Car sharing is a rapidly growing business. It’s a healthy alternative to private car ownership, offering fewer responsibilities and more freedom. There’s no need to purchase a car, spend money on fuel and maintenance, and constantly search for a parking spot. Moreover, Millennials and those in Generation Z like to share. They prefer to rent, borrow, and swap everything from hiking gear and power tools to homes and yachts rather than buy them.
This is why shared mobility has become a trend. It includes services such as ridehailing (Uber, Lyft), carpooling, scooter sharing (Lime, Bird), and, of course, car sharing. The most prominent car sharing operators are car2go, Zipcar, Getaround, Turo, and Maven.
Turo provides car rental and car sharing services Carsharing services differ by both business and sharing model. For example, car2go uses a business-to-customer (B2C) model and provides a free-floating service. Getaround and Turo offer peer-to-peer (P2P) carsharing.
Benefits of carsharing
Initially, carsharing was akin to traditional car rentals: people rented cars for long distance travel or special occasions instead of using their own car. However, gradually more and more people started to consider carsharing as a means of everyday transportation. This tendency is wholesome, as it helps to solve immediate problems by:
reducing CO2 emissions
minimizing urban congestion
addressing parking problems
It’s true that by switching from car ownership to carsharing (and other eco-friendly means of transportation) people can greatly reduce their carbon footprint.
Although carsharing doesn’t solve the traffic congestion problem completely, it’s a move in the right direction. One shared car takes 15 private cars off the road. This helps to solve issues with the lack of parking space, as streets in urban areas are usually overloaded with vehicles.
Every day, carsharing conquers new markets across the globe. This type of shared mobility has already proved itself viable, and there’s still room to grow. Carsharing looks appealing as a business idea, and modern technologies make it possible to provide customers with high-quality service. This article tells you how to start a carsharing business and which features to include in a mobile app.
How to start a carsharing company
Many entrepreneurs see carsharing as a lucrative market and have latched onto the idea of starting their own carsharing companies. According to Roland Berger, the carsharing market will grow by as much as 30% annually through 2020, potentially reaching more than $6 billion in global revenue. You can be part of this growth, but first you need to learn what steps to follow before entering the carsharing market.
Decide what type of carsharing service you’ll provide
You can own a dedicated car fleet and use a mobile app to manage it and gain more users. Or you can bring together car owners and renters with your app and generate income from membership fees.
Choose the business model for your service
Common models are station-based, free-floating and A to B. The latter type suits EV fleets since it ensures that trips end near charging stations.
Study the market and competitors
See what competitors are lacking and what you can offer to meet the immediate needs of end users.
Think about marketing strategies from the start
Prior to the official release, decide how you’ll promote your carsharing app. Include advertising costs in your budget.
Meet legal issues
As a carsharing service operator, you need to receive permission from local regulatory bodies to conduct business in their jurisdiction.
Figure out the financial aspects
There’s no denying that carsharing is a costly venture. In the US, once you launch your own carsharing company, you become subject to taxes for rental businesses along with regular income taxes. You also have to think about insurance, maintenance, software licenses, and staffing costs.
One shared car takes 15 private cars off the road, partly solving the parking problem.
Shortlist mobile app developers
Find a team of developers experienced in developing apps for the shared mobility market. It’s best to choose a company that provides a full development cycle: business analysis, development, UI/UX design, testing, after-launch support. This will save you both time and money.
Make your app eye-catching and handy at the same time. Apart from the key features, every car sharing app should have a user-friendly interface and an up-to-date design.
Car sharing business models
There are a few business models in car sharing you can choose from:
Station-based
Free-floating
A to B
Station-based business model
It requires an infrastructure of stations in a city, where your customers will be able to rent and leave their cars. It’s easier to manage, as you’ll have all your vehicles in particular locations and won’t need to gather them from all over the city. On the other hand, it’s costly to develop such an infrastructure, especially for cars.
Free-floating business model
It is the most popular, as it’s the most convenient for the customers. According to this carsharing app concept, users can leave and take their cars at any place in the city. It’s very convenient for users, but you need to pay close attention to parking costs and move the cars from unpopular locations.
A to B business model
It is rather restricting for customers, who can only choose a particular route. However, this is more convenient for you, as you can predict your vehicle locations.
Revenue models of car sharing apps
The revenue model of a carsharing business depends on their business model and an approach to charging fees.
Generally, there are two major revenue models: subscription-based and commission based.
According to a subscription-based model, a car user is charged a flat rate every month. This model is basically a long-term car rental.
A commission-based model is charged based on an actual usage of a car. This usage can be calculated in different ways, for example:
by minute
by mileage
by the distance between the stations
Most often, car sharing apps charge their users by minute, so they can cover the time spent in traffic or while the car is parked. A user is charged an initial fee, and is then charged by minute for short-time rentals. The cost per minute can be different depending on the time of day.
Mistakes a carsharing operator should avoid
Deciding to ignore local authorities and launch your fleet without permission. If you do this, you’ll be in a situation where you don’t know where to park your cars, as all parking spots are off limits for illegal carsharing operators.
Forgoing marketing analysis and offering the same service and technologies as other carsharing companies in your area. In this case, you can’t compete. Things will be even worse if your main competitors are ridesharing monsters such as Uber and Lyft that provide many services, including car rentals.
Underestimating your budget needs. In this case, you may decide to cut some expenses to stay afloat. So your app won’t get updates, your fleet will start getting worn out, and your employees will go to your competitors.
Forgetting to put the product in front of the customer. Perhaps you’ve successfully launched your carsharing service and everything is going seemingly well. But if you fail to provide a sufficient number of vehicles, your business is doomed. Your service will be labeled as inconvenient.
Having a fleet that consists solely of electric cars. This is forward-thinking; however, you shouldn’t forget that very few cities have recharging stations on every street. This likely won’t affect a station-based type of service so much, but will make a free-floating model impossible.
Weigh the pros and cons before diving into the carsharing business and make sure to avoid common mistakes.
What technologies carsharing relies on
Carsharing wouldn’t be the same without modern technologies. They help to organize the whole process and make fleet management easier. Let’s name some of these technological wonders.
Eco-friendly engines
One of the main technologies used in modern carsharing services is eco-friendly engines powered by emission-free energy sources such as electricity and hydrogen. Eco-friendly cars are not only cleaner than gasoline-powered cars but are also more affordable for car sharing services.
GPS
GPS devices receive data from satellites and use it to calculate a vehicle’s location in real time. GPS devices don’t require an internet connection, which is a big plus.
E-vehicles are cleaner than gasoline-powered cars and also more affordable for car sharing services.
Internet of Things
IoT app development goes hand in hand with creating services like car sharing. Unlike GPS devices, IoT devices require a network connection. IoT devices include embedded in-car hardware that’s connected to an app. This technology updates the system on the vehicle’s status and also receives data from the system, such as a user’s ID, to manage keyless access to vehicles.
To make your service technologically on par with competitors, you can check the leading technology vendors who provide ready-to-use solutions for carsharing businesses: INVERS, Mobiag, MonGeo, Omoove, Ridecell.
The back end of the carsharing app consists of an operational system (server) and the in-car device.
Communication devices
Nowadays, car manufacturers equip cars with devices that connect to networks using radio, Wi-Fi, and cellular modems (GSM/CDMA, 3G, 4G, 5G). This enables communication between users and service providers.
Onboard systems
Onboard systems allow carsharing providers to control a whole fleet. They provide real-time data on a vehicle’s location, fuel/battery level, and security. With the help of special hardware installed in each car, you’ll always know where your cars are, whether they require a recharge or repair, etc.
Basic features for a carsharing app
If you want to create a custom carsharing app, you should implement the following features in your MVP.
Registration
Sign-in
Maps
User profiles
GPS tracking
Smart lock
In-app payments
Ride stats
Bookings
Push notifications
Support
Registration
The registration process should be fast and easy. No need to request full information from new users right from the start. Users can provide additional details later when updating their profiles.
Sign-in
Your app can have its own sign-in form or offer users to sign in using social accounts or email.
To integrate maps, developers connect the Google Maps API for Android apps and MapKit for iOS apps
User profiles
After registering, users should be asked to provide further information about themselves (upload a profile photo, fill in personal details).
In-app payments
Integrate a payment gateway into your application to accept cashless payments from customers. You can choose among Stripe, PayPal, and Braintree. Stripe offers its own Android libraries and a card input widget. For iOS, you can use the Stripe SDK.
Maps
To integrate maps, developers connect the Google Maps API for Android apps and MapKit for iOS apps.
GPS tracking
To determine the current location of a vehicle, developers use GPS. Geolocation for an Android app can be implemented with the help of Google’s Location APIs. iOS developers rely on CoreLocation.
Key features and stylish design will make your app more engaging.
Smart lock
A smart lock feature enables keyless locking/unlocking of a vehicle via an app. Once the in-car system confirms that the user has a reservation, it will unlock the door. After the trip ends and the user gets out of the car, the doors lock again.
Carsharing keyless technology can be implemented through a third-party service, if you integrate your carsharing mobile app with it, as mobile app is the facilitator of locking and unlocking the vehicle. If you want more security, however, you can develo your own custom keyless access for your fleet.
Bookings
A user can request a car right away or make a reservation for a later date using the booking feature.
Ride stats
This feature allows users to see the duration of their ride and track their booking history.
Push notifications
In order to notify users about the status of their reservations or about cars available near them, you’ll need to connect some APIs for sending push notifications. For iOS devices, this feature is provided through the Apple Push Notification Service. Android apps can rely on Google Cloud Messaging.
Support
In case a user encounters difficulties during the trip or the vehicle is damaged – whether or not it was the user’s fault – they need to contact the carsharing operator for instructions. Built-in support will significantly improve the quality of your service. You can enable live chat, a сhatbot, or direct calls in your app.
Advanced features
The following features are optional for car rental mobile app development, and you can add them after you release your MVP.
Multilingual support
By default, your app will support only one language. However, if you’d like to cover a larger market, you can add more languages. Note that some languages are written from left to right while others are written from right to left, so you need to consider this peculiarity prior to development.
You can start with MVP functionality and add more advanced features later.
Rating system
To make your service credible, give users an opportunity to rate their ride experience and leave feedback about cars. This will help other users to choose a car that’s suitable for them.
Built-in messaging
With a built-in messenger, users can contact the owners of shared cars (assuming you provide a peer-to-peer carsharing service).
Car subscription
You can expand your business offering and allow your users to purchase monthly car subscriptions. One of the most famous and successful examples of this is SIXT service that charges a monthly fee for car usage. A car subscription is a great alternative to car leasing.
CRM integration
Integrating your CRM with the app allows you to create a single ecosystem for both internal and external business processes that happen in your carsharing company and allow you to provide efficient service and customer support by storing and synchronizing all information about your customers across all platforms.
Insurance
Insurance is always included into a carsharing service membership, and you can allow your users to file insurance claims right from your app by integrating it with an insurance service or simply adding their support contact to your app.
Fare calculator
Allow your users to calculate the approximate cost of their ride beforehand by adding an intended destination or a planned time of ride.
In-app camera
During the registration process, your user will need to share and verify their driver’s licence. Allow them to add it directly through an in-app camera in your carsharing application. You can also add a frame to get a clear, centered photo.
Admin panel
An admin dashboard is a web application that stores data and manages all activities in the app. Basically, it’s the hub that connects the vehicle’s in-car hardware and the app. It can be created either from scratch or using an admin panel template. Common features of an admin panel include:
Fleet management
This feature allows a carsharing provider (admin) to determine the location of each car, check its fuel/battery level, and see metrics for in-car systems.
Admin dashboard stores data and manages all activities in the app.
User management
With the help of this feature, admins can accept or reject registration requests, get access to profiles of registered users, and see their booking history.
If necessary, admins can ban users who violate the rules. User management also allows admins to reply to customers’ inquiries via live chat or direct calls.
Payment management
This feature lets admins set rates based on the duration or distance of the ride and issue refunds or charge fines.
Reports & analytics
With this feature, admins can see an app’s statistics and performance reports in downloadable tables and diagrams.