New product, new business opportunities - flexible subscriptions

With the increasing demand for shared mobility, we've seen different business models in the car market: traditional car rental, peer-to-peer car sharing, and on-demand car sharing.

In this blog post, we're going to compare these business models. We'll look at the established traditional car rental companies and how they stack up against the newer peer-to-peer and on-demand services. We'll explore how these companies are doing financially – and make some predictions about their possible future.

Traditional car rental

Traditional car rental companies like Hertz, Enterprise, and Avis operate by owning or leasing their own fleets of vehicles. They usually have rental offices and parking lots in strategic locations such as airports and city centers. Customers looking to rent a car make reservations through the company's websites, mobile apps, or by phone. Typically, customers pay a daily or weekly rate, plus additional costs for mileage and optional services like insurance.

Avis – proving that traditional car rental is going strong

Avis was founded in 1946 in Detroit, and it quickly established itself as a major player in the car rental market. Avis is best known for its "We Try Harder" slogan, which was introduced in the 1960s and became a symbol of the company's commitment to customer service. Over the years, Avis has expanded its operations globally. 

Avis had a strong second quarter in 2023. They reported $3.1 billion in revenue, with a net income of $436 million. The company saw an increase in usage compared to the same period in 2022, reaching 70.5%. Avis also performed better than expected on Wall Street, with earnings of $11.01 per share – surpassing the estimated $9.79.

At the end of Q2 2023, Avis had around $1.1 billion in liquidity and an additional $1.1 billion for fleet funding. Avis CEO Joe Ferraro credited the strong results to the company's ability to capitalize on the growing travel demand, particularly during the busy summer season.

Hertz – usage and fleet growth

Hertz was founded in 1918 in Chicago. Over the years, Hertz grew into a global brand, serving both the leisure and business travel sectors. Despite various ownership changes, it has maintained a strong presence in the car rental market.

Hertz also reported a healthy second quarter in 2023. They made $2.4 billion in revenue, mainly due to high demand – rental volume increased by 12% compared to the previous year, and their average fleet grew by 9%.

Each vehicle brought in an average of $1,516 per month during the quarter, thanks to a usage rate of 82%, which was 230 basis points higher than in Q2 2022. As of June 30, 2023, Hertz had $1.4 billion in liquidity, with $682 million in unrestricted cash. Overall, Avis' old rivals Hertz are doing quite well too.

Peer-to-peer car sharing

Peer-to-peer car sharing allows private vehicle owners to offer their cars for rent through platforms like Turo and Getaround. The vehicles are distributed across various neighborhoods and residential areas, offering a decentralized and more flexible system. Customers can use these platforms to find and reserve their vehicles of choice.

Turo – promising financials, uncertain IPO plans

Turo, founded in 2009, began as RelayRides and was later rebranded. Turo offers an online platform that allows individual car owners to rent out their vehicles to other people when they are not using them. The company provides a marketplace where people can list their cars for rent, and renters can search for and book vehicles for short-term use.

Turo has gained popularity as a more flexible and often cost-effective alternative to traditional car rental services. It allows car owners to monetize their vehicles when they're not in use and provides renters with a wide selection of cars to choose from. 

Turo, valued at $1.2 billion in 2019, has seen promising financials. In 2022, they earned $746.59 million, up 59% from the previous year, with 320,000 vehicle listings. They went from substantial losses in 2019 and 2020 to a net income of $154.66 million in 2022.

Turo also grew its marketplace, engaging with 160,000 active car owners and 2.9 million riders worldwide by the end of 2022. However, according to their S-1 filing, they anticipate increasing expenses in the future, which might challenge their profitability.

Turo applied for an IPO on the Nasdaq in 2022 but didn't proceed. The IPO plans were delayed, likely due to challenges like the 2022 tech downturn. However, recently, Turo revived its plan to go public and could list their shares in the fall of 2023.

Getaround – an uncertain future

Getaround is another popular peer-to-peer car-sharing platform that allows individuals to rent out their personal vehicles to others when they are not using them. It's often referred to as the "Airbnb of cars." Introduced in 2011, it is currently accessible in over 1,000 cities in the United States and Europe.

In 2022, Getaround earned $62.3 million in revenue. However, they reported an EBITDA of -$25.0 million, indicating that its operating expenses exceeded its earnings. Overall, the company experienced a net loss of -$46.8 million for the year. Getaround's total assets were valued at $217.1 million.

During its public market debut in 2022, Getaround witnessed a significant decrease in its share value, plummeting by as much as 65%.

In March 2023, the company got a notice from the New York Stock Exchange saying it didn't meet the requirements. This was because their average global market capitalization over 30 consecutive trading days fell below $50 million, and their reported stockholders' equity was also below $50 million.

Overall, Getaround's stock market troubles and weak finances make their future uncertain for now.

On-demand car sharing

On-demand car sharing services like Zipcar and Share Now (formerly Car2Go) maintain their own fleets, which are parked throughout cities in designated spots or on the streets. Customers can access these vehicles in real-time using mobile apps. The pricing structure usually includes fuel, maintenance, and insurance.

Share Now – downsizing, acquired by Stellantis

Share Now, a German carsharing firm born from the merger of Car2Go and DriveNow, now operates as a subsidiary of Stellantis' Free2Move division, offering car sharing services in European urban areas. It has over four million registered members and a fleet of 14,000+ vehicles across 18 European cities.

In late 2019, ShareNow announced the closure of its North American operations due to competition, increasing operational costs, and limited support for electric vehicles. Service in London, Brussels, and Florence was also discontinued.

On May 3, 2022, Share Now was acquired by Stellantis, with the ownership now managed by Stellantis subsidiary Free2Move, following the closure of the acquisition on July 18, 2022.

CityBee – a success story in Baltics

CityBee, founded in 2012 in Lithuania, started as a car-sharing service primarily aimed at businesses. It now operates in the whole Baltic region. Customers can choose from a variety of vehicles, including cars, vans, bikes, and electric scooters. The fleet also includes electric and hybrid cars. CityBee takes care of insurance, fuel, and parking fees in CityBee areas.

In 2022, CityBee reported a sales revenue of €33,168,028, slightly down from the previous year's €39,814,173. However, the company's profitability surged, with a profit before taxes of €2,193,820 – a substantial increase from the €968,722 in 2021. This also resulted in a higher profit margin of 6.61% in 2022, compared to 2.43% in 2021.

CityBee saw its net profit rise to €1,857,517 in 2022, a substantial increase from the €876,986 in 2021. The company's equity capital also grew to €4,688,176, indicating a stronger financial foundation. CityBee shows that on-demand car sharing can succeed with the right approach in the right market.

There's room for different business models

The shared car mobility market is large enough for different solutions to exist together – especially with car ownership costs going up. Companies like Hertz and Avis demonstrate that the traditional rental model remains relevant and holds significant profit potential.

Despite financial challenges, peer-to-peer car sharing and on-demand car sharing are attracting a fresh customer base. Peer-to-peer car sharing offers a more personal touch by letting people rent their own vehicles. On-demand car-sharing services are a great solution for urban residents, offering quick pay-as-you-go access to vehicles. 

While the position of traditional car rental giants might seem unshakeable, it's a fast-moving, evolving market. Regional success stories – such as CityBee – certainly prove that challengers are not asleep.

If you own a fleet, operate a car rental business, or are looking to get into one, ATOM Mobility can equip you with an end-to-end software suite that will put you miles ahead from competition.

Running a successful shared mobility business is more than just providing rides from one place to another. It's about placing your customers at the heart of your business – making them feel valued, appreciated, and the real focus of all your efforts. In other words, it involves a customer-centric approach.

Let’s take a closer look at what a customer-centric strategy means, why it's important – and how to adopt it in a shared mobility business.

What being customer-centric means and why it's important

Customer centricity means shaping your business to deliver an excellent customer experience at every step. It's a strategy to build stronger brand loyalty and satisfaction, leading to deeper and longer-lasting customer relationships. 

It involves shaping your messages and services to match what your clients want and like. Being customer-centric is about recognizing the pivotal role customers play in the success of any business.

Here are the main reasons why it’s a worthwhile strategy to consider:

‍

• Customer satisfaction and loyalty: When you put your customers first, you're more likely to provide them with what they truly want – and satisfied customers are more likely to stay loyal to your brand.

• Positive reputation: Satisfied customers become your brand advocates. They share their positive experiences, enhancing your brand's reputation and attracting new customers.

• Easier to stay ahead: Talking to customers and getting their feedback can help make your services more innovative and proactive. It helps you stay ahead of the curve and meet changing customer demands.

Key aspects of a customer-centric shared mobility business

Now, let's look at the key areas in which shared mobility businesses can enhance the customer-friendliness of their services.

User-friendly and engaging software

Software is often the first point of contact for customers when they start using a shared mobility service – and it's important to ensure that this first impression is positive.

In this case, a user-centric approach is about making sure the software doesn't get in the way but rather enhances the user experience. For customers, it should be effortless to book a ride or rent a vehicle. 

‍

Consider these factors when aiming to provide a customer-centric software experience:

‍

• Keep it simple: Make sure the software is straightforward and easy to use – especially for people who might not be tech-savvy. It's a good idea to have a clear layout – keep the interface organized with easily visible buttons for key tasks like booking rides, checking ride details, and providing feedback.
• ‍Let customers pay as they like: Give users multiple ways to pay (cards, ApplePay, GooglePay, PayPal and more), and, if possible, show them an estimate of the service cost before they confirm it. This helps users know what to expect and makes the process more transparent and user-friendly.

• Features to drive engagement: Consider additional features that can boost user engagement and make the overall experience more enjoyable. One intriguing option to explore is gamification, which involves infusing apps with game-like elements. The idea is to offer users a feeling of achievement as they advance and complete various tasks within the app.

‍

If you are after a white-label solution, Atom Mobility offers a user-friendly high-converting mobile app for both iOS and Android, which can be customized to match your brand. The app is regularly updated and supports various vehicle types, languages, and geographic locations. 

Great customer support

When a business is all about making customers happy and putting them first, one of the key aspects is having great customer support. It’s key to better customer satisfaction, loyalty, and positive word-of-mouth. 

‍

Here are the key principles that define great customer support:

‍

• Speed: Customers don't like waiting a long time for answers to their questions – they want quick solutions to their queries. It's a good idea to give customers various options for getting help, like phone, email, chat, and social media. You can also offer self-help tools like FAQs, chatbots, and online guides. Some customers like finding answers on their own, which can cut down on the number of questions needing human assistance.
• Knowledge: While being fast is important, it should come with knowing your stuff and giving accurate info to customers. Your support representatives should have a deep understanding of your company's services, policies, and available resources. Customers must have confidence in the information provided by your customer service team – nobody wants to call about the same problem repeatedly.
• Treating customers with care: Good customer service means treating customers with respect, courtesy, and professionalism in every interaction. Sometimes customers may feel anxious or frustrated, and it's crucial to empathize with their needs – picture yourself in their situation, and let them know you're fully committed to their problem. 

Safety, feedback, and proactive solutions

Let's explore other important factors like safety, feedback, and proactive solutions that can solidify a business's role as customer-centric.

‍

• Commitment to safety and reliability: According to a survey by McKinsey, safety is the top priority for shared mobility users worldwide. In other words, businesses should make customers confident in their ability to provide safe and reliable services. Take shared micromobility fleet vehicles as an example – they should be well-maintained in both appearance and technical condition. This ensures that customers feel confident and secure when using them. Ride-hailing businesses should find ways to promote safe driving and take strong action against drivers who don't follow the rules.

• Listen and act on feedback: You should actively engage your customers through a continuous feedback loop. Collect and analyze your customer feedback – whether it's through in-app surveys, email, or social media channels. This way, you can identify areas for improvement and make necessary adjustments to improve the customer experience. When customers think their feedback matters, they usually feel more connected to a business.

• Stay ahead of the curve: Last but definitely not least – try to be proactive. When you see an opportunity to improve things, there's no need to wait for a customer to point it out – go ahead and do it. By staying ahead of the game, you can pleasantly surprise your customers and even exceed their expectations.

Conclusion: putting the customer first

A great shared mobility business is not just getting from point A to point B – it's an experience that customers appreciate and want to repeat. With the right tools and mindset, you can deliver this kind of experience to your customers and set the stage for your business's long-term success. A customer-centric approach simply recognizes that your customers are your business – since their satisfaction is what fuels your own success.