Ride-hailing service Uber is planning to enter the car rental market in the United States, allowing people to hire cars from owners in select cities.
The Carshare rental program was announced by Uber on Thursday. The program will provide a platform where car owners can list their vehicles and rent them out to borrowers at daily or hourly rates.
“For years, Uber has made it effortless to tap a button and get a ride on demand. Now, we’re taking the same approach with carsharing by making it simple, affordable, and sustainable for you to borrow—and list—cars in your neighborhood,” said Camiel Irving, Uber’s general manager of US/C mobility, according to Fox News.
“Uber has an unprecedented ability to bring carsharing to the mainstream unlike any other company in the market today,” Irving added.
In North America, Uber will initially be available in Boston and Toronto.
In the program, vehicles must meet the company’s criteria—like age, type, and mileage requirements—before Uber allows them to be listed. No advance booking would be required to rent a vehicle.
Uber will suggest pricing to owners, which will include the cost of fuel. Owners will have the ability to set the availability as well as the final pricing of their cars.
US Carsharing: Pros and Cons
At present, the rental car market in the United States is dominated by brands like Alamo, Advantage Rent a Car, Avid Budget Group, Hertz Corporation, and Enterprise Holdings. Hertz leads in market share with 36 percent, followed by Enterprise at 33 percent and Avis at 29.2 percent.
Zipcar, now a unit of Avis, began offering carsharing in the United States in 2000. Ten years later, RelayRides introduced peer-to-peer carsharing, inspired by homesharing options like Airbnb. RelayRides was rebranded in 2015 as Turo.
According to market research firm IBIS World, the car rental industry in the United States had a market size of $71.3 billion in 2022. It grew by 9.6 percent last year and had seen 6.9 percent growth on average annually between 2017 and 2022.
For renters of carsharing options, the service can provide the flexibility of having a personal vehicle that can be driven without having to own it. However, carsharing on a regular basis can turn costly and economically unviable.
For owners lending their vehicles, carsharing offers an opportunity to earn additional income. By sharing their cars, owners can offset some of the costs of investing and maintaining their vehicles. On the flip side, renting out cars will subject vehicles to additional wear and tear, potentially raising maintenance costs.
There can also be insurance risks. Even though insurance is usually offered, there may be loopholes in cases of accidents that can leave the owners with losses. Moreover, owners may potentially have to face legal consequences if a renter were to be involved in an accident.
Uber Carsharing in Australia
Uber already offers carsharing in Australia. The service was launched last year after the company acquired peer-to-peer carsharing platform Car Next Door.
According to Uber’s Australian Carshare website, the company has paid out $54 million to car owners—with more than a million trips taken using the service. On average, a car owner is said to make AUD$3,396 ($2,277) in annual income for casual sharing.
Uber provides an “owner guarantee” in Australia under which the company will pay for repairing or replacing an owner’s car if a borrower is responsible for damaging it or the vehicle has been lost. The borrower does not pay what is owed under the “member agreement.”
However, this is “subject to the guarantee terms.” Owners will not be paid if the car is damaged under certain circumstances, like wear and tear, mechanical breakdown, deterioration from corrosion, and more.
