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Everything you need to know before starting your car-sharing business
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Everything you need to know before starting your car-sharing business

What is car-sharing & how does it work? What's the car-sharing business model? How to launch a car-sharing business? Find out here.

Is it a good time to start a car-sharing business? Absolutely. 

The car-sharing market is booming – it's estimated to grow 20% every year and reach a $20 billion market value by 2032. That's nearly a sevenfold increase from 2022's $2.9 billion valuation. 

Despite app-based vehicle sharing being a relatively new entrant in the mobility ecosystem, it has exploded in popularity. People have been quick to pick up on its convenience and ease of use, especially in urban centers where maintaining a private vehicle grows increasingly costly and bothersome. 

This spells an opportunity for entrepreneurs keen to answer real mobility demand. 

But what is car-sharing and how does it work? What does the business model look like? And what are the first steps for getting started?
Find the answers below. 

What is car-sharing and how does it work?

Car-sharing is an app-based mobility service that allows individuals to rent vehicles on a short-term basis. With this service, users gain access to a fleet of vehicles which are typically stationed throughout a city, ensuring that there's always a car conveniently nearby.

The user's journey and benefits of car-sharing

Through an app on their smartphone, users can locate, book, and unlock the closest available vehicle, as well as pay for their journey automatically by adding payment details, thus providing a seamless experience and quick access to a car. Other common benefits for users include not having to worry about fuel or insurance, as those are included in the price. 

Cities often encourage the use of shared mobility since it helps decongest streets, free up parking, and minimize the environmental impact of private vehicles on the city. Accordingly, public-private partnerships are common, conferring further benefits for users of this type of shared mobility: free parking, free use of bus lanes, and more. 

How does car-sharing work: the business perspective

On the business side of things, the operator is responsible for ensuring that maintenance and logistical tasks for their fleet are taken care of. 

This includes regular maintenance tasks, such as vehicle check-ups, repairs, fuel fill-ups, and cleaning. Also, if you have a free-floating model (where users can leave their cars anywhere), the operator should regularly relocate cars to optimal locations for continued user convenience and reliability.

Beyond deploying and maintaining their fleet, operators also oversee the smooth functioning of their mobility app, as well as take care of user verification, namely, ensuring that the people signing up are who they say they are and have valid driver licenses. Of course, like any other business, customer support and other responsibilities tied to running the operation are a given.

The car-sharing business model

So far, we have listed a lot of expenses – maintenance, management, insurance, IT. Add to this salaries, operational overheads, and buying or renting the fleet itself. How do businesses recoup all these expenses and turn a profit? 

Note: Since car-sharing businesses operate at scale, they should aim to negotiate lower rates with service providers.

Car-sharing businesses make use of several revenue sources. First and foremost, customers are charged for the time/distance use of the car. Additionally, branding and cross-promotion partnerships (e.g. advertising on the car or the app) are often used to secure additional revenue. It may also be sensible to create membership or loyalty programs to ensure recurring revenue, by offering subscribers added benefits, such as access to premium cars or longer reservation times. 

The aim is to have your cars on the road as much as possible, so enterprises typically focus on maximizing vehicle usage and revenue per vehicle. Finding success is about finding balance in a constantly changing landscape – having too few cars may lead to overbooking and dissatisfaction with lack of availability, whereas having too many will lead to inefficient use of resources. 

How to start a car-sharing business

As with any business, launching a car-sharing project requires research, investment, development, and strategy. Let's take a look at each in turn. 

1. Market research

When exploring opportunities for starting a car-sharing business, numerous factors must be considered.

Audience and demand 

Understanding the demographics, preferences, and behaviors of your potential users is crucial. As is determining the level of demand. Some questions you should answer include:

  • Who is my target audience – urban commuters, occasional travelers?
  • What are their demographics? How should you communicate with them?
  • What segment offers the most promise – B2C, B2B?

Competition

Identifying who's already operating in your area and why (or why not) can help you get a better grasp of what works and what doesn't. Some questions you should answer include:

  • Who are my competitors – other car/ride-sharing businesses, public transportation?
  • How can I differentiate my business from others?
  • Has any previous similar business failed in this area – why? 

Legal and logistical considerations

Determining whether there are any legal/practical barriers to launching your operations is a smart thing to do before you invest too much time and money into your project. Consider:

  • What are the legal requirements for operating this type of business in your area?
  • How will you handle insurance and liability issues for your fleet?
  • How and where will you run your day-to-day operations? If you're thinking about going electric – does the area have the necessary infrastructure?

While answering these questions isn't necessarily a prerequisite for launching your business, dealing with them early on can save you a lot of headaches down the road. 

2. Investment

How much capital do you need to launch a car-sharing business? 

It depends most on whether you're planning to rent or buy vehicles for your fleet. While renting is more accessible in the short term, it will take a sizable bite out of your profit. Owning your vehicles is typically the preferred option, as this offers price stability, long-term cost efficiency, freedom of operations, and other benefits. 

To get a ballpark estimate for the starting investment, you should add up the total price of cars (EUR 12,000-20,000 per vehicle), insurance, car-sharing software procurement and maintenance, as well as expected operational overhead for getting started. It may also be wise to put aside some funds for unexpected expenses such as repairs.

3. Development and launch strategy

Securing the vehicles and necessary permits can take a while, and you should account for this. During this time, you should put your plans into practice. Establish maintenance protocols and logistical plans for efficient fleet management. Implement user verification processes and responsive customer support for a secure and positive user experience. 

As to the IT infrastructure, you can save a lot of resources by choosing a white-label IT solution to power your app and dramatically accelerate your time-to-market. Platforms like ATOM Mobility can equip your business with the app you need – all you have to do is customize it

Speaking of customization, don't forget about branding. Create a compelling brand identity and plan for targeted launch and marketing campaigns to generate awareness the moment your business is ready for its first customers. 

Your car-sharing business journey starts here

Now you know how to start a business in this industry – entering this thriving market demands a blend of user-centric strategies and astute business decisions. But the key to success is reliable partners that can guide you in the right direction. 

Get in touch with ATOM Mobility to discover how you can power your new enterprise the smart way.

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Traditional car rental vs peer-to-peer vs on demand car sharingTraditional car rental vs peer-to-peer vs on demand car sharing
Traditional car rental vs peer-to-peer vs on demand car sharing

Explore car sharing market business models: traditional rental vs. peer-to-peer & on-demand. Financial analysis & future predictions.

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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.

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Creating a customer-centric shared mobility businessCreating a customer-centric shared mobility business
Creating a customer-centric shared mobility business

Discover the key to a thriving shared mobility business: a customer-centric approach that puts your users first.

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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. 

man in white and gray striped polo shirt holding black smartphone

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. 

group of people using laptop computer

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.

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Improving your vehicle-sharing operations with ATOM's unique featuresImproving your vehicle-sharing operations with ATOM's unique features
Improving your vehicle-sharing operations with ATOM's unique features

Discover how ATOM Mobility can enhance your vehicle-sharing business with its unique features – loyalty modules, corporate invoicing, dynamic pricing, add-ons, promotions, & more.

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Are you thinking about launching a vehicle-sharing business, or perhaps you're already in the game? No matter where you are in your business journey, it's vital to understand that in this industry, software can be a game-changer when it comes to your success.

An easy-to-use and intuitive platform with a comprehensive set of features can draw in customers and keep them coming back. For operators, it's about extracting valuable insights from the software to better run their business. 

The good news is that ATOM Mobility has a range of fantastic features that can take your vehicle-sharing venture to the next level. In this blog post, we'll dive into these features and discover how they can improve your business. 

Let's get started!

Corporate integration: promoting sustainability together

With ATOM, vehicle-sharing companies can extend their services to other businesses through corporate accounts and corporate invoicing. This feature facilitates a unique and mutually beneficial partnership between vehicle-sharing providers and companies interested in their services.

Imagine, for instance, a forward-thinking bank that aims to foster a greener and more sustainable approach to mobility for its employees. Instead of every employee relying on their individual cars or traditional transportation methods, the bank decides to collaborate with a vehicle-sharing operator. This collaboration involves setting up a corporate account within ATOM's platform.

In this scenario, the employees gain access to a fleet of shared vehicles registered under this corporate account. These vehicles can include cars, bicycles, scooters, or any mode of transportation available in the vehicle-sharing network. The management can also decide and set up limitations for the usage, for example, set a limitation of a maximum of 200 EUR/month per employee to cover expenses for transportation or allow to use corporate payment method only during weekdays.

This feature creates a win-win scenario, where businesses can promote sustainable practices among their employees – while vehicle-sharing operators gain a reliable source of revenue through corporate partnerships.

Loyalty module: the key to improved user satisfaction and retention


ATOM Mobility's loyalty module adds a fun dimension to its customizable white-label platform. This gamification integration enhances the overall user experience and allows operators to stand out from the competition. 

So, what makes gamification such a great feature?

It makes apps more enjoyable by adding game-like elements, boosting user satisfaction. Popular apps like Duolingo, Fitbit, and Headspace have successfully employed gamification to engage users. ATOM Mobility led the white-label shared mobility industry by introducing this feature for the first time in the summer of 2023. Broadly speaking, gamification provides:

  • Enhanced user engagement: Challenges, rewards, and interactive elements motivate users to actively participate, increasing app usage.
  • Improved user retention: Gamified elements foster a sense of progression, enticing users to return for more.
  • Data insights: Gamification provides valuable data on user behavior, enabling personalization and higher engagement.

With the loyalty module, operators gain access to a special dashboard to create challenges. These can be personalized with titles, points-based goals, duration, and enticing rewards like ride discounts. Multi-level challenges add excitement, keeping users engaged.

Operators can customize the module by adjusting points, point calculation logic, challenge length, and more. When users complete challenges, they receive rewards. Data insights help operators gauge the engagement and effectiveness of their efforts. 

ATOM's clients have noticed a boost in customer engagement and more rides as soon as they started using the loyalty module. You, just like other operators, can also enjoy these benefits by choosing ATOM.

Adding flavor with group discounts and bonus zones

ATOM also offers two unique features that offer advantages to both customers and operators: group discounts and bonus zones.

Group discounts

ATOM Mobility's platform allows operators to implement group discounts. Whether targeting students, businesses, or other specific groups, operators can create custom discount levels. In the backend, they can easily manage group memberships. 

It's straightforward – when group members log in, they see discounted rates tailored to their group. This feature not only attracts a wider audience but also fosters loyalty among targeted groups, making it an attractive proposition for various demographics.

Bonus zones

To promote high-demand areas and incentivize riders, ATOM Mobility has introduced the concept of bonus zones. These zones encourage users to end their rides in specific popular locations. When users comply, they receive bonuses. 

The innovative aspect is that the bonus is applied before the ride is charged, meaning users get an immediate discount. For instance, if a user's ride costs 4 EUR and a 10% bonus is set, they'll be charged only 3.60 EUR, with 0.40 EUR deducted as a bonus. Users can also use accumulated bonuses to pay for rides in full, making it a compelling way to encourage repeat business and reward user loyalty.

Add-ons: an opportunity to upsell insurance

Add-ons available through the ATOM dashboard are a versatile tool designed to provide riders with various services, including insurance, donations, participation in lotteries, or any other service that aligns with your offerings.

Here's how it works:

Before starting a ride, app users can activate the add-ons you've created, which will be billed on top of your standard ride fees. The pricing structure for add-ons comprises a fixed fee, a time-based fee, and a distance-based fee, and operators can adjust and mix these elements as they see fit.

Add-ons in the ATOM Mobility platform offer benefits to both users and operators. From a user perspective, they provide customization, value, and control, allowing riders to tailor their experience and choose services like insurance or donations based on their preferences. 

For operators, add-ons can create new revenue streams and differentiate services. They also provide valuable data insights into user behavior and preferences, enabling data-driven decisions and the potential for partnerships with third-party service providers, such as insurance companies. 

Dynamic pricing

Now you can ensure that the pricing of your services automatically adjusts based on times of the day and days of the week - this feature lets you automate price adjustments by setting time-sensitive multiplicators that will increase or decrease the pricing of your service, for example, twice the normal price for weekend evenings or a 30% discount early Tuesday and Wednesday mornings.

How does it work?
The system will take the standard price for the Vehicle model (vehicle-sharing module) or Vehicle class (ride-hail module) and multiply it by the multiplicator set in Dynamic pricing if the ride is started/requested within specified times and days.

Stand out from the competition with ATOM Mobility

As more consumers opt for sustainable transportation, the vehicle-sharing industry is set to see increased demand in the years ahead. This growing demand will bring more operators into the field, intensifying competition. 

One way to distinguish yourself is by delivering an exceptional user experience through software. Alongside the unique features we've explored, ATOM Mobility also provides all the core features you would expect, including a customizable rider app, a feature-rich operator dashboard, AI-powered vehicle analysis, and robust data and analytics tools to support informed business decisions.

Don't miss the chance to captivate your users and stand out in the shared mobility industry!

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Everything you need to know about micromobility fleet insuranceEverything you need to know about micromobility fleet insurance
Everything you need to know about micromobility fleet insurance

Discover why fleet insurance is important for shared micromobility operators. Learn how the right coverage provides peace of mind against unexpected challenges.

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For shared mobility operators, fleet insurance should be one of the top priorities. No matter the size or composition of your fleet, having the right insurance can offer peace of mind by protecting your business from unforeseen situations

However, the insurance question can sometimes seem daunting – especially if you're new to the industry. In this article, we will explore the key things you need to know about insuring your shared micromobility fleet.

Why you need insurance

Operating a shared mobility fleet isn’t always smooth sailing. Accidents can happen – whether it's a minor fender-bender or something more severe. Insurance serves as your safety net, offering financial coverage for repairs, replacements, and even potential legal obligations after an incident.

Here are the main reasons why insurance should be one of the top priorities for shared mobility fleet operators: 

Legal compliance: In many places, insurance for shared mobility fleets is a legal requirement. You probably want to comply with these regulations to avoid any potential fines, penalties – or even the suspension of your operations.

Financial security: Insurance also helps keep your business going financially, no matter what happens. Without insurance, accidents, vehicle damage, or theft can seriously impact your finances. Comprehensive insurance coverage can ensure that you're not left scrambling to cover any unexpected expenses.

Understanding shared micromobility insurance

When it comes to insuring micromobility fleets, part of the challenge stems from the fact that the market is relatively new. Some insurance underwriters avoid dealing directly with micromobility because it's seen as an unfamiliar market. 

This is where brokers like Cachet and others specializing in micromobility insurance come in. They partner with various insurance underwriters to provide coverage for operators in this field.

When it comes to shared micromobility, insurance coverage generally has a twofold role: safeguarding assets and handling third-party engagement in the event of accidents.

person riding bicycle during daytime

Liability coverage: Securing third-party public liability insurance for shared mobility fleets is not just a matter of choice – in some places, it's mandated by law. This insurance serves to protect pedestrians and riders in the unfortunate event of accidents, providing financial coverage for injuries and damages that may arise. In other words, it's a safety net that offers peace of mind to operators.

When it comes to mandatory third-party liability insurance, the negotiations with the insurance company usually begin by figuring out what the local authorities require to give them a permit. After that, the insurance policy is adjusted to meet the specific demands outlined by these authorities.

Physical damage coverage: This covers the repair or replacement costs of vehicles if they are damaged due to accidents, collisions, vandalism, or theft. Depending on the policy, physical damage coverage may also extend to equipment like GPS devices, charging stations, and other hardware.

What decides your insurance premium payments?

The amount you'll pay in premiums depends on various factors that are specific to your business This includes your fleet's makeup, where and how you operate, and the level of coverage you're aiming for.

Fleet usage: The more a shared micromobility fleet is used, the more chances there are for things to go wrong. When a fleet is in high demand and used often, there's a greater likelihood that something might happen that requires insurance coverage.

Rider behavior: Insurance companies also consider the fleet's ability to predict and manage undesirable rider behavior. Reckless riding, improper parking, or violating traffic rules can significantly increase the risk of accidents and incidents. Operators that have better measures in place to anticipate and mitigate such behaviors can demonstrate a lower risk profile to insurance providers.

black metal train rail during daytime

Value of the fleet: How much your vehicles are worth individually and as a fleet will affect how much you pay for insurance. If your vehicles are expensive, your insurance premiums will be higher because it would cost more to replace them if they get damaged or lost.

Size of the fleet: Operators can often negotiate more favorable insurance rates for proportionally larger fleets. As the number of vehicles increases, the overall expected risk is distributed and “diluted” as a result – which translates to lower premiums per vehicle. 

However, some brokers like Cachet have embraced a broader approach, ensuring that smaller and medium-sized fleets can also benefit from insurance coverage.

Technology implementation: Shared mobility services that employ technologies like GPS tracking, telematics, and IoT devices can provide insurers with valuable data. This data can then help assess driver behavior and usage patterns, enabling insurers to offer more accurate and tailored premium rates. This also takes into account how simple it is for scooters to be stolen and how well the recovery processes function – which can also play a role in insurance expenses.

Where you operate: The location in which your fleet operates is another important factor. From the insurer’s perspective, different areas pose varied levels of risk. For example, urban mobility – which is associated with a higher risk of accidents – may incur higher premiums compared to vehicles used in rural areas.

Level of coverage: The level of coverage you choose directly affects how much you pay in premiums. Opting for higher coverage limits means you get more comprehensive protection, but obviously, it also means your insurance costs go up.

a scooter parked on the side of a bridge

Choosing the ideal insurance for your fleet

Every shared mobility fleet and business is different, so your insurance needs will depend on things like the type and size of your fleet, where you operate, how much risk you're comfortable with, and of course – how much you are willing to pay. 

For example, do you require coverage for specific risks, like vandalism, or perhaps your fleet is composed of premium vehicles that are more expensive? To make it more relatable, let's dive into a practical case of a shared micromobility operator's experience with insurance.

How Hoog found the right insurance with Cachet

The concept behind Hoog Mobility is to revolutionize transportation in smaller Estonian towns. They recognized the need for efficient and eco-friendly local travel and brought a shared mobility solution often seen in big cities but missing in smaller communities: electric scooters.

Cash-strapped mobility startups often worry about potential damage or vandalism happening to their shared vehicles. This concern is shared by traditional insurance companies too. As a result, these insurers might hesitate to provide coverage for shared scooters, and if they do – it's usually at a higher cost.

Faced with this challenge, Hoog initially operated without insurance due to the steep expenses. But that changed when Cachet provided them with a customized insurance solution that perfectly suited the company's needs. Hoog also realized that the initial worry about vandalism wasn't as much of an issue as they thought. But still – having insurance for their fleet turned out to be a sound financial decision that gave them peace of mind.

Concluding remarks

Don't underestimate insurance – it's just as crucial as having a top-notch fleet and solid software. Insurance is best approached proactively – discovering you've cut corners after an unforeseen event will cost you significantly more.

Getting insurance for shared micromobility might be a bit trickier since it's still a new concept, but we've seen that even smaller fleets can make it work – it's just a matter of finding a suitable partner who understands your needs.

At the end of the day, insurance isn't merely about meeting legal requirements – it showcases your dedication to safety, responsible operations, and the well-being of everyone involved in your mobility business.

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