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Pimp Your Ride WorldChanging Team November 27, 2006 11:37 AM Article Photo Guest contributor: Alan Durning. Each time I walk to a FlexCar in my neighborhood, I pass scores of parked private cars. I sometimes fantasize about strolling up to one of them, swiping my FlexCard over the dash, and driving away. I’d be debited automatically; my neighbor would be credited, less a slice for FlexCar. And I’d have a vastly larger pool of vehicles at my disposal. This fantasy is less fantastical than it may seem. Advances in information technology and the growth of car-sharing could converge with trends such as high fuel prices, urban densification, and caps on carbon emissions to create a thriving market for private cars’ idle hours—for people to pimp their rides. The benefits for consumers and society would be colossal, and the obstacles to such a market emerging do not seem insurmountable. But I’m getting ahead of myself. The starting point for this line of reasoning is the fact that cars and trucks are everywhere. From wherever you’re sitting right now, I bet you can either see or hear at least one. The Pacific Northwest has substantially more motor vehicles than licensed drivers. There are enough cars around that everyone in the region could climb into a vehicle and no one would have to sit in the backseat. In fact, most of us would be alone. What’s more, most of the time—23 hours a day on average—our vehicles are parked. The degrading effects of this massive vehicle population on our climate, our communities, and our health are gargantuan, but forget all that for the moment. Just think like an MBA. More than 12 million motor vehicles, each of them idle 23 hours a day— that’s a mind-boggling stock of underutilized capital, Aside from our homes, most of us Cascadians have more money tied up in our cars than in any other physical assets. And they’re just sitting there in the driveway depreciating, their resale value diminishing with every passing hour. (It’s true! Cars depreciate even they aren’t being driven.) Anytime there’s such over-capacity in the economy, there’s also a profit opportunity for whoever can figure out a way to put the over- supply to productive use. So how might northwesterners reap rewards for their unused cars? Well, they could rent them out. Imagine parking at the office, flipping the “rent me” button on your dash, and earning a few extra dollars an hour until quitting time. Imagine leaving town for a week and coming back to learn that your vehicle had earned you $300 on the rental market? On the flip side, imagine that your car-sharing membership card gave you access, on a moment’s notice, to tens of thousands of private cars and trucks sprinkled around your city. You might shed one or more of your household’s own vehicles if you knew there were a hundred at your disposal within a ten minute walk. Why hasn’t such a market for vehicles’ off-duty hours already developed? What are the practical or legal obstacles? The practical obstacles are what economists call transaction costs, most of them having to do with information. How can potential buyers and sellers find each other? How can they conveniently ensure payment? How can they tend to liability and insurance? Car-sharing companies such as FlexCar and ZipCar are hard at work reducing these obstacles. They’ve developed elaborate and expensive transaction and marketing infrastructure—smart cards, onboard computers and GPS trackers, online reservation and billing systems, refueling and car washing systems, advertising and member recruitment. The business challenge for them is to get adequate scale. You need a huge number of billable trips to amortize all that transaction overhead. To add trips, you need more cars, which are very expensive. The idea of creating a market for off-duty vehicles is a natural extension of the car-sharing business model. It’s also an idea that both FlexCar and ZipCar have toyed with. From a car-sharing business perspective, what could be better than to extend your transaction infrastructure across not only the fleets of vehicles you own but also to private vehicles that might be plugged into your system? Even getting one private vehicle in a thousand plugged in would represent several orders of magnitude of growth in the car-sharing fleet. That's vastly more billable trips but no additional capital locked up in buying your own vehicle fleet. The German car-share company Choice has gone from toying with this idea to proving it. It began road-testing a system called CashCar a few years ago. CashCar is a form of vehicle lease. Here’s how it works: I lease a CashCar, just like I might lease any other vehicle. But with Cashcar, I retain the option of turning the vehicle back over to the car-sharing company during idle periods. Whenever someone uses my CashCar, I get a credit toward my lease fees. (Unfortunately, neither I, nor my German-reading father, have been able to figure out whether CashCar has moved from road test to the consumer market. If you read German and have some time, please look into it and tell us what you learn!) Many of the practical obstacles to ride-pimping are diminishing with the growth of car sharing. But there may still be barriers. Legal barriers, for example, may be considerable. The car rental business is as regulated and taxed as any other, and those regulations and taxes are designed for the conventional by-the-day rental business. So I imagine that enrolling thousands of cars into a CashCar-like system will require at least a few friendly rule changes from state and provincial capitals. (If you’ve got any expertise on this subject, please enlighten us!) Insurance and liability issues could also block ride-pimping: if I’m paying you, through FlexCar, for the use of your Hummer and I drive it over the top of someone’s Jaguar, whose insurance pays? If the brakes fail in my car while you’re driving it, who is liable? In car-sharing, as in much of life in North America, liability and insurance concerns are killers of innovation. FlexCar’s first CEO Neil Peterson once told me that getting insurance coverage was by far the biggest obstacle to his company’s early success. I’m betting CashCar would be even tougher to insure, and under present rules, renting out your wheels to strangers would almost certainly invalidate your insurance. But I’m no expert on such matters, and I can’t see any problems that smart and creative attorneys couldn’t resolve in the design of pimp-your-ride contracts for owners and drivers. (If you’ve got expertise on this subject, please enlighten us!) Last, I’ll mention the obstacle that many readers probably thought of first: many car owners are too emotionally attached to their vehicles to let strangers use them—even strangers with clean driving records like the members of FlexCar. I mention this last because I don’t believe it’s as big a barrier as you might expect. The beauty of the pimp-your-ride strategy (assuming we can lower the legal and liability barriers) is that it sets in motion a virtuous circle. It can start very small and grow steadily, unlike some all-or-nothing transportation solutions like London and Stockholm’s congestion pricing systems. Even a fraction of a percentage of owners is enough to create explosive growth in the car-share fleet. As the fleet grows, so does the market for it. The more cars available, the more people will start renting them—because the system will become ever more pervasive and reliable. Meanwhile, the more money the owners are making, the more that other owners will want to plug into the system. And as the idle-car rental market becomes ubiquitous, it will grow reliable enough that many, many people will feel comfortable shedding one or more of their private cars. The newly car-less (or second-car-less) will become a more reliable group of consumers for the whole ride- pimping system. As the virtuous circle keeps turning, emotional reluctance to share your car with strangers is likely to diminish. Once your neighbors are all pimping their rides, you’re far more likely to do so yourself. Furthermore, if external trends such as high fuel prices, regulations or fees on emissions of greenhouse gases, rising parking costs, and denser urban development continue, the virtuous circle is likely to turn faster. A welcome side-effect of this virtuous circle would be to nudge the transportation economy from a market in which we buy transportation by the vehicle to one in which we buy transportation by the trip. A trip-by-trip transportation market results in fewer car trips, because of the first law of car-lessness: when you don’t have a car, you think more and drive less. My family, for example, cut our mileage by about two-thirds when we went car-less. So fostering an hourly market for off-duty cars could make a big contribution to creating healthy, lasting prosperity. It’d give more people ready access to a car without having to buy one (or a second one). It would help shrink the over-capacity in the vehicle fleet and drive steep reductions in how much driving we do—in ways that generate profits (or savings) for both car owners and nonowners. Along the way, it would help stabilize the climate by preventing greenhouse gas emissions, help stabilize the Middle East by reducing oil imports from terrorism-financing nations, help reduce traffic congestion by eliminating discretionary trips, help liberate parking spaces for other uses, help create jobs by keeping dollar circulating locally (rather than leaving the region to buy vehicles and fuel), help save lives (by reducing car wrecks), and help make us all fitter and trimmer (by spurring us to walk more). Not a bad deal, all around, or that’s how it seems to me. Would you, personally, rent your car during off hours? Would you car- share if there were more cars available? Alan Durning is the founder and executive director of Sightline (formerly Northwest Environment Watch). He's spent the year chronicling the experience of car-free living with his family. We've covered several installments of his series here. 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