Renting vehicles through car-sharing apps can reduce prices – if politicians allow it


Have you tried renting a car recently? Good luck. The number of vehicles available for hire has plummeted and prices have skyrocketed. But there is a new option on the table: renting from individuals using car-sharing apps, that is, if the government allows it.

Used car prices started to climb significantly in 2020 as the supply of cars dwindled. The pandemic and lockdowns reduce the number of vehicles car rental companies were able to acquire. The number of vehicles available was even lower in 2021, as supply chain issues made it even more difficult and expensive to obtain cars.

The result was called “rental car apocalypse.” Renting a vehicle is more expensive in $35 per day that in 2019, nearly double the pre-pandemic rate, according to Kayak.com. This price spike is not expected to improve much in 2022.

But the market responds, as long as politicians and government regulators allow it.

A key response has been the increase in the number of people using car-sharing apps. It’s where individuals lend their own vehicles — through services like Turo — to people who need them.

Auto share is like Airbnb on wheels and it competes with traditional rental companies. Those wishing to rent a vehicle (guests) can download the app and find nearby vehicles whose owners (hosts) are willing to rent. Guests can list their cars for rental on designated days and times. Drop-off and pick-up locations are provided. Guests and hosts can rate each other using an app similar to Uber and Lyft, and they can opt out of business if they don’t want to.

There are a few main areas of concern, primarily dealing with potential fraud and dealing with insurance issues. The State of Michigan, for example, has proposed a “Peer-to-Peer Car Sharing Program Act” to enact reasonable regulations without restricting this technology too much. The billing file:

  • Require car-sharing platforms to take responsibility for the vehicle when renting it, unless the renter commits intentional fraud;
  • Mandate an extensive insurance policy covering the owner of the vehicle and the driver who rents the car;
  • Allow car insurers to choose not to cover rental vehicles with their policies;
  • Establish certain record keeping and disclosure requirements;
  • Requiring safety recall issues to be repaired before an owner can rent the vehicle;
  • Mandate that certain taxes be collected and paid by the car-sharing platform; and
  • Regulate airport agreements before vehicles can be dropped off or used to pick up tenants of this property.

While most of the above is reasonable, there are some details that need to be ironed out. It’s fair to demand insurance and make sure insurance companies know what their coverage is for. Some minimum disclosure rules for businesses make sense. But taxes must be low and fair for the whole industry. And there’s no reason for state lawmakers to try to get involved when it comes to airports or other places where cars are dropped off or picked up – hosts and guests can sort that out themselves. themselves.

State legislators and other regulators should aim to establish a level playing field between individuals and rental companies. But the laws must also recognize a difference between a company that rents thousands of vehicles and an individual who rents a few days a month. For the most part, the private market can figure this out – with the car-sharing service regulating using its app, with insurance companies determining the correct costs for these vehicles, and with airports making their own deals with platforms.

Car sharing meets an important market need. Some people are able to make extra money from an underutilized resource, while others are able to find a more affordable rental option. Legislators should allow this service to exist as freely as possible.

Jarrett Skorup is Senior Director of Marketing and Communications at Mackinac Center for Public Policya research and educational institute headquartered in Midland, Michigan. Follow him on Twitter @JarrettSkorup.

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