Teaming up with the Joneses

WHEN eBay, now the world’s biggest auction website, went online in 1995, many expected it to fail. Why would anyone buy used items from perfect strangers? Two new services—WhipCar, which was launched in London on April 21st, and RelayRides, which will start up in Boston, Massachusetts, early this summer—will face similar scepticism. Both aim to get car-owners to rent their vehicles to strangers when not using them themselves.

At heart, both offerings are online exchanges. Car-owners and drivers register, contact one another through the site and agree to a rental contract. To ensure that both parties are trustworthy, WhipCar asks, among other things, for details of both the rented car’s registration and the renter’s licence, and checks them against official data. It also provides insurance for the duration of the rental and a replacement car if there is an accident. In addition to these measures, RelayRides only accepts cars that have gone through a safety check and installs a device that allows them to be unlocked with a special card. This way, owners and renters do not have to meet, as they do with WhipCar.

Both firms allow owners to set the price, taking a 15% cut. Even with the insurance premium and other fees added in, the firms expect the rental price to be lower than using a conventional car-rental firm or an urban car-sharing club. WhipCar provides suggestions for the prices different cars might fetch in various neighbourhoods. Shortly after the site went live an Audi A4 in central London cost £10 ($15) an hour or £41 a day.

Will the idea take off? The main hurdle will be car-owners’ reluctance to share so personal a possession (and the requirement to keep it clean). The firms must also overcome a problem all exchanges face: attracting enough members to make the service useful.

Yet cars are expensive, underused assets. On average, a British car is driven for less than an hour a day but costs about £5,500 a year to own—a sum many would love to reduce in these straitened times. Drivers, for their part, are ever more willing to share a car. By 2016 some 4.4m Americans will be members of a car-sharing club, nearly ten times as many as today, projects Frost & Sullivan, a consultancy. On April 21st two big clubs, Britain’s Streetcar and America’s Zipcar, announced that they would join forces. Pooling assets, it seems, is all the rage.