Turo Wants All Your Rides

A year and a half into the pandemic, a lingering chip shortage has made it difficult to expediently buy a new car. Because rental cars sold off vehicles last year amid plunging demand and auto production is now hampered, traditional rentals remain scarce and expensive. And with driver supply still below pre-pandemic levels, Uber is no guarantee.

But Turo has another option for those in the U.S., Britain or Canada: renting someone else’s car by the day. There are other car-sharing companies out there, but Turo says it is the world’s largest, offering over 450,000 vehicles across more than 850 different makes and models in over 5,500 cities world-wide. This year especially, Turo has been used by its guests to take long vacations or to test drive different vehicles. In the San Francisco Bay Area right now, for example, a guest could reserve a Tesla S, 3, X or Y for tomorrow. Many hosts will even deliver them to your home for a fee.

Like

Airbnb,

ABNB 0.06%

Turo makes money by taking a cut from both the host and the guest. For hosts, the model can be quite profitable, though not without risk. According to Turo’s website, hosts can choose to earn between 60% and 90% of bookings, based upon the insurance protection plan option they choose. Choose the 60% plan and Turo will pay your eligible damage costs with no deductible through an insurance provider such as Liberty Mutual; choose the 90% plan and you are looking at a multithousand-dollar deductible.

Turo is known for facilitating bookings between an individual car owner and a renter, but its hosts can also build small businesses on its marketplace. Turo’s website says hosts with a fleet of nine cars can earn an average of over $90,000 a year. Compared with Airbnb, a small business on Turo seems more achievable.

Turo had a tough spring of 2020. The Wall Street Journal reported the company laid off one-third of its workforce at the end of March and in April it cut marketing spending to zero, where it remained for the duration of the second quarter. But as consumers began to want to travel again, business came back better than ever. The third quarter of last year marked Turo’s first profitable quarter and, while the company is currently in a quiet period ahead of its initial public offering, it has previously forecast achieving full-year profitability before interest and taxes next year. As of the beginning of January, Turo had been expecting to finish 2020 with record revenue of over $150 million.

How sticky Turo’s business will be post-pandemic remains to be seen. Public transportation is likely to make a comeback and ride-share companies, which have also been getting into the rental-car game, will continue to benefit from those who simply can’t or don’t want to drive themselves. Meanwhile, it isn’t clear the effect autonomous vehicles might have on business longer-term.

Still, some big investors are taking big bets. Turo hasn’t recently commented publicly, but PitchBook shows the company as having been valued at $1.2 billion following a financing back in 2019. That round was led by holding company

IAC/InterActiveCorp.

Since Turo’s blog post on the financing, the company seems to have since added roughly four million people to its community of hosts and guests and more than 50,000 vehicles to its marketplace. In its second-quarter shareholder letter, IAC said Turo had meaningfully exceeded its expectations at this stage of its investment.

Bloomberg Second Measure data show that relative to Getaround, Zipcar and traditional rental-car companies such as Enterprise Holdings, The

Hertz Corp

oration and

Avis Budget Group,

Turo logged the most growth in average transaction value in June, up 82% year over year and more than doubling since June 2019.

Rental-car businesses have been wrecked and refurbished of late. After declaring bankruptcy in 2020, Hertz saw investors bid to revive it amid rebounding demand this year. Meanwhile, Avis Budget’s stock is up over 230% in the year to date, coming off what its chief executive called the most difficult year in its history.

Turo is also gaining speed. The question is just how much gas is left in the tank.