In my quest to find the many connections between the manufacturers and car-sharing or ride-sharing schemes, I can add another one to the web of agreements.
Back in October 2016, Toyota announced a relationship with Getaround, a San Francisco based startup (although they had been in business for 7 years) in the “sharing economy” industry. There are two types of car-sharing companies now operating across the world, one owns all the cars and a scheme member pays a monthly fee to access available cars for at least an hour. The other type is for car owners who want to “rent” their car to another driver – similar to the AirBnB business model.
Getaround is one of the latter schemes and Toyota started by supplying new Toyotas and Lexus models for short term usage. This is a smart idea and one I’ve seen before because it can reduce the inventory waiting to be sold and the cars can then be on-sold as a used model for a good price after a few months. Slow moving models can then be utilised rather than heavier discounts applied to shift them. Toyota Finance then came to the party to allow anyone leasing from them to add their car to the scheme and use the payments to offset their leasing costs.
Prior to Toyota partnering with Getaround, the car-sharing company inked similar deals with Mercedes-Benz, Ford and Audi and also with Uber to allow their drivers to use a Getaround car for deliveries. They also partnered with City CarShare, one of San Francisco’s first car-sharing schemes to add more cars to the fleet which was a great way to utilise more vehicles.
In April of 2017, a third round of investment attracted $45M in capital through a lead investor, Braemar Energy Ventures. The other partners in the capital raising were Toyota, SAIC (the Chinese manufacturer) and many smaller investors. Their main backer is Menlo Ventures and they tout high profile investors such as Marissa Mayer (ex Google and Yahoo) and the actor Ashton Kutcher. In all they have raised over $88M in funding over their life!
What I find interesting is that in 2015 they were claiming tens of millions of dollars of revenue with only 600 cars – yet they needed to go out for 2 more rounds of funding and with manufacturers pouring cars into their scheme. They charge a minimum of $5 an hour and if every car was booked for 8 hours a day, 365 days a year then revenue would be around $9M, a big difference to the “tens of millions” quoted. Incidentally that is the same amount that D&B Hoovers estimated for the last financial year.
The company says that it now has just under 100 employees and 200,000 members over 8 US cities although three of them are in the Bay Area (San Francisco, Berkeley and Oakland) and they claim a car owner could earn up to $10,000 a year with the average owner making $6,000.
Cars are unlocked via a smartphone app (Getaround Connect) which is the member interface for all bookings and usage of the vehicles. They recognised that the app is the key to making it simple for both renters and owners to connect. This would have been a significant cost to the company, however it wouldn’t have been a huge drain on their finances. They are a private company, so getting access to their financial data is hard and I would love to see where the money flow has been. Companies like this are fascinating to learn about because their story is held in the data they produce!
Getaround is an example of a company not just working the sharing economy but also improving the utilisation of run-of-the-mill products. For many people, services like this are a great way to use a vehicle for the short periods that they are needed. It is also clear that the manufacturers need to partner with as many of these schemes as possible to keep their vehicles moving – which means more revenue from sales, parts and servicing.
There is a clear change in the industry and a lot of money is being dumped into new methods of car usage and I wonder who the winners and losers will be.