Car Insurance Car

I may be the only blogger out there who hasn't written something about the glories and potential and profits to be made from "collaborative consumption" - i.e capitalism meets sharing.  But here goes...

A while back I received a review copy of Lisa Gansky's The Mesh: Why the Future of Business is Sharing.  At the time I wasn't sure what to make of it.  I have to admit I'm a bit of skeptic (some might say "fuddy duddy" or worse) when it comes to books describing how to make millions from the latest trends. And the breathless style of this book did nothing to allay my concerns.

So, several months went by and the book sat around.  After having read the umpteenth blog post about Rachel Botsman, I picked up Gansky's book again and started reading.  Once I got past the first few chapters that read like Gansky had just discovered the secret power of the universe, I found the book had lots of useful ideas and is well worth taking a look at.

Basically "the mesh" refers to how networked we are and how to take advantage of web and mobile networks to run businesses to share stuff (physical goods) or provide news and recommendations through social networks (electronic word-of-mouth).  Gansky says the sweet spot for mesh-able goods are those that are "high cost and frequently used" (but I would add, not too frequently used, or people will want to own them).

So obviously carsharing fits right in to this description of "mesh" transportation, and Zipcar is duly noted early on in the book.  But it also applies to the various attempts to use the web and mobile phone tools to take "causual carpooling" beyond it's non-automated roots in "slugging".  The Mesh web site has an interesting list of mesh transportation services.

So, as I say, the book makes some good points that you may find useful.  It's a prime candidate for reading using one of the early pre-internet mesh services — the public library.  In the meantime, you can get a sense of the book's style which I had such a hard time getting past in this free Mesh Manifesto pdf. Enjoy.

While I was finishing up my previous post about new service models, I got a tantalizing call from Nic Lowe of GoGet Carsharing, serving Sydney, Melbourne, Adelaide, and soon Brisbane, Australia.  What he had to tell me surprised and amazed me - they're doing a test of exactly the services I had been writing about:

• On demand (no reservation needed)
• Open ended (return it when you're done)
• Pay by the minute (pay for what you use, not what you reserve)

They call it GoFree and it's very nicely thought out.  It's designed to answer to concern that every carshare member has had at one time or another - avoiding penalties for late return.   GoGet thinks it will be particularly appealing to business users but I think it will get plenty of use on evenings and weekends, as well.  Members can still reserve a regular GoGet vehicles in advance.

How are they implementing it?  Right now only selected members are being invited to test the system.  Certain vehicles at several pods are designated as GoFree vehicles.  To use a vehicle the member swipes their card over the reader but instead of opening the door it sends the member an SMS (text) message to verify they want to start a trip.  Responding to the message unlocks the door.   At the end of the trip, the member uses their card to re-lock the doors and sends a text message to GoGet with the word FIN to end the trip.

The trip is billed at a rate of about 8.5¢ per minute + GoGet's standard $0.35 kilometer rate, similar to GoFrequent hourly rate (Australian and US dollars are approximately the same).  Members still have fill up the gas tank if it gets lower 1/4 during their trip and they do have to return the vehicle to same station.

And if you just can't get enough of this stuff, there's another interesting interview in The Economist video series with architect, designer and creator of the Curituba BRT system, Jaime Lerner here.

I'm pleased to know Jose Paris, an innovative car designer (the itMoves EV) and very thoughtful about the car industry and new mobility options.  He recently posted this musing about BMW's new Drive-Now "mobility on demand" program to open soon in Munich, Germany.

He writes:

"Ivan, one of my coworkers here in London, has a funny way to describe his admiration for his former employer BMW; he just paces back and forth muttering they cover and master every single angle of the business, e.v.e.r.y single one, all while shaking his head in disbelief.

"Proving Ivan right, BMW announced last week that they were starting a premium car-sharing program in Germany.

"The news comes right on the heels of their February announcement of the i sub-brand, a division that wants to be to environmental vehicles what the M brand represents to performance, as well as the launch of i-ventures, their venture capital arm.

"Why would a conventional car company move into such a fundamental threat to their core business as car-sharing? While the launch of the i sub-brand is understandable from a product point of view, creating a venture firm and a car-sharing organization might seem, at first glance, odd. I see three possible explanations:  (Continue reading on Jose's blog.)

Here's a 5 min. "talking heads" video of the Drive Now roll-out press conference.

A (hopefully) low-profile bill is passing through the New Jersey legislature that would exempt carsharing from the $5 per trip rental car tax, according to the Associated Press.

The measure is sponsored by Ruben Ramos Jr., D-Hoboken, and will certainly help that city's Corner Cars program (operated by Connect by Hertz), as well as Zipcar members in the Garden State.

The idea of taxing carsharing like a rental car transaction doesn't go away because:

• Many people still don't "get" carsharing and continue to see it as some sort of "hourly car rental"
• Governments are hurting for revenues and this look like an easy and fair (if you don't understand what carsharing is) way to increase revenues

To most of us exempting carsharing from rental car taxes is a no brainer.  In most places, rental car taxes are dedicated to tourism and convention promotion, but carsharing is primarily a mobility option for local residents.  So, on the most fundamental level, why would you tax something you want more of?  Yet, it's an issue that doesn't seem to go away and one that is probably going to have to be resolved on a state by state and possibly even, city by city basis.

New Jersey isn't the first place to struggle with this issue: Flexcar in Washington State also faced the issue a couple of years ago.  The state decided that some longer trips made in carsharing vehicles looked an awful lot like car rental trips and not like than the classic 4-5 hour around town carsharing trip.  Yes, some trips taken by carsharing may be as long as a car rental trip but, to me, if you just had to tax something, I'd base the distinction on whether the trip was they taken by people from out of the area or not (which Washington officials said was too difficult!)

Word to the wise: if your carshare isn't exempt from rental car taxes, why not?  It won't happen overnight but doesn't take that much time or effort.  Start by finding an advocate in the appropriate level of government (that the tax is levied at) to introduce legislation.  You'll have all sorts of supporters and few detractors.  Just be ready for one of the car rental giants to show up at the hearings claiming that car rental is "just like carsharing" (as they have done in Chicago) and should be entitled to the same benefit.  NOT! (until they show that they deliver the same benefits to society).

If you're wonky on the subject, the Tax Foundation posted this informed discussion about rental car taxation.  Thanks to RelayRides for Tweeting the link to this article the other day.

In light of several new innovations in shared vehicle services, I think it is useful to review what the essential elements of carsharing are.  And why I consider some services, often referred to as carsharing, are actually car rental.

The simplest description of carsharing that I can come up with is this:

• Unit pricing that includes fuel and insurance
• Unattended access to the vehicle at trip start and end

Yes, there are other characteristics of current carsharing services - membership, parking, etc. but they aren't what make carsharing distinctive.   This means that Whipcar, and now Buzzcar, don't meet a key aspect of my definition - unattended access - since both require some sort key exchange.  And for what it's worth, at the present time two current P2P start ups in the US - Getaround and Relayrides appear to have 2 classes of vehicles in the fleet - those with technology and those without.  Of course, this "unattended access" could be easily provided with a simple mechanical lockbox mounted on a wall or post near the vehicle, as a number of carsharing companies have quite successfully employed over the years.

Another innovation that's gotten some press recently is the Peugeot Mu program.  While offering a wide range of vehicle types, it, also, does not meet my definition of true carsharing since (correct me if I'm wrong someone) members have to collect the vehicle keys in person.

Why is this important?

Don't get me wrong, I think car rental serves a useful function and p2p car rental, such as Whipcar, even more so (since it uses existing vehicles more efficiently and provides a gateway into shared vehicles for die-hard "can't pry my hands off the steering wheel" car owners).

The reason I think it's important to make the distinction between carsharing and car rental is because there is a large body of research that demonstrates substantial benefits to individuals, to cities and to the environment when people join and use carsharing - fewer cars, lower VMT, etc.  I would suspect that car rental might be able to demonstrate some of these benefits, although probably to a much smaller degree, but so far these companies have not commissioned any independent studies to validate their impact.  Until the benefits of other service models are quantified, I believe it is important that cities not extend privileges, such as marketing partnership, parking benefits, etc. that have been earned by carsharing.