The business of sharing cars has taken off in Sydney and Melbourne, writes Ed Charles
SOMETIMES you have just got to do it. Car share plan GoGet came into being when founders Bruce Jeffreys and Nic Lowe put their own cars — a ute and a diesel station wagon — into the first incarnation of their company, Newtown Carshare, which rents out cars by the hour.
They secured a sponsored Volkswagen Polo from a local dealer and, with a dozen founding members recruited at local community events, the company was born in 2003. Now the company has a fleet of 45 cars in Sydney and Melbourne and over 500 members.
Since then, two competing car share schemes have been born. Melbourne-based Flexicar was launched in March 2005 and has 750 members and 22 cars with another 10 to be launched in December. Sydney-based Charterdrive was launched in August 2005, has 10 cars but does not disclose membership numbers.
The founders of the three schemes had all seen the growth of car share schemes in Europe and the US. The idea is that cars are available at various city locations — rather than at a single depot as with a traditional car hire firm — and can be booked by the hour. There are two main target markets for the service. They represent a cheap alternative to buying a first or second car for individuals. And the cars offer a flexible alternative to a car fleet for organisations such as NGOs and local councils. In addition to raising funds, the challenge for the companies has been to bring the councils on-side to offer designated on-street parking and to market the new idea to consumers.
GoGet’s Lowe and Jeffreys worked hard to build interest with local councils. They ran a seminar series, “Reinventing the private car: changing personal mobility in the 21st century”, in November 2004. They brought over from the University of California care share expert Dr Susan Shaheen to speak. At the time many local councils had no policy on such schemes.
To some extent Flexicar benefited from their efforts in educating the market. In late 2004, Monique Conheady and four other entrepreneurial friends were looking for green business ideas. They were inspired by the likes of Bodyshop founder Anita Roddick and moves towards triple bottom line reporting.
Flexicar was originally called Flo CarShare and the company made inroads first with the Port Phillip and Yarra Councils in Melbourne. They simply wrote to the councils and provided them with market research conducted in St Kilda and Fitzroy. The research analysed the local density of cars and demonstrated the similarities in the key characteristics of success overseas with local conditions.
For the councils it was a simple decision to take. Conheady says: “State government and local government have been really supportive. This concept obviously exists overseas. They’ve seen evidence that this takes vehicles off the road. And the issues of parking pressure and parking congestion in city and inner suburbs is really high on the agenda.”
GoGet’s Lowe says at first it was interested in the green angle in car sharing, although the schemes are really about mobility first and green issues second.
But a big source of funding, in addition to external investors, is state government green funds. Flexicar received $160,000 through the Victorian Government Sustainability Fund and both Flexicar and GoGet received $50,000 from the Victorian Greenhouse Strategy. Both schemes also received $60,000 City of Melbourne Small Business Development Grants.
Each of the three schemes have individual quirks to their business models. Flexicar and GoGet chose new names to better reflect that they were rental schemes rather than just sharing. While all use online booking, GoGet has a simple access system based on locked boxes containing the car keys.
Flexicar and Charterdrive, in contrast, use smart cards. These cards control access to the cars during the time for which the cars are booked. By doing this, says Conheady, Flexicar has been able to offer a smaller insurance excess to GoGet — $500 compared with $1250 with GoGet and $1000 to $1300 with Charterdrive. Neither GoGet nor Charterdrive charges a security deposit. All charge a membership fee and variations on monthly fees depending on mileage. Flexicar and Charterdrive have an all-in-one cost from $12 an hour. This includes petrol and insurance and, for Flexicar, 100km of free mileage and, for Charterdrive, 30km. Goget is $6.60 an hour plus 35c/km.