Fights build over future of car-sharing

News

The hardball tactics started in an airport parking garage.

Car owners arrived at Orlando International Airport expecting to hand keys to their vehicles to arriving guests, who had arranged to borrow them on the Turo car-sharing platform. Instead, they received citations for illegally operating businesses on airport property.

A Turo executive who examined the rash of tickets in August 2017 learned the authority that runs the airport had hired a private investigator to create bogus reservations, then meet car owners with a police officer in tow.

Weeks later, a cease-and-desist letter arrived at Turo’s San Francisco headquarters, demanding the company stop its business at the airport until it obtained a permit and operated with rental car companies from an off-site facility.

IMG01

“It was bizarre,” said Michelle Peacock, vice president and head of government relations for Turo. “We had a conversation with them that lasted nine minutes. We’re willing to pay something in terms of a fee and give them information on transactions. Instead, it seems like they’re interested in being litigious and aggressive, and I find it baffling.”

Since then, the fight hasn’t just escalated, it has spread. Not only to other airports but to dozens of statehouses across the country, where lawmakers are considering legislation that affects peer-to-peer car-sharing, in which individual car owners make their cars available for borrowing.

The ongoing battles echo other instances in which companies that play matchmaker between customers and providers — companies such as Uber and Airbnb — have unsettled traditional incumbents, which claim the newcomers are circumventing regulatory requirements and laws. Turo and other peer-to-peer upstarts say the rental companies are bent on squashing innovation and competition.

They believe they’re under siege from the rental car industry, which, Peacock claims, has encouraged airports to skirmish with car-sharing companies and urged legislators to pass laws that could cripple the fledgling peer-to-peer industry.

Experts project that nearly 30 states may contemplate laws related to the peer-to-peer car-sharing and traditional rental car industries when legislatures are in session next year. In most cases, the crux of the argument revolves around the question: Are peer-to-peer companies the same as car rental companies? That classification would bring distinct requirements related to taxes, insurance and safety.

“This is an issue of fairness and level playing fields,” said Greg Scott, a government relations representative for the American Car Rental Association. “I kid you not. Their whole thing is: ‘We’re new and inventive and the future, and you should treat us differently.’ OK, why? Do we want the public to rent less-safe vehicles or to use public facilities like airports without supporting them? That’s what they say in Silicon Valley, but it doesn’t play well in the rest of America.”

Turo requires car owners on its platform to comply with all safety recalls — a mandate the rental car industry fought when Congress considered, and ultimately enacted in 2015, legislation that compelled the industry to fix recalled vehicles before they are rented.

And both Turo, which counts Daimler as a major investor, and rival peer-to-peer car-sharing service Getaround offer insurance as part of their standard pricing, pointing out that rental car companies mostly sell it as an add-on.

Turo disputes the charge of an uneven playing field. If anything, it says, it’s tilted toward car rental companies.

Turo says car rental companies pay no sales tax when they purchase their vehicles, which adds up to a tax break worth an estimated $3 billion annually in the U.S.

“I like to say that states have already decided that peer-to-peer isn’t the same as rental car because they’re not extending this tax break to Turo car owners,” Peacock said. “That’s one of the things where their argument of fairness and level playing fields is laughable.”

Turo, founded in 2009, has 10 million members and 400,000 cars listed on its platform. It operates in the United States, Germany and the United Kingdom.

Car owners pay regular sales tax when purchasing their vehicles. Most, Peacock says, view putting their cars on the Turo platform as a means to make a few extra dollars from an asset that sits idle, many studies find, as much as 95 percent of the time. It’s a way for families to add a few extra dollars to their monthly budgets or for car enthusiasts to afford a dream car.

But Scott says Turo is a means for some owners to essentially deploy fleets of rental cars that undercut the traditional industry.

“The idea that this is a grandmother in tennis shoes not using her Cadillac except to go to church on Sunday is a fallacy, and it doesn’t stand up to scrutiny,” he said. “We have people who are running businesses, but they’re not calling it a car rental company. Because if they do, they have to be regulated as one.”

Airports are a particular sticking point. Car rental companies cry foul because peer-to-peer users don’t pay anything beyond regular state sales tax, while their users often pay additional surcharges and taxes that fund public projects such as stadiums and concert halls.

Further, car rental companies have concession agreements with airports that Scott says typically require them to pay 10 percent of their airport-related revenue to the airport. The payments help airports defray costs for infrastructure such as parking garages and rental car centers that may be on- or off-site.

But Turo argues that its car owners shouldn’t have to pay similar fees for those facilities because they do not house fleets of vehicles at the airport; car-sharing and ride-hailing have, in a sense, made those infrastructure investments expensive and outdated.

“It’s unfortunate that the rest of the mobility space has been able to look ahead and account for future technology,” Peacock said. “The airports didn’t do that. They doubled down on infrastructure that’s of a different era.”

That airports are relying on revenue from the car rental concession agreements to pay for that infrastructure means they’re compelled to tilt their rules in favor of incumbents, as the airport authority did in Orlando, observed one car-sharing executive, who asked not to be named.

For its part, Turo says that conversations with Orlando International Airport officials remain ongoing. It says it’s willing to pay some fees, akin to agreements with ride-hailing companies, and share data with airport officials. But no agreement has been formalized.

In the meantime, the company has become more assertive in seeking legislation that would codify the differences between peer-to-peer car-sharing and rental cars. After watching rental car companies lobby for legislation, Turo did the same, earning favorable laws in places such as Colorado, Indiana and Maryland.

There are similar battles on the horizon in places such as Illinois, Utah and Arizona.

In a world where Airbnb is subject to local scrutiny in cities across the U.S., where Uber and Lyft are being pushed away from curbs at airports in San Francisco toward designated pickup and drop-off spots, and where Turo is fending off rental car companies, it’s clear the fights between incumbents and platforms are nowhere near finished.

Products You May Like

Articles You May Like

Ford recalls nearly 519,000 Bronco Sports, Escapes in the U.S. over fire risks
Russia revives Soviet-era car brand at ex-Renault plant
US: More Than 70% Of Plug-Ins On Road Were Assembled In North America
Guest commentary: Inflation Reduction Act poses a big automotive manufacturing challenge
Private buyers drive dealership buy-sell activities in first half of ’22

Leave a Reply

Your email address will not be published. Required fields are marked *