Need A Ride?

CAR clubs, whose members pay an annual fee and then rent a car by the hour on a pay-as-you-go basis, are moving from a fringe fad for greens to a big global business. Carmakers have no choice but to pay attention: one rental car can take the place of 15 owned vehicles.

Car-sharing started in Europe and spread to America in the late 1990s, when the first venture opened in Portland, Oregon, a traditional hangout of tree-huggers. For years it was organised by small co-operatives, often supported by local government. It still has a green tinge. One in five new cars added to club fleets is electric; such cars are good for short-range, urban use. But sharing is no longer small.

Frost & Sullivan, a market-research firm, estimates that by 2016 the market will be worth $6 billion a year, half of that in America, with a total of some 10m users. Outside America, most of the growth is in Britain and other north European countries such as Germany. The market leader is a company called Zipcar, founded in Cambridge, Massachusetts, which is now headed for a public listing. Zipcar already has 400,000 members, mostly in America where it is thought to have 80% of the market. It recently bought Streetcar, the market leader in London, though competition authorities are still scrutinising that deal.

Zipsters, as members are called, book their car by phone or online, pick it up from a nearby parking bay and unlock it with their Zipcard. When they finish, they leave it in a neighbourhood parking bay, rather than having to return it to a central depot. Hertz and Avis, two conventional car-hire firms, are trying something similar, fearful that their daily and weekly rental business will suffer if they ignore the new trend.

Carmakers are interested, too. Daimler launched its car2go with a pilot scheme in Ulm, in Germany, where it now has 19,000 members nationwide. It has also set up a scheme in Austin, Texas, where members can pick up the car in one place, leave it in another and pay by the minute. Such car-sharing schemes have been boosted by American university campuses banning student cars to ease congestion. Daimler, which makes Mercedes cars and trucks, uses its tiny smart fortwo cars for the service. In Germany the market leader in car-sharing is a company owned by Deutsche Bahn, a railway giant, based around railway stations. In France, Peugeot is experimenting with its own scheme.

Frost & Sullivan calculates that a car owner doing 12,000 miles (19,000km) a year can save $1,834 by shifting to a car-sharing service. So car-sharing will stimulate short-term demand for new cars while threatening a proportion of carmakers’ longer-term sales. There is one way that car-sharing might actually help carmakers, however. The main car-sharing firms are keen to promote electric vehicles, since that fits with their green ethos. So they could become a reliable source of demand for such cars, which carmakers feel they ought to make but are unsure if they can sell. And if sharers like their electric vehicles, they may even go on to buy them.