Why Car Share?
A lot of my friends ask me why I rent my vehicles on Turo. At first my answer went something like this: it’s a profitable side-hustle, it financially allows me to drive cool vehicles, it’s fun participating in the sharing economy and the emerging mobility-as-a-service ecosystem.
After some reflection, hard accounting and experience being an all-star host, my rationale for participating on the Turo platform as a host changed.
Reducing the Cost of Car Ownership
I use Turo to offset the cost of car ownership.
In other words, I’m not building a rental car empire. I’m not a Turo host to only pursue profit. But if it happens, great.
My goal with Turo is to reduce the cost of owning and maintaining a vehicle.
Here’s my thought process. Are you familiar with the Cost of Car Ownership?
Costs include insurance, maintenance, repairs, taxes & fees, financing, depreciation, and fuel.
Edmunds predicts the cost of owning my vehicle to be about $15k this year. This doesn’t include the average cost of a garage in San Francisco ($3k/year).
In my case, I require a vehicle for work about 4-6 days a week. There’s an opportunity to generate cash flow from my vehicle when it’s idle. Besides, cities usually have a multitude of transportation options aside from personal vehicles. I wouldn’t miss it too much.
What is Turo?
Turo, the world’s largest peer-to-peer marketplace for car sharing, allows me to easily ‘host’ or monetize my idle asset. For a small take, Turo provides insurance and claims processing, technology for remote handoffs, messaging, payments, listings, ratings and reviews, and the marketplace among other things.
If I can generate a few thousand dollars a year from Turo it goes a long way in reducing my car ownership bill.
Are You Profitable?
I’ve seen too many hosts in the Turo community talk about profitability but fail to account for two imaginary costs: depreciation and their time.
I did a post about depreciation but know that you don’t have to be an accountant to consider it. The difference when you sell your vehicle and what you paid is basically depreciation.
Mileage, new models available, safer cars, better technology, etc. all factor into deprecation. There’s a ton of online resources to help you determine your vehicle’s deprecation schedule (Edmunds, Iseecars.com to name a few). The bottom line is that depreciation should be amortized or spread out over the period that you own your vehicle. Not accounting for this imaginary cost could wrongly make you believe that you’re making money with Turo.
Take my example. $15k of car ownership expenses a year is a high hurdle to overcome to even begin thinking about profitability.
In the same way that most Turo hosts aren’t accounting for depreciation, they also aren’t factoring in their own time (labor). I won’t go into how to solve for your hourly rate but consider what your main profession pays you. If you plug that number into your expenses how does your Turo income statement look?
Offsetting Costs with Turo
My involvement with Turo is to help offset the cost of car ownership. The investment to own a car is steep. Turo is a great solution for some people to lower the barriers of car ownership.
In my opinion, Turo works well for people:
- In urban areas where demand is strong and alternative transportation options exist.
- Comfortable with others using their vehicle.
- Who don’t always require their car.