So you have a car that could generate income for you? Part 2
Understanding the Sharing Economy in transportation and steps to consider before sharing your car.
Have you ever called for a taxi only to wait rather long periods for it to arrive? Have you traveled to new places thinking you could use public transportation and became disappointed? How about needing an affordable ride from one end of town to the next?
Have you heard of the Sharing Economy? More or less, it is an exchange of doing business with resources you have that are either extra, under used, or simply available for rent at a rate determined by the owner. People explore the Sharing Economy because they have (too much) stuff and are in a position to capitalize off of extra “things” that sit idle… such as an automobile, a bicycle or perhaps a spare bedroom.
Shared transportation services are designed to provide car sharing services to paying customers when owners are willing to either rent their personal automobiles or provide transportation service for pay. Sharing transportation in this manner is foreign concept to most Americans; however, that is changing for younger generations and urbanites where it is growing in popularity. On the other hand, interest in automobile ownership is on the decline for Millennials. According to research shared in USA today, the automobile industry is still very much supported by people between the ages of 55-64. And University of Michigan’s Transportation Research Institute confirms that for this reason middle-aged car buyers are more important to the automobile industry than ever.
While purchasing power plays a role in car ownership, desire to own does as well. Just like the global housing crisis fueled the development of peer-to-peer travel and shared-accommodation (see Part 1 of this series from Michigan State University Extension), the global economic collapse has taught younger generations first-hand that owning a car can be a financial burden. Many are choosing bicycles over cars, which is understandable when you compare average annual operating costs between the two. Bicycles have an average annual operating cost of approximately $300 and the average for cars is over $8 thousand annually, according to placemakers.com.
In a USA today article, Executive representatives from peer-travel industries state that “most personal automobiles sit idle more than 90% of the time, so they are untapped resources.” According to a 2012 study from the Transportation Sustainability Research Center at University of California-Berkeley,” there were 33 personal vehicle sharing operators worldwide, with 10 active or in pilot phase, three planned, and four defunct in North America”.
However, there is a lot to consider when renting your personal space or automobile(s) to customers. The following list may help individuals wishing to venture into the shared-economy with their automobile according to Bill McGee and USA today:
- Understand the basics: Car sharing involves short-term rentals from an existing fleet, peer sharing is renting from individuals and ride sharing is carpooling.
- Whether renting or lending, be sure you're clear about all the fine print. This is a burgeoning industry and newcomers will have lots of questions.
- For owners, confirm that the sharing company provides detailed background checks on all renters. There have been reports of unscreened renters using phony IDs to steal cars. In addition, drivers should be screened for accident records, moving violations and distracted driving citations.
- GPS technology can confirm not only the miles logged on the car, but the locations visited as well, which can help settle disputes on both sides.
- Whether you own or you're renting, as a safety precaution make sure you're comfortable with where and when you conduct the transaction; some sharing programs will help facilitate this.
- Tax laws can vary from state to state, so it can pay to check with an accountant first—regardless of whether you're the user or the owner.
- In some cases, the sharing may be facilitated by keyless technologies such as DriveBox or RideLink that allow renters to access vehicles.
- Think long and hard about insurance coverage—it's make or break for this industry.
- Don't be afraid to walk away from a transaction.
Other articles in this series: