Companies combining cars and the sharing economy have had a rough ride on the stock market as investors downshift enthusiasm for shares of Uber Technologies Inc. (UBER) and Lyft Inc. (LYFT) in the wake of hotly anticipated initial public offerings.
But the dismal performance of the two ride-sharing rivals hasn’t slowed Turo chief executive Andre Haddad’s drive to list his company on a major exchange.
“We’re definitely interested in taking the company public at one point,” he told Yahoo Finance Canada on the sidelines of the Collision conference in Toronto this week. “Seeing all these companies go public is a confirmation that trust-based business models are here to stay.”
San Francisco-based Turo is often called “Airbnb for cars,” and mentioned in the same breath as Uber and Lyft. The company operates an online peer-to-peer marketplace for owners to loan out their personal rides for short-term rentals in Canada, the U.S., the U.K. and Germany.
Haddad sees more consumers demanding alternatives to traditional car ownership. And he’s betting those who choose to own will want their pricy four-wheeled investment earning its keep rather than sitting idle in a parking space.
With more than half a million vehicles spanning 850 makes and models, Turo is positioning itself as a more dynamic alternative to traditional car rental firms.
A search for cars in the Toronto-area yields a diverse automotive offering, ranging from a 2013 BMW M6 convertible said to be “owned and tricked out by an NBA player,” to a humble 2008 Dodge Caliber available for just $28 per day.
Haddad spoke on a panel on Wednesday about the changing economics of car ownership, automation, sharing, and rising costs for owners. Volvo Cars Technology CEO Zaki Fasihuddin and Dan Preston, the CEO of a U.S. car insurance firm offering coverage by the mile called Metromile, also participated in the discussion. They agreed the emergence of digitally-connected fleets will see more consumers turning to transportation services.
There are numbers to support the utility of Turo in Canada. The company partnered with Angus Reid Global on a study that found nearly half of Canadians think the cost of owning a car is too high, and most vehicles across the country sit idle 96 per cent of the time. Still, 84 per cent of those surveyed said they own a vehicle, and a further 9 per cent want to buy one.
Turo relies on car owners for supply and car-free people for demand. For car owners, it’s like working for a ride-sharing service, but staying at home and letting the customer handle the driving.
Haddad said he sees people in their 20s and urban dwellers as the most promising demographics on the renter side. At the same time, he said more owners are looking to offset rising expenses like insurance and gasoline.
A self-described auto enthusiast with six of his own vehicles for rent on the Turo, (A Tesla Model X, Model S and Model 3, plus two Porsches and an Audi.) Haddad said the platform is also useful for drivers who want a higher-end ride but could not otherwise afford it.
“They are spending less than what they would have spend if they were to buy a more common vehicle,” he said. “The average Tesla in Canada earned more than $1,200 a month last year. It’s a big amount of money.”
The challenge has been getting owners to think of cars as sources of income rather than expenses, and convincing them to put their trust in the insurance, scheduling and other logistics involved.
In Canada, Turo partners with Intact Insurance to cover guest drivers. Car owners manage their vehicle availability on an app-based calendar. Telematics in the cars track mileage, and allow owners to remotely grant access.
“New ideas take a while to spread,” Haddad said.
Developments within two industries that initially gave Turo a cold reception, insurance companies and automakers, have been encouraging for the company.
“They are finding that our platform is a great way for people to try out new models. They call it ‘extended test drives.’ It's also a great opportunity for dealers that may have loaner fleets that may be under utilized,” he said.
Turo recently launched a new “fractional insurance policy” with Metromile that allows owners to insure a vehicle only when it is in their use, and avoid paying for coverage when the car is loaned out and covered by Turo’s policy. The policy is not currently available in Canada.
Haddad said while Turo is still busy scaling up, the momentum of the sharing economy and so-called “trust-based” businesses could see the company join its publicly-traded peers in time.
“We're still in an earlier stage in the development of our business than these other big names. That being said, there are a lot of things in common,” he said. “The more people are comfortable with these models, the more I think the whole ecosystem of the sharing economy will grow over time.”