Car Rentals

Car2Go Pulls Car Sharing Program out of North America

car2go america

The on-demand car rental program Share Now announced the end of their Car2Go services in North America this week. The service provided Mercedes cars for rent, picked up from parking spots on the street. The rentals could be as short as 30 minutes and users can leave the car parked anywhere legal on the street within the service area. It was a convenient alternative to full-day, office pickup, commercial car rentals. But Share Now apparently couldn’t make this business profitable. Instead they are focusing on 18 European cities.

From the ShareNow announcement this month:

The decision to close North America was made based on two extremely complicated realities. The first being the volatile state of the global mobility landscape, and the second being the rising infrastructure complexities facing North American transportation today… and rising operating costs…. we are unable to continue operations in a manner that’s sustainable for our business due to low adoption rates.

In 2018 Car2Go pulled out of Toronto because of a fight over parking spaces. Residents demanded the city reserve all parking for their personal cars. And so the city refused to allow the free-float parking model that is essential to a successful program like Car2Go.

Why are all the car sharing programs leaving?

This has been a bad year for car sharing programs in the U.S. Lime shut down their LimePod program after a Seattle pilot test. And ReachNow also ended services this year. It’s not a big leap to say that there is something systematically going wrong. Either these programs don’t make sense for Americans. Or Americans don’t like the idea of these programs.

car2go america

I distinguish between these two realities because public transportation really makes sense. For so many reasons it’s important. And yet Americans are resistant to public transit. This resistance starts at the top, where tax deals are given to auto manufacturers and tax cuts are made from programs that would fund public transit. And it extends to the preferences of Americans who choose private cars over public transit even when the later is more convenient.

Similar to public transit, I think there are a lot of barriers to car sharing in this country. Resistance to car sharing aligns with American resistance to carpooling (ridesharing). And so I’m not optimistic that another similar program will come into the market and succeed just by doing it better.

What’s left for American drivers?

Is there anything left beyond commercial rental companies like Hertz and Enterprise?

There are a few remaining on-demand car rental businesses in the U.S. Zipcar continues to offer a membership program with hourly and daily rentals from lots positioned throughout some cities. That’s closer to the commercial rental model.

In addition there are several peer-to-peer car rental companies. Turo and Getaround seem to dominate the market in the U.S. In these programs individuals rent out their personal vehicles directly to others on the platform. This business model leverages unused cars without requiring the owners to do much work.

This year the tax battles escalated between companies like Turo and various states. While traditional car rental companies are paying fees and following specific regulations, peer-to-peer auto rentals are skirting these rules. That can translate into cheaper prices and more profit for the company. But as with Airbnb’s avoidance of hotel taxes, it’s likely not sustainable.