GM Boosts Carsharing with RelayRides

Businesses like exchange networks and carsharing are gaining more popularity as consumers realize that what they really want is not the product, but the service.  Services like Neighborgoods are starting to thrive as people realize that if they are only going to use a power drill an average of 12 minutes a year, they should track one down from someone down the street.  And as for bigger and more powerful things, shared car services like Zipcar have found success with hourly or daily car rental services that cover the wheels, gas, and insurance.

Now car owners realize that their hefty monthly payments and insurance bills are going towards something that sits for hours at a time--but have an option instead of their cars sitting idle in a parking lot.  To that end, RelayRides allows car owners to loan out their cars and score some extra cash.  Its business model is resonating with investors and automakers.  First, the firm has raised about US$15 million from investors this year.  Second, General Motors (GM) announced an exclusive partnership with RelayRides earlier this month that will allow borrowers to unlock and access others’ cars with their cell phones using GM’s OnStar system.  For now the service is available in San Francisco and Boston, but count on RelayRides to expand soon.

RelayRides is intuitive and easy to use.  The car owner sets his or her own rates, which can be as low as $5 an hour.  Borrowers can start searching for cars in their local area after filling out a profile.

Before car owners are scared off by the thought of strangers using their cars, there are two things to remember:  1) This is the way the world is moving 2) RelayRides provides a $1 million dollar insurance policy.  RelayRides requires a safe driving record, and should a member ding (or worse) a car and self-report, a $100 reduction is applied towards the deductible.  Early returns are rewarded with a reduced rental fee, and clods who leave a mess are tagged with a cleaning penalty.  For owners who fear their shiny new sports car (or electric vehicle) will be taken for a joy ride up and down the Pacific Coast highway, per-mile charges are tacked on after the borrower passes an hourly or daily maximum.

In sum, businesses like RelayRides have benefits all around.  People may get to know their neighbors (or confirm what they assumed about their neighbors); car owners make a little money while borrowers save cash; and according to RelayRides, one shared car offers the equivalent of taking 14 others off the road.  All of these shared services and exchange networks, like Zipcar, Airbnb, Neighborgoods, and RelayRides, will evolve and endure their share of growing pains.  But watch for these companies to grow and be imitated; and offering value instead of those unmentioned “deal of the day” outfits that have long peaked.

Leon Kaye is a consultant, writer, and editor of GreenGoPost.com and also contributes to The Guardian Sustainable Business; you can follow him on Twitter.  He lives in Silicon Valley.