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Why Turo, the 'Airbnb for Cars', Is Angering Rental Companies | WSJ - YouTube
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(soft music)
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- Have you ever had to find a rental car
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after a late flight?
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Imagine if you were renting
a stranger's vehicle?
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Turo, a peer-to-peer car company,
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brings an element of
adventure to your trip
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by allowing you to rent a personal vehicle
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from someone looking to
make some extra money
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from their car.
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But rentals like the one I'm doing here
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are putting the company in the crosshairs
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of traditional rental car companies.
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So here's how it went.
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After several screens
full of instructions,
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we find the address for our
car in a nearby parking lot.
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This is definitely not
quite as straightforward
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as renting from a traditional
car rental agency.
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We're in a parking lot
that's maybe a quarter mile
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away from the airport.
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It's near the Sheraton hotel
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and we were told to find the orange cones.
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We found the orange cones and
we've actually found our car.
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It's right here.
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Next step is to take a selfie
of myself with the car.
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Good shot.
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After verifying I'm the renter,
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the car's owner electronically
unlocks the door for us.
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We're checked in, we've
done our inspection.
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Let's go.
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The two-day rental of this 2019 BMW X3
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comes to, without insurance, $160.
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A comparable luxury SUV
from National Car Rental
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would've cost us 37% more.
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National's quote for $220
includes $66 in taxes and fees.
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Turo says nowhere in the US
are those same fees and taxes
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being imposed on its customers.
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And National points out, in this example,
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that its contract includes
unlimited mileage,
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whereas our Turo rental does not.
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All right, we've got our fancy wheels.
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Now, tomorrow, we're gonna
meet the owner of a car
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who rents it on Turo, but
it's a really different car
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than the one we've got.
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(door slams)
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How's it going?
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Jason.
- How are ya, Kris.
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- Good to meet you, Kris.
- Nice to meet you.
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- I've never seen a Slingshot
before, I have to say.
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- I haven't either until I went to Hawaii.
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(laughter)
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- [Jason] Kris Mullins and his Slingshot
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is what Turo says it's all about,
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extra cash for car owners
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and unique experiences for renters.
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How often are you renting this out?
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- [Kris] Four to six times a month.
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- [Jason] Mullins rents his Slingshot
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for around 100 bucks a day.
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With his monthly car payment,
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he paid $15,000 for the Slingshot,
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and other costs, he says he's
pretty much breaking even.
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But he says he sees the
potential down the road
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to come out ahead.
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- The more people catch on
to it, the more subscribers,
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the more people that understand
what it is and are aware,
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the more people will be
able to rent their cars.
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And I don't mind adding another car to it.
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- [Jason] He says he's had
no major issues with renters.
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Like the established companies,
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Turo offers insurance to renters.
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It also insures the hosts
for accidents or damage
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that occur during the rental.
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But, as an example of
these cars in Denver,
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if a car is damaged or
stolen between rentals,
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it falls on owners and
their own insurance.
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The big car rental agencies
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are focusing their ire less
on individuals like Mullins
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and more on these types of people.
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Are you guys doing rental for Turo?
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When I returned our
BMW to the parking lot,
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I met Carloz Basan.
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- I've personally done
around 1,800 trips with Turo.
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- [Jason] He and an employee
were prepping cars for renters,
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assembly line style.
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Most of the vehicles had
lockboxes on their windows.
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- A lot of business travelers rent cars.
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- [Jason] Basan tells me he's
among five Turo power hosts
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who've got 70 cars at this San Diego lot.
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So you're making a
full-time living doing this?
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- It is full-time living, yes.
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- For Turo, is this a
problem or an opportunity?
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(knuckles rapping)
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I went to San Francisco
to meet with Andre Haddad,
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Turo's CEO.
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He's aggressively trying
to grow his company,
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now valued at more than a billion dollars.
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How many people do you have now?
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- We have a bit more than 350 people now.
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We've been growing our team
roughly 100% every year.
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- So this time next year, you
think you'll have 700 people?
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- We might well have 700 people
this time next year, yes.
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- Really?
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Haddad shows us the six cars he owns,
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all of which he rents out using Turo.
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- So let me show you how this works.
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You put this button here.
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- [Jason] Including this Tesla Model X
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he bought four years ago.
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- I'd say the first year,
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when everybody wanted to drive one,
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I was renting it out at
more than $500 a day.
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- $500 a day?
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On this day, Haddad's
using it to get to work.
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So when people describe your
company as the Airbnb of cars,
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what do you say?
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- I'd say that's just about right.
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- [Jason] Like Airbnb,
Turo is the dominant player
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in its peer-to-peer market.
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- Selection, price, and
convenience I think are the reasons
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why we think fundamentally we are better
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than traditional rental car.
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- When you have the slogan,
Way Better Than a Rental Car,
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that must antagonize the incumbents,
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the rental car agencies.
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- We are not intending to antagonize them,
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but they are, in many ways, the
reference in people's heads.
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- Do you think you're
eating into their business?
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- Partly, but that's not
really the core of Turo.
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I mean, our core mission
is to enable people
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to monetize their cars.
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We've obviously run into the antagonism
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and the hostility from
the rental car industry
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because they're not used
to seeing competition.
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- It's kind of like what Airbnb dealt with
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with the major hotel companies.
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There was a lot of pushback.
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In the case of Airbnb, the
hotel companies were saying,
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"Well, we have to pay all
these taxes, these fees,
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"and Airbnb hosts, they
don't have to do that.
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"That's unfair."
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Is it a similar situation for you,
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especially when you have
people renting at airports?
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- Yeah, there's absolutely
the same situation for us.
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- Is it fair?
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- What they don't like to talk about
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is the significant tax subsidy they get
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because they actually don't
have to pay any sales tax
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on any of the cars that they
purchase for their fleet.
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- Enterprise, which
has the world's largest
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rental car fleet, calls
this argument a red herring
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because companies, whatever
industry they're in,
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typically don't pay sales tax on equipment
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they purchase for commercial
purposes, including rentals.
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Enterprise says peer-to-peer operators
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hope to avoid applicable
taxes, plain and simple.
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Turo's response: What we hope to avoid
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is having a competitor dictate
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how we should be regulated and taxed.
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Airbnb says, since 2014,
it's established agreements
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with local governments around the world
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and it's collected more than $1.5 billion
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in transient occupancy taxes to date.
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With Airbnb, you had people
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who basically came hoteliers themselves.
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They would have entire buildings
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that they would start
renting out on Airbnb.
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Do you have some customers
who are creating their own
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mini car rental agencies at airports?
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- We don't have the same kind
of scale that Airbnb has,
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but we have some car
enthusiasts, like myself,
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who have found Turo to
be a great opportunity
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to be able to get another car,
a third car or fourth car,
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because the reality is,
when you bring these cars
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and list them on the
app, they can generate
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a lot of earnings.
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So it's still a small
percentage of our community
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that's going out and getting a second
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or a third or fourth car.
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- Well, are people creating
businesses, entire businesses
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of renting cars using Turo?
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- I don't think there's
anything of that scale
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of, like, creating a business.
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- [Jason] Enterprise says that many hosts
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actually own or operate fleets of 10 or 15
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or even more vehicles on these platforms.
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It's our opinion that all
rental car transactions,
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including those through
peer-to-peer companies,
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have the same tax obligations
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that every other car
rental provider has today.
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Turo acknowledge that
some entrepreneurial hosts
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have embraced the economic opportunity
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the marketplace provides.
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(soft music)
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