Let’s say you’re dying to be a part of the fast-growing gig economy. But you’re so asset-free (some might say unburdened) that you don’t own a car. So you can’t join the Saturday night mob of amateur taxi drivers.
What to do?
You could do what thousands of other gigsters have done, and lease a vehicle through Uber Xchange Leasing, a program that Uber Technologies Inc. rolled out last July.
HyreCar is hoping to carve out a piece of Uber’s business by offering even shorter-term lease options. In theory, HyreCar allows car owners to rent out their vehicles at a daily rate to drivers who want to earn money chauffeuring passengers around for Uber, Lyft or other ride-hailing services.
Just as Airbnb allows property owners to rent their homes or apartments – thereby unlocking value in an underused asset – HyreCar’s founders say their service will allow vehicle owners to squeeze some value from their vehicle when it might otherwise be sitting in the driveway. In the hyped-up world of the sharing economy, its chief executive and co-founder certainly has the requisite bravado.
“We’re going to be bigger than Airbnb,” Marciano Kim proclaimed in an interview late last month, following the firm’s move into Pennsylvania and Illinois. The company now says it’s operating in more than 20 states.*
Of course, several startups in the so-called sharing economy have envisioned grand ambitions before they went kaput. And like so many others, HyreCar is trying to take a bite out of Uber’s business, which began exploring ways to put car-less drivers on the road several years ago.
Uber’s Xchange Leasing program offers a way for people to get behind the wheel under terms that are more flexible than most auto companies’ multi-year leases. Under its program, a driver can sign up to lease a vehicle for a minimum of 30 days, with unlimited mileage and few additional costs. Drivers can then return the vehicle with at least two weeks’ notice – in effect, creating a minimum six-week lease. The San Francisco-based ride-sharing behemoth also has partnered with Enterprise Rent-A-Car to offer weekly leases in Denver and a handful of other cities. The average weekly rental through Uber ranges from $110 to $150, a company spokeswoman said.
And in Chicago, Uber’s working with E-RIVE to rent a car by the shift. For a one-time fee of $169 and $22 per hybrid car per shift (plus a surcharge for weekends), a customer can fulfill his or her dream as a gigging taxi driver for Uber.
“We often hear from drivers that they want to join Uber, but don’t have access to a car or traditional vehicle financing. That’s why Uber has developed a number of new options through our Vehicle Solutions Program, including flexible leases, vehicle discount programs, and rental options to give consumers more choices,” an Uber spokeswoman said in an email. She said the company’s Vehicle Solutions program has been offering such options to drivers since December 2013.
Beyond Uber and its partners, there’s a company called Breeze offering flexible leases for ride-sharing drivers in Boston, Chicago, Seattle, Los Angeles, San Francisco and Washington, D.C. In the District, Breeze charges a one-time $99 membership fee and $195 per week to get behind the wheel of Toyota Prius and start hacking or running deliveries.
But HyreCar is hoping to out-Uber Uber and the rest of them with on-demand microrentals.
Kim, who is HyreCar’s chief executive, acknowledged that the firm is not nearly as well known yet; he was vague on how much of its business is people-to-people renting. But he said that people typically rent for a few days, sometimes as little as two, and that the average rental costs vary from $35 to $50 per day, depending on supply and demand, and type of car. HyreCar’s cut comes from both sides: 15 percent from vehicle owners, 10 percent from drivers.
The tricky part involved figuring out how to insure the vehicles. Uber claims that its drivers work under a package of coverage, including $1 million worth of liability coverage. And that insurance is, presumably, in place for the majority of drivers who own their cars.
For HyreCar, however, insurance means covering the vehicle’s owner and the stranger who’s renting it–which they admit is another level of complexity. But HyreCar says it’s got its drivers’ backs.
“HyreCar is covering you,” Kim, who lives in Orange County, Ca., said. “It’s not an easy solution, but we really did our homework on that.”
Kim was reluctant to go into details as to how HyreCar has set up a business that will indemnify everyone — vehicle owners, drivers who rented the cars, and their passengers — against accidents in any situation once the car’s on the road, as he insisted that HyreCar will do. Yet HyreCar’s Web site also appears to be relying on Uber, Lyft or another so-called Transportation Network Company (TNC) to provide insurance coverage whenever the rider has logged on to work for those companies.
From the HyreCar Web site:
Kim, in a followup email, disputed the idea that his firm is “relying” on another company’s insurance. He said companies such as Uber are required to provide the primary insurance for every stage of a shift once the app is activated and a driver goes on duty to pick up a passenger. And HyreCar’s insurance will cover everybody until then.
In any case, Kim said that in addition to its insurance policy, HyreCar screens drivers carefully with background checks and uses technology to monitor them. “We believe an ounce of prevention is 10 times better than any $1 million liability coverage,” he said.
So far, that has apparently been enough to satisfy more than 10,000 vehicle owners who have signed to rent their vehicles. “And our growth rate has been triple digits every month,” Kim said in a telephone interview in late March.
“I think the idea is pretty cool,” said Harry Campbell, an Uber driver who quit his job as an aerospace engineer to blog full-time about ride-sharing as The Rideshare Guy. “And there’s definitely a need. A lot of drivers are looking to rent or lease a car.”
But, he added: “I think it’s still a way’s off from being a reality.”
Campbell said in an interview Tuesday that an article that appeared on his blog about the ins and outs of Uber’s leasing program has been among the most popular his site’s published – and its comments section filled with a lot of griping, he said. Several drivers complained that although lining up the Uber financing was sweet, obtaining an actual car from the list of approved dealerships was a hassle.
But that doesn’t mean HyreCar is ready to exploit the spillover.
“To be honest, I don’t know a single driver who’s used this to rent it out,” Campbell, who lives in Los Angeles, said. “I don’t think they’re that big yet.”
*HyreCar is also operating in Arizona, California, Colorado, Georgia, Indiana, Kentucky, Maryland, Missouri, Mississippi, North Carolina, New Jersey, Nevada, Ohio, South Carolina, Tennessee, Texas, Utah, Virginia and Washington, company officials said.