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Beyond The Fleet, Car Sharing Makes Inroads On Roads Down Under

Car Share

Rent or buy? Borrow or share? In the land down under, this isn’t about housing; it’s about cars.

Modes of transport, where short trips — of the garden variety type, where the supermarket or IKEA beckons — can lead to long hassles. Borrowing a car, especially in suburbia, depends on the whims of the lender.

Car share companies are offering up a solution to the wheels dilemma by letting consumers rent vehicles owned by ridesharing firms.

Enter Car Next Door, a Turo-like car share service that connects car owners and would-be borrowers, founded in 2013.

“At that time in Australia, it was before the peer-to-peer economy had really taken off,” Kate Trumbull, communications manager for Car Next Door, told PYMNTS in an interview. “It was right at the early days of Airbnb and before Uber.”

Car Next Door — and American counterparts, such as Zipcar, Turo and car2go — are examples of accessible product sharing services. These companies place their products in convenient, accessible locations. Customers can then use an app to find a car, use it temporarily and return it when finished.

For drivers, using shared cars reduces their fixed costs by saving them from having to own, maintain and fuel a vehicle. And while Car Next Door may apply to users with shorter journeys, Zipcar has launched a program in the U.S. in which commuters in cities pay for a monthly subscription to gain access to unlimited cars during a workweek.

The idea that people could share valuable items — like cars — was borderline crazy then, she said. But then Airbnb and Uber entered the market, which made the concept of Car Next Door a bit more palatable.

“Often people refer to us as Airbnb for cars because that concept makes sense,” Trumbull said.

 

The Technology

Car sharing began in Switzerland in 1948. Over time, it evolved in various countries, such as France and Germany.

Trumbull believes early companies used to store keys in lockboxes. Alternatively, services could potentially ask borrowers to pick up the keys directly from the owner.

But exchanging keys adds friction and makes the car share experience less convenient. As a result, Car Next Door took a different approach.

“We actually started out with a swipe car unlocking device, which the other commercial car shares in Australia used,” Trumbull said.

But the problem with that approach was that Car Next Door had several cars across a myriad of makes and models. And the aforementioned swipable devices had to be hardwired into the cars. They were occasionally triggering the immobilizer — a device that prevents the engine from running — in cars too.

As a result, the company developed a technology that combines a lockbox with a GPS tracker and an online booking platform. The company has a patent pending for the technology. In a way, the technology is back to the future: Car shares started off with lockboxes, after all.

 

Sign-ups

To encourage car owners to put their vehicles on Car Next Door’s platform, the company guarantees they will receive at least $2,000 over a year for the use of their car.

“I think it helps people to try it out and helps them stick around for that initial year, which is needed to get the car active,” Trumbull said. “It’s important to people to know that … it’s still a very new concept, and for a lot people, they don’t know how much they will earn and there is a … fee to list a car, so what it really does is reverse the risk.”

While some cars are rented within hours of being listed, it takes longer for cars in other areas to find borrowers. The guarantee, in essence, can make up for that lag time if need be — especially if an area doesn’t yet have many vehicles on the platform.

After all, “each geographical area has to build its own momentum,” Trumbull said.

 

The Future

The company notched $5 million in Series B funding, which was announced on Feb. 8. It also raised $2.5 million in a 2016 corporate round, AUS $1.6 million in a Series A funding and $650,000 through a convertible note in 2013, according to Crunchbase.

Trumbull said most of those funds will go toward hiring new developers and growing the company’s technology — as well as marketing and promotions.

Overall, Car Next Door seeks to “increase our geographical presence and also the density of the network in areas where we do operate,” she said.

The end goal: to make car ownership optional — not a necessity — “so that owning a car is purely a choice,” Trumbull said.

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