The strategic investment in a peer-to-peer car rental company is expected to help ease a shortage of vehicles throughout New Zealand according to a leading tourism operator.
Jucy CEO Tim Alpe says the company has adopted a new business model to help meet the shortfall and expand their existing fleet – without the need to purchase more vehicles.
As part of this new strategy Jucy has acquired a 50 percent stake in YourDrive, the country’s largest peer-to-peer rental firm which connects private vehicle owners with renters; managing the financial transaction and insurance on their behalf online.
Alpe says the vehicle rental market in NZ is highly seasonal and there are key geographical areas where demand is regularly outstripping supply.
“We are currently turning away 20-30% of our customer orders every day – mainly because we don’t have a car in the right place at the right time. We will be able to now channel this surplus demand into the YourDrive network,” he says.
Alpe says peer to peer vehicle rentals work in a similar way to Airbnb’s use of vacant rooms.
“Car ownership is inherently inefficient and is traditionally seen as a sunk cost with most of us driving for on average for an hour a day, this new model allows owners to derive a revenue for the remainder of that time.
“The peer-to-peer model helps maximise the use of the resource in an environmentally and financially sound way. It is estimated that for every car that is shared, it takes ten more off the road,” he says.
Alpe says there is also a growing secondary market made up of domestic customers who don’t own a car of their own, but want the flexibility of occasionally having access to a vehicle.
“The YourDrive acquisition will allow us to not only expand our fleet overnight but will also make vehicles available at a suburban level,” he says.
Alpe says ironically improvements in public transport infrastructure increase the demand for car rentals.
“With more consumers relying on trains, buses, cycling and even walking to meet the bulk of their transport needs, the need to own a vehicle begins to decline.
“Although public transport can meet your needs most of the time, not owning a car can be limiting if you want to get out of the city on the weekend for example.”
Alpe says Wellington is the biggest market for peer to peer rentals – in part due to it’s well established public transport network.
Around 70% of YourDrive customers are Kiwis with Australians the next largest demographic.
Alpe says that even with this new acquisition they will be unable to meet demand in all areas of the country.
The demand is often seasonal and it wouldn’t be financially feasible to expand our fleet for a short space of time – however this creates the perfect opportunity for local residents to make their cars available.
Alpe says they are now offering a guarantee of a minimum $1500 in rental returns for every six months for each car that is made permanently available to them.
He says YourDrive has proved popular and is growing at around 20% per month and they expect it will add another 1,000 vehicles to JUCY’s existing fleet of 4,000 over the coming year
“YourDrive will help fill a number of gaps in the market – particularly in the regional areas; effectively putting creating a virtual rental depot with multiple collection points in every neighbourhood.
“One of the barriers in renting to domestic customers is that they need to travel from their home to where the depot is. YourDrive means a rental car will be in many cases just streets away, says Alpe.
He says at the same time, traditional rental car companies create spaces for ‘micro renters’ to fill; such as having minimum seven day hire periods for larger passenger vehicles.
Alpe says that YourDrive can offer cars on a daily or even hourly rate – and provides for flexible agreements between the two parties.
He says that the new fleet will be far more diversified offering everything from a seven series BMW through to a scooter as well as small trucks suitable for moving house, and even camper vans and motor homes.
“Our aim is to become the go to market for occasion based use rentals – this could include small trucks for moving house or a more premium or classic car for use as a wedding vehicle”
Alpe says that the financial benefits for leasing out a spare car proving popular with vehicle owners.
“One YourDrive customer has already generated more than $8,000 in revenue over the past year.
Alpe says the risk of damage by renters is low, with less than 1% of the transactions to date resulting in a claim for repairs – and all of these under $1000 and fully covered by YourDrive’s comprehensive insurance policy.
“The next stage for the service will be the development of Jucy’s managed service where for example you might drop your car off with YourDrive whilst you are overseas and instead of paying to store it, you would derive a rental while you were away,” he says.
Founder of YourDrive Oscar Ellison says he is excited about the potential the new strategic partnership offers.
“The opportunity to partner with Jucy will provide a new customer base and a further incentive for Kiwi car owners to become part of the sharing economy,
In addition to providing scale, we have the chance to rapidly transform the traditional car rental market by removing many of the supply constraints that exist in New Zealand,” he says.