The rise of car rentals for the "gig economy"
The on-demand economy of ride-hailing and delivery services were initially built on the idea that drivers are looking to put their idle cars to use to make a few extra bucks. As it turns out, a growing number of these on-demand drivers want the gigs but don't own a car (or one that fits the services' requirements). To fill that void, a small cottage industry has sprung up over the past few years to make cars available for these car-less drivers.
Why it matters: The rise of these car services bring up questions about the future of car ownership. Between 2010 and 2015, car-less living began to slowly grow after decades of the opposite trend. Companies—especially automakers and car rental providers—are increasingly experimenting with car-sharing and other models. The constant need for new drivers, coupled with the car-ownership shift means that ride-hailing services like Uber and Lyft are looking for new ways to equip their drivers with vehicles to, well, drive.
For example, Uber recently came under fire when the Wall Street Journal discovered that the company was knowingly leasing defective cars to Singapore drivers—and worse, one of them caught on fire earlier this year. Uber's risky practices like this stem from its desperate need to get drivers (who don't necessarily own cars) on the road.
The players range from independent startups, to the ride-hailing companies themselves, to car rental companies and automakers.
How these services have evolved:
- ZephyrCar/Breeze: In late 2013, a small startup then named ZephyrCar quietly popped up in San Francisco, hometown to both Uber and Lyft. By spring 2014, it began to rent out cars to drivers after they signed up for Uber or Lyft, and renamed itself Breeze. The startup faced some challenges early on when the ride-hailing companies weren't comfortable with its service but eventually made it work. Breeze shut down its operations last year after it sold to a Ford subsidiary.
- HyreCar: In 2014, HyreCar surfaced, and began operating a similar service. Unlike Breeze, its customers rent cars from each other (peer-to-peer) instead of from the company. Today, it still operates in several markets across the country.
- Uber Xchange Lease: In mid-2015, Uber introduced Xchange Leasing, a program via a subsidiary that leases cars to drivers with more flexible terms, such as the ability to return the car with a two-weeks notice. The program stemmed from Uber's earlier efforts to provide car financing to drivers who want a vehicle, though it came under fire when it became apparent it was doling out subprime loans. (Xchange Leasing has since faced similar criticism.)
- Lyft + Hertz: In late 2015, Lyft announced an initial partnership with Hertz to provide discounted car rental prices to drivers. Shortly after, Uber inked a similar deal with Enterprise Rent-A-Car (and eventually with Hertz too).
- General Motors: Following a $500 million investment into Lyft in early 2016, the two companies debuted a car rental program for Lyft drivers, which grew throughout the year. Late that year, GM's Maven division, which runs the program, inked a similar deal with Uber to provide car rentals to its drivers.
- Maven expansion: From there, Maven began to partner with more on-demand services, and recently added an option for customers to rent a car independently of who they work for. This stems from drivers' tendency to work for multiple services, so Maven says that its gig program gives them flexibility. Peer-to-peer car rental service Getaround recently jumped on the train and inked a deal with Uber for $5/hour rentals.
What's next: Expect to see more of these services as some people decide to ditch their cars and rent one for personal and work purposes, or loan their cars out for some quick cash. And once self-driving cars hit the roads, people won't be renting cars to ferry passengers and parcels around — self-driving cars will do the job instead.