle the concept of a trip to a low-rent part of town where they're unlikely to find anything but the cheapest of cars to ride back home?

But I doubt that individuals would ever rent out their own cars, for practical and possessive reasons. This sort of effort has to be managed and capitalised by a company, not an individual.

The possessive reasons are simplest - it's my car, I don't want complete strangers leaving their litter in it for me to clean up. Look at the amount of time and effort taxis and car rental companies invest in keeping their vehicles clean: if you're offering a commercial service, that cleaning and valeting becomes a necessary commercial overhead, but if you're renting out your own precious car, it becomes a hassle that your average car owner can do without. I'm sure this could be overcome by outsourcing the cleaning in a more easily available manner, but possessiveness would be a strong counterargument to an individual - conscious or unconscious.

But the killer is the practicalities. Under this scheme, I drive my car to work, flip the sign saying "rent me", walk into the office - and I will never see that car again. Sure, it'll be getting rented out and used by people who need it, and I'm sure I'll be getting my rental income, but the simplest problem would be how to ever find 'my' car again.

The person who hops into the car after I've walked into the office is very unlikely to be making a return journey in the same car, so they'll drive it to a deli and abandon it, have their coffee and a bagel, and move on to another vehicle. Meanwhile someone else has walked out of the deli, jumped in and driven it to their office. Where someone else will pick it up, drive it to the supermarket to do their shopping. Someone else will use it to drive their shopping home to their house in the countryside - and so on.

How do I now know where 'my' car is? Do I ever track it down and reclaim ownership, or do I just leave it to bounce here and there through the city, earning me rental dollars?

If I ever have to reclaim it, the act of reclamation becomes an unacceptable overhead - it's making car ownership significantly more difficult, especially if the car ends up in another city. If I don't reclaim it, then I never see 'my' car again, which makes this less of an ownership question and more of a financial investment - I invest money in a car in hope of making profit from the rentals. But this isn't a simple financial investment to manage, as I have to arrange insurance, servicing (how on earth?) and so on myself. It would be easier (and commercially more viable) for me to invest in a corporation that maintains the vehicles on my behalf, and arranges the logistics en masse.

So yes, cool idea - but look to corps like FlexCar or ZipCar to provide it, not me.


Posted by: Geoff on 28 Nov 06

Wanted to provide some clarification on CashCar after looking at the linked site. The site you linked is for one of the sponsors, WZB, and they list it as a completed project (link). An entity named choice was created to work on this & other projects, and they indicate the project ran from 1999 - 2003.

choice has also worked with the German rail system (Deutsche Bahn), and DB has a service called DB Carsharing that appears to be pretty well developed. Check out a neat/somewhat amusing Flash demo.

Also, just wanted to say I think this is a great idea. I hope to see the shifts you're talking about - fewer cars & fewer trips, and people seeing cars as a transportation tool rather than a member of the family.


Posted by: Matt on 28 Nov 06

Just noticed that my home page needed correcting. Cheers, Dan.


Posted by: Angelica on 30 Nov 06

The biggest barrier is the tipping point-once everyone participates, and all cars are shared, suddenlly it's easy.

Maybe smaller systems could be created, cells as it were, that limit where a car can be and who can drive it. Imagine that all the cars on my block were shared by those of us who live there. I'd know the people using my car, and I'd know that my car would come back to where it started. The office could offer the same thing - as long as I come back to my car at then end of the day, do I care where it's been?

I agree that convenience is what drives us and our car usage, so maybe there's a way to offer sharing, and keep convenience, by localizing a given pool of shared cars.


Posted by: neil on 30 Nov 06



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