By Nick Fortuna
Most of us have borrowed a buddy’s car at one point or another, but have you ever borrowed a car from a total stranger? It might sound strange to rent out your most valuable material possession to someone you’ve never met or even talked with, but thanks to the internet and the entrepreneurial spirit of thousands of car owners, peer-to-peer car sharing has become a thing.
Through Turo’s smartphone app, users can select from more than 350,000 rental vehicles scattered across more than 5,500 cities in the United States, Canada, Germany and the United Kingdom. Yourdrive offers essentially the same service in New Zealand, allowing car owners to rent out their vehicles on an hourly, daily or weekly basis while paying a sales commission to the company.
Peer-to-peer car sharing is just one of the ways the internet and smartphone technology are changing the automotive landscape, along with ride-hailing apps, carpooling apps, informative resources for car shoppers and e-commerce sites catering to do-it-yourself mechanics.
Turo says its service makes sense for car renters because it typically is 25% cheaper than car rental companies, and cars typically are delivered to the renter. Car owners get 65%, 70% or 85% of the revenue from each rental, depending on the level of liability insurance they choose from the company, or they can provide their own insurance and collect 90%. Yourdrive also provides insurance to its car owners, who get 60% of each rental fee. Since rentals are paid for online, neither party has to deal with cash.
Mobile technology also is making carpooling easier than ever before. BlaBlaCar, a French carpooling app, has 70 million users and is available in 22 countries, almost all in Europe. It connects drivers and passengers willing to travel together between cities and share the cost of the journey. Via, headquartered in New York City, provides a similar service and operates in more than 20 countries, including the United States, United Kingdom, Canada, Israel, Australia, New Zealand, Singapore, Japan, Brazil, Indonesia and Germany.
Most Americans are familiar with ride-hailing apps such as Uber and Lyft, but there are many other players in this growing marketplace, including:
• Bolt, headquartered in Estonia, has 25 million users in 34 countries.
• Careem, based in Dubai, was bought by Uber for $3.1 billion last March. It operates in more than 100 cities throughout the Middle East, Africa and South Asia.
• Didi, headquartered in Beijing, has more than 550 million users and tens of millions of drivers.
• Free Now, based in Germany, serves more than 100 European cities.
• Gojek operates in Indonesia, Vietnam, Singapore, Thailand and the Philippines, offering car and motorcycle ride hailing.
• Other ride-hailing apps include Kakao T (South Korea and Japan), Grab (Southeast Asia), Ola Cabs (India), Snapp (Iran), Pathao (Bangladesh) and Yandex Taxi (Russia).
Some products seemingly don’t lend themselves to online sales because in order to know you’ve picked just the right one, you have to be there in person for a close inspection. Things like mattresses, fitted clothes and eyeglasses quickly come to mind, and yet these products routinely are sold online nowadays as the e-commerce boom continues. Now, you can add cars to that product list.
The 2019 Buyer Insight Report from CarGurus.com found that shoppers are taking full advantage of the wealth of information available online, visiting an average of 13 third-party or dealer websites before purchasing. Overall, 96% of car buyers use auto-shopping websites, and 73% say they research and compare vehicles exhaustively, giving them confidence that they can get a fair price for new and used cars, the report said.
Armed with detailed information, shoppers are eschewing brand loyalty for the best overall deal. The CarGurus.com report found that among car buyers replacing a vehicle in 2019, 69% switched brands.
Consumers also are showing up to the dealership ready to buy instead of visiting dealerships to learn about what is available. The average car shopper now contacts three dealerships and visits only two before purchasing, according to the report. They know what they want and how much to pay for it because they’ve been studying up online.
“The younger generation is less interested in negotiating prices,” said Mark Schirmer, Director of Public Relations for Cox Automotive. “They want to be able to know the price and what it is going to cost them. It’s really easy to find out what a car is worth now because there’s so much data online.”
Millennial and Gen Z shoppers are more likely than their older peers to use social media to get recommendations for new and used cars and to narrow down their options, according to the CarGurus.com report. In addition, the report found that 60% of younger car shoppers would like to complete at least some of the sales process online, including agreeing to a price for their trade-in and applying for an auto loan.
Schirmer said many states still require “wet signatures” on financing documents and other paperwork, but otherwise, showing up to the dealership is optional. Websites like Carvana and NowCar allow users to get financing and pay online, and they deliver cars to buyers. Both offer money-back guarantees that eliminate the risk of purchasing a vehicle without a test drive.
“People are spending more time online shopping, and they’re definitely visiting fewer dealerships,” Schirmer said. “There is absolutely a move toward doing more of the process online, and people want that because the current way to buy a car, people just aren’t happy with it. So, the idea of buying a car entirely online is getting closer.”
Nathan Stretch, Chief Executive of the car shopping site AutoTempest, said online car buyers should follow some simple rules to avoid being scammed, including never sending wire transfers to private car owners as payment. Instead, they should use a credit card or options such as PayPal, which typically provide the buyer with some protection from fraud. Perhaps most important, buyers should understand that if the price seems too good to be true, it likely is.
Stretch said one recent scam involved Craigslist ads for used cars with extremely low prices. When shoppers would respond, they would be directed to a website with a URL and an appearance that was confusingly similar to AutoTempest’s. Invariably, they would be asked to wire a down payment, and after they did, they would never hear from the seller again.
He said car buyers should choose a mechanic to do a presale inspection or use a third-party broker to handle the sale if the seller is located far away. Don’t allow the seller to choose the mechanic or broker because that person might be part of the scam, Stretch said.
“It’s definitely something that people need to be aware of,” he said. “The lesson to take from that is not that you shouldn’t buy cars online but that you have to be aware of the scams and be careful with how you do it.”
The highly competitive new car market has forced manufacturers to step up their game from a quality standpoint, and the result is that people are able to keep their cars for longer than ever. The typical vehicle on U.S. roadways is a record-high 11.8 years old, a figure that has increased 4% over the past five years, according to a June report from the research firm IHS Markit.
IHS expects there to be 84 million vehicles that are at least 16 years old on U.S. roadways by 2023, up 22% from 2018. Back in 2002, there were only 35 million vehicles that old on the road.
With owners holding onto their cars longer, many are turning to the internet for parts and accessories to lower the cost of repairs and customizations. Online sales of new auto parts and accessories in the United States were expected to grow about 16% to $12.3 billion in 2019, according to research from the automotive digital marketing agency Hedges & Co.
Hedges & Co. said 60.2% of those purchases, or about $7.4 billion, will be made on smartphones, an increase of 27.6% from $5.8 billion in 2018. Websites selling new auto parts and accessories now get more than 60% of their web traffic from mobile devices, the company said.
Like online car shoppers, online parts shoppers are thoroughly researching their purchases. About 90% of consumers do research online before buying an auto part or accessory, even if they eventually buy from a brick-and-mortar retail store. These do-it-yourself mechanics visit the websites of car manufacturers, parts retailers and automotive forums to ensure they are buying the right parts at fair prices, the report said.
“Consumers in the automotive aftermarket tend to be research-obsessed,” said Jon Hedges, President of Hedges & Co. “The [automotive] aftermarket is catching up to the rest of the world.”