Features

On-demand car rental: Streets ahead

26 Feb 2015 by GrahamSmith
Mobile technology is driving change when it comes to renting vehicles. Jenny Southan finds out about on-demand services that let you grab a car on the street We’ll make driving so cheap only the rich will buy cars.” So said Sixt managing director Alexander Sixt in reports last December. It was a bold statement that was timed with the London launch of the company’s “free-floating” car rental concept. Drive Now, as it is called, is a joint venture with BMW that was originally launched four years ago in Munich. Since then, it has been rolled out across Berlin, Dusseldorf, Cologne, Hamburg and Vienna, and offers a handy alternative for both locals and visitors. What’s all the fuss about? The idea is to leave several hundred cars parked around a city for people to pick up and drop off whenever and wherever they like, within a certain boundary, and pay by the minute for the time they are using it. (Similar car-sharing schemes require you to return the vehicle to the same place you found it, so A to B trips are not possible.) For short journeys, it is far more convenient than conventional car rental set-ups, whereby you have to book in advance and go to an office to pick up your vehicle and deliver it back. It’s also more cost-effective than taking taxis – in London, Drive Now is half the price of a black cab (39p per driving minute and 19p per parking minute with a cap of £20 per hour). That said, it is probably the same as hailing an Uber car via its app, which prides itself on under-cutting local taxi firms. I want to try it out, but haven’t yet passed my driving test, so I meet up with Joseph Seal-Driver, director of Drive Now UK, outside Hackney Central station to go for a spin. At this time in early February, Sixt had just over 200 BMW 1 Series and Mini Countrymans available in three adjoining boroughs in the north of the city – Islington, Hackney and Haringey, covering 60 sq km. By the time you are reading this, it will be extended eastwards to the whole of Waltham Forest (E17), with the fleet upped to 300 cars by the summer. I immediately spot my ride in the car park outside the station (the Drive Now blue and white logo is above the back wheel), and Seal-Driver is standing next to it with his smartphone at the ready. He has already registered online for a one-off fee of £29 and uploaded a copy of his driving licence, and because he has the app on his phone, he can see where all the nearby cars are on an interactive map. He taps “reserve” on the screen and holds the handset against the reader on the windscreen to unlock the vehicle. “Once you have used Drive Now it is really familiar – it is exactly the same in Germany as it is in London, except for which side of the road you have to be on,” he says. I watch as Seal-Driver puts his PIN code into the touch-sensitive computer screen on the dashboard, which activates the car. All he then has to do is push the button by the steering wheel to start the engine – no keys are required. The screen shows a map with the Drive Now zone in blue – you can leave the perimeter but you must return to drop off the car. Packages for longer journeys can be bought (£240 for up to 48 hours), plus £11.50 if entering the congestion zone. Vehicles feature BMW’s Connected Drive system, which has satnav, digital radio and parking assist technology, real-time traffic information and Bluetooth/USB connectivity. All cars are automatic, and if there are any problems with the vehicle or damage when you find it, you can call the Sixt control centre through the built-in hands-free system. Another good thing is you don’t have to pay for fuel, but if you find the tank is more than 75 per cent empty you will need to fill it up and pay with the fuel card provided. If you want to park up for a while to go to a meeting, you can select parking mode and no one else can take it. Alternatively, you can end your journey and find another car when you are ready to hit the road again. “Most people use us either for 20 minutes or three hours,” Seal-Driver says. I ask what would happen if I accidentally left my suitcase in the boot. “Just give us a call and we will send our service team to retrieve it and keep it in one of our Sixt offices, or if you were nearby we would block the car so no one else could use it so you can go back to it,” he says. The service now has more than 400,000 members (375,000 in Germany). Nico Gabriel, managing director of Drive Now International, says: “Our shareholders want to see ten European cities and 15 in the US by 2020. We have a sister company in San Francisco that is trialling electric vehicles and we are looking to bring this offering to a number of European cities as well. London will receive a fleet of eco-friendly BMW i3s this spring.” What’s interesting is that this kind of car rental scheme has been tried in the UK before but ended in failure. After successfully starting up in the German city of Ulm in 2008, at the end of 2012 Europcar and Daimler launched Car2go in London (and Birmingham in 2013), with Smart cars available for 35p a minute, similarly free-floating in certain areas within the city’s confines. However, it was forced to withdraw its activities in the UK last May and released a statement saying: “We will continue to observe the UK market for cultural changes towards the free-floating model.” What went wrong? Drive Now's Seal-Driver suggests that the boroughs all need to be next door to each other and Car2go hadn’t managed to get a big enough area with universal parking conditions (of 33 London boroughs, it had only managed to secure Islington, Sutton and Newham). Despite Car2go’s failure in the UK, it was announced in December that it was the largest car-sharing company in the world, with one million members, and 12,000 vehicles in 60 cities. It also revealed that the average rental time in North America was 19-25 minutes, confirming that people were turning to these services for short trips across town. Avis, too, has recognised the potential for on-demand rental, buying US car-sharing giant Zipcar (founded in 2000) in January 2013 for US$500 million. At the time, it had 767,000 members – this has now grown to 850,000 in countries including Canada, the US and Spain. Hourly rentals cost £6, while membership starts from £6 a month or £60 a year, and vehicles include VW Polos, Golfs and Audi A3s. In the UK, it is available in London, Bristol, Oxford, Cambridge and Maidstone – the company says 4.6 million people in the capital are within a ten-minute walk of a Zipcar. It most recently rolled out operations in Madrid and France. Originally branded as Connect by Hertz, Hertz 24/7 was launched in 2008 in London, New York and Paris. The secret to its success seems to be partly down to the fact that cars have to be returned to the same dedicated parking bays that they were collected from. This means the company can “easily flick from 24/7 to traditional car rental mode according to demand”, says Neil Cunningham, Hertz UK general manager. At the moment, Hertz has more than 50,000 24/7 cars in seven European countries, as well as Australia and the US. Its RFID key fob entry system is being replaced with a PIN system like Drive Now’s but, unlike its competitor, rentals are charged by the hour (from £5). Cunningham says: “We are replacing the bricks and mortar and the people in the traditional rental model with technology. What it allows is for us to place cars and vans in popular, convenient places. It lends itself well to shorter rentals, and for us it is extremely efficient as well, because it doesn’t require staff.” It won’t spell the end of car rental offices, however. “There will always be people who fly into Heathrow wanting maps and directions, and to use the loo and speak to somebody, or have special requests or unusual payment methods,” he says. “But it will probably replace the bricks and mortar city-centre locations.” Drive Now’s Gabriel has a different view: “When we started, [the service] was used more by local people doing shopping at the weekend or going to Ikea. But in Munich, with availability now at the airport, there is a growing number of corporate accounts coming in, especially for smaller companies that don’t have accounts with conventional car hire companies. “A taxi from Munich airport to the city centre costs about €65 but a Drive Now car will be about €25,” he says. “There are a growing number of SMEs that see this as a good alternative.”
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