Cities look to benefit as car sharing becomes increasingly accessible and popular

Written on 27 Apr 2015

No matter how you look at it, the automotive industry and consumer usage of vehicles is on the cusp of major change. One sub-set of those changes, Car sharing, comes in multiple forms, from car clubs such as City Car Club (recently acquired by Enterprise Rent-A-Car – a deal on which we acted for selling shareholders) to web and app based peer-to-peer services such as BlaBlaCar, UberPop and Lyft.

Even if you own a car, it’s easy to see the attraction of car sharing: who wouldn’t happily halve (or better!) their respective travel costs by sharing a lift? In some cases, urban dwellers who are members of these clubs make significant savings – say £3,000 – a year in car ownership costs.

As the car sharing trend grows, cities will benefit from less congested streets, making room for more efficient and greener modes of transport – each car club vehicle removes 17 privately owned from the streets according to a recent study by business consultancy Frost & Sullivan.

Realising the challenge facing them, some carmakers are partnering with local authorities and car club providers to ensure they are at the forefront of urban car sharing projects. At the start of the year, BMW and car hire company, Sixt, launched a joint venture called Drive Now, aimed at capitalising on the car sharing trend in London where the number of car club members is forecast to reach 800,000 by 2020.

In London, local authorities support the Drive Now scheme by allowing members to park in any parking bay (including those requiring residents’ permits). In even smarter experiments such as in Grenoble, a city in the French Alps, the city has teamed up with Toyota to provide ultra-compact electric vehicles, EDF, who will manage electric charging stations, and car sharing service provider, Citélib, in a trial that will connect the scheme to the public transport system’s IT infrastructure. All very smart.

The rise of the car sharing economy is one which will test and challenge the existing legal and regulatory framework from both operational and user safety perspectives. Operationally, car clubs fit well within the current legal framework but lift sharing services need to ensure that they and their users, especially those offering rides, operate within the legal restrictions on offering shared lifts and receiving payment.

The legal position with regards to user safety is less clear. Lift sharing providers are seeking to use trust based methods by featuring reviews, star ratings for trusted drivers and offering ladies-only options, and using terms and conditions that aim to exclude liability.

Insurance is an added area of complexity but one which the existing legal framework seems able to accommodate. Operators of car clubs need to consider if their offering equates to arranging a contract of insurance for its members and the requirements of the Financial Services and Markets Act 2000. For those who choose to car share, their insurance policy must always be checked, but generally car sharing is permitted by insurers.

We’ll continue to blog about changes in the automotive world as it evolves over coming months and years.