The Breakdown

Explaining Southern California's economy

Daimler's Car2Go comes to South Bay. Will it make drivers ditch their cars?

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What if you could rent a car by the minute and leave it in any parking space when you’re done?

That’s the pitch behind a new car-sharing service, backed by German luxury carmaker Daimler, that launches in the South Bay Friday.

When Car2Go asked Redondo Beach mayor Steve Aspel permission to operate in his city, to say he was skeptical would be putting it mildly.

“When I first heard about it, I thought they were out of their mind,” recalled Aspel.

Then, he began to come around. The company would pay his city so that its 150 cars could occupy any public parking spot without customers having to feed the meter.

“It’s a new concept," said Aspel. "Guys like me, I’m 61 years old, and we don’t think of this sort of stuff. That’s why the world needs stuff like Car2Go. If you notice, the representatives of Car2Go are all young.”

Car2Go’s North American CEO Nicholas Cole isn’t exactly a teenager. He’s 46. But at any rate, he compares his company to iTunes where instead of buying the whole album, you just buy a few songs.

With Car2Go you only rent the car for exactly as long as you need it. When you want to take a spin, open an app on your smartphone, locate a car, and use your membership card to unlock it.

The vehicle is certainly no Mercedes, but it is decidedly European, a tiny two-seat smart car. But what it lacks in size, Car2Go hopes it makes up for in simplicity. Once in the driver’s seat, you check off a series of boxes on a touchscreen, and the road is your’s.

“It asks you to take a look to see there’s no damage to the vehicle and then you remove the key and you’re free to drive as long as you want,” said Aspel, sitting in one of the company's vehicles in Redondo Beach.

Car rental by the minute

Car2Go started in Germany six years ago and came to the U.S. a short time after that, to Austin. It’s now operating in 26 cities, including Portland, Washington D.C., and San Diego. (In a setback, the company pulled out of London and Birmingham last week, owing to a lack of customers)

Car2Go's closest competitor is ZipCar, which was bought by Avis last year, but where Zipcar pioneered the model of renting a car by the hour instead of the day, Car2Go takes it a step further, charging by the minute – 41 cents a minute after a $35 registration fee – which includes gas and insurance. 

Cole says 700,000 customers have signed up worldwide.

“They’re free to rent as long as they want, they don’t need to tell us how long they’re going to drive it, or where they’re going to return it to,” he said.

Ride-sharing companies like Uber and Lyft could be seen as competitors, but Cole prefers to view them as complimentary; Together, they all make it much easier for drivers to ditch their cars than it was a few years ago, before all these services existed.

For vehicle manufacturer Daimler, having a stake in the car-sharing business seems akin to Chevron investing in biofuels; it’s wise to spread your bets across the table.

“You look at the taxis and Ubers of the world and we fit right in there," said Cole. "As we see the densities in these major metropolitan areas, it’s just another alternative to getting people from point A to point B at their convenience”

Susan Shaheen, who co-directs Berkeley’s Transportation Sustainability Research Center, is conducing a federally-funded study on whether Car2Go makes people really give up their cars.
She’s already seen a sizable impact from Uber and Lyft.

“Our research actually documents that one car-sharing vehicle takes nine to 13 vehicles off the road, and that’s a notable number," Shaheen said.

San Diego resident Luann Gould says neither she nor her husband own a car; They bike most of the time, or take transit. But sometimes they need to drive, so they use ZipCar for longer trips and Car2Go for shorter ones.

“It’s especially helpful to have Car2Go available when situations arise such as weather, and also for doctors appointments, grocery shopping and errands that are harder to do on a bicycle,” said Gould.

Company still negotiating with Los Angeles 

On Yelp, Car2Go gets a modest three stars in San Diego, with lots of complaints about billing errors, bad customer service, and cars not being available when you want them. (Reviews in other cities are also mediocre)

Said one user:  "The concept is fantastic. The execution is not."

Said another: "The idea sounds great and after weeks of avoiding car2go I 'give it another try' and every time its the same thing. Hassle to find, hassle to drop a car off and hassle with billing."

Another problem: Despite advertising an L.A. launch, for now Car2Go will be limited to a 28 square mile area in the South Bay. You can drive the car anywhere, but you have to leave it in cities where the company has struck deals: El Segundo, Hawthorne, Torrance, Hermosa Beach, Redondo Beach and Lomita.

Car2Go says it’s negotiating with the city of L.A., but hasn’t yet been able to strike a deal.

In that sense, Car2Go couldn't be more different than ride-sharing companies, which usually go into new cities without regulatory approval.

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