Regulation

Turo: Why Regulating P2P Carsharing Won’t Level The Playing Field

The world of traditional car rentals, generally speaking, doesn’t present a consumer with the world’s greatest experience. One can pick the general category of their rental car, but the specific make and model is going to be a mystery until they go pick it up. Some things, they can specify, like a bike rack or car seat. Other — fairly obvious — things, like whether a car has hands-free Bluetooth capabilities, remain a mystery.

“I mean, renting a car is usually a terrible experience all the way around. You get to stand in a long line, wait your turn and then you get to accept whatever car they hand you,” Michelle Peacock, VP and head of government relations at Turo, told Karen Webster in a recent conversation.

In light of that experience, Peacock said, it shouldn’t be all that surprising that consumers are defecting to the alternatives to car rentals that the sharing economy and platform businesses make possible.  With alternatives like Turo, a peer-to-peer (P2P) carsharing service that essentially makes transparent everything that is invisible in a normal rental process, the customer knows exactly what car they are renting, and exactly what will come with it.

The rental industry could have taken this as a sign that it needed to do something different, she noted, but that’s not the way it went.

“They should have spent money on innovating. Instead, they’ve hired a lot of lobbyists to put the competition at a disadvantage,” Peacock said.

Unfortunately for Turo (the competition), that has meant a push in state after state for regulations supposedly aimed at “leveling the playing field” between P2P carsharing services and regular rental car companies. The problem with most of those regulations is that, in reality, they are aimed at anything but fairness, she explained.

Reasonable And Unreasonable Regulations

Turo, Peacock told Webster, is not prima facie against regulations of the sharing economy — the company believes consumers have every right to have their safety and privacy protected. It’s why, she noted, it has collaborated on laws in places like Maryland, even knowing that those laws will “mean there are going to be a lot of new hoops to jump through,” because those laws make sense and exist for the good reason of protecting people who use the service.

With its rather extensive vetting of both drivers who rent and renters who offer up their cars, Turo believes it has a moral obligation to that anyway — and it would, therefore, much rather work with the state than against when it comes to protecting both sides of its platform.

What Turo is against (and is committed to fighting tooth and nail in every state it comes up in) is the idea that, since there are some surface similarities between what it and the traditional industry does, it should just be shoved into the “rental car box” from a taxation perspective. The fact is that, under the surface, these are two very different business models, Peacock noted, and the attempts to send the tax man after P2P firms are really just attempts by the old-school rental industry to disrupt the companies that are disrupting it.

“The push by the industry that is absolutely led by Enterprise on the tax front is really flabbergasting,” she said. “And it’s dishonest, because it overlooks the massive benefits the car rental industry already enjoys.”

For example, car companies get an exemption from paying the state excise tax when they buy cars to add to their fleets — a tax loophole that literally saves them billions of dollars a year. Turo owners, on the other hand, all pay sales tax on their cars — and those car taxes add up to much more money than they are saving by not paying the car rental excise tax on the platform.

Moreover, car rental companies are not shy about passing costs, like tax and title fees, directly to their customers — in exactly the way they pass that 10 percent excise tax onto them. It’s a demand for fairness in words only, Peacock noted. What the industry players actually want is for the playing field to remain as tipped as possible, as long as it remains tipped toward them.

Democratizing Car Ownership

The battle, she said, is a state-by-state affair. In Colorado, for example, the state — when writing rules around this — worked hard to make sure there was a carve-out for P2P players. In Alaska, it was an all-out war to make sure that overly broad, written rules didn’t force Turo into a category it truly doesn’t belong in.

Ultimately, while these attempt can certainly make it harder for Turo to do business, the company isn’t going anywhere. The traditional industry is going to have to think of a better response than running to regulators with claims of unfairness.

The people that the regulators should primarily be concerned about being fair to, Peacock noted, are consumers. To them, Turo offers a real benefit. Half use the platform to offset the cost of car ownership, and a large portion is active duty military. When looking at the renters, she said, there are cases one would expect: Someone needs to get from point A to point B. However, there are also the people who are thinking about buying a new car and, rather than try to figure it all out in a test drive, they can get a Turo car and get a feel for it over a few days.

“There are 7 million Americans out there right now behind on a car payment, and we give them an easy way to put that asset at work for them. We think we can change the relationship Americans have with the cars in their driveways, and really democratize automobile ownership,” Peacock said.

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