The power of technology has changed the world. Today, you can avail almost any goods and services delivered to you with your smartphone. You can book car services directly from your phone and ride to any location you want. Not just that, but you can also offer your vehicle to renters and generate income.
One such company that allows you to rent your car to people is Turo. In this guide, we will be discussing Turo’s business model and how it generates income.
If you are planning to rent your vehicle on Turo, you might find this article helpful.
What is Turo?
Turo is a reputable peer-to-peer vehicle-sharing platform. It allows people to rent out their vehicles and earn some extra money on the side. It is also beneficial for renters as they can find their desired rides at cheaper rates. This model is slightly different from your regular car-rental apps like Zipcar (read here).
If you have a car that you don’t use often, you can rent it out on Turo and earn some extra cash. You can rent out different kinds of vehicles. From saloon cars to pickup trucks, Turo allows all types of vehicles. You can even rent your luxury car if you want to.
Turo has its services available in countries like the US, the UK, and Germany. You can hire vehicles on Turo at any given time at affordable rates. To use Turo services, you need to be at least 25 years of age. Otherwise, you will not be allowed to hire vehicles.
How does Turo work?
Turo is often compared to Airbnb. It is a simple platform that allows you to rent or hire any type of vehicle you want. Just enter a date and location and start looking for vehicles. You can make your searches more specific by mentioning car models, brands, and types.
Once you enter the parameters, you will be shown a list of vehicles related to your search. Not it’s up to you to choose a car and complete the booking process.
You can either pick up the vehicle from a set location or get it delivered to a pick-up point of your choice. However, this depends on whether the owner agrees to it or not.
The good thing is both the vehicle owner and the customer are protected by various insurances offered by Turo. For example, liability insurance covers damages of up to $750,000. Besides that, you can avail 24/7 customer support as well as road assistance from Turo.
Currently, Turo is available in over 7,500 cities across Canada, the UK, and the US. You can access their service by visiting the official website. Or you can download the Turo mobile app on your phone. The app is compatible with both iOS and Android devices.
Turo Company History
Turo was founded in December 2008 by Shelby Clark. Back then the company was known as RelayRides. It has its headquarters located in San Francisco, California.
Founder Clark wanted to make Turo different from other car companies. Instead of owning the vehicles, it allowed people to rent out their vehicles on the platform. It helped owners to install an unlocking system so that they don’t have to meet the renters.
By the first year of the company’s establishment, it had grown into a community of 50 cars. They had more than 1000+ borrowers in Boston alone. The same year, the company raised $5.5 million in Series A funding which helped them to relocate their headquarters to San Francisco, where they had their secondary market.
The company started flourishing within its two markets. Later in 2011, the platform was boosted by Zipcar’s IPO. To keep the company competitive, Clark raised $10 million in Series A funding. Later he added $3 million more. But soon after, he stepped down from the CEO post to become the Chief Community Officer of the company.
The CEO position was then occupied by Andre Haddad, founder of the iBazar auction site. The company continued to grow under his reign. In October 2011, the company entered a partnership with General Motors. This allowed General Motors to rent out their vehicles on Turo. Not just that, but they also invested $3 million in the company.
This partnership proved to be beneficial for Turo as it helped the company to go national. In March, the announcement was made that Turo services were available all across the United States. This made the company change its business model. Turo decided that it will no longer install its own in-car connected systems in the vehicles. Not just that, but they also got rid of gas cards.
After going through a rough patch in 2013, the company struck a partnership with San Francisco International Airport to provide free parking to customers. The company soon reached a milestone of serving one million rental hours since its inauguration.
In the coming months, the company continued to expand its business. They eventually shifted from hourly rentals to long-term renting periods. However, the company was hit hard during the pandemic when it had to lay off a third of the company’s employees. Not just that, but it also had to stop its operations in Germany.
But Turo was lucky enough to receive $6 million in pandemic-related reliefs. This enabled the company to hire a few of its employees back. By December 2020, it was again back in New York.
Today, Turo is available in 7,500 cities across the United States, the United Kingdom, and Canada. It has over 1,300 models available for the customers to choose from.
Understanding Turo’s Business Model
Turo generates income by charging both hosts and customers. Turo’s business model can be described as an online marketplace for vehicles. It connects car owners and people seeking to rent a vehicle for a limited period.
Turo makes sure that it has sufficient car models available in every city that it operates. The greater choice of vehicles is satisfying to customers as they get to pick a vehicle of their choice and that too at an affordable rate.
Turo has to make itself attractive enough for car owners, so they get the confidence to rent their cars on the platform. Apart from helping car owners make money, the company also provides consultation on how to make the most of their rental program.
Turo has helped many hosts to set up their businesses on the platform. This enables them to rent out multiple vehicles and generate a good income for themselves.
To make the platform safer and more trustworthy for car owners, Turo offers sufficient insurance packages. This covers damages for both customers and hosts. Besides that, the company also runs a background check on the customers before they are allowed to hire vehicles. This ensures that people hiring your vehicle are good drivers.
But there exists a problem with Turo. Many people hire vehicles from Turo for illicit purposes. There have been many such cases in the past where cars have been used for human trafficking, drug smuggling, and other criminal activities.
Despite all the issues, Turo is well-equipped to become the best car rental company. As long as, car owners trust Turo, the company can continue to expand its services and venture into new markets in the future. The best thing about Turo is that it offers vehicles at affordable rates.
Like most other online marketplaces, Turo makes money from various sources. It charges a fee every time there’s a booking. Both car owners and customers pay a fee. Turo keeps 25% of each booking.
Turo Revenue, Funding, & Valuation
According to Crunchbase records, Turo has raised a total of $502.6 million so far. The company has a list of notable investors, which include Manhattan Venture Partners, Allen & Company, IAC, Daimler, Kleiner Perkins, and many more.
In July 2019, Turo revealed its valuation during its Series E funding, when IAC invested $250 million into the business. The company was valued at $1 billion.
In 2020, Turo’s revenue was $149.9 million. However, it also lost $97.1 million over the same period.
Is it worth working as a host on Turo?
Yes, it is worth working as a host on Turo. You will get the results if you put in the effort and rent out multiple vehicles.
Turo offers a great way to generate a side income. The best thing is your vehicle will be covered by Turo’s protection package, so you have nothing to worry about.
Unlike other car rental platforms, Turo ensures safer vehicle exchanges. Not just that, but it also pays for your cost of ownership. But this is only if you select a high rental price.
According to Statista, the number of car-sharing users will increase from 7 million to 36 million by 2025. So if you want to rent out your vehicle and earn some side money, this seems like the best time to do it.
Turo offers a great source of income for hosts. At the same time, it solves the problem of people looking for vehicles to rent. It charges money from both parties and this is where the company’s revenue comes from.