Why Car-Sharing Companies Keep Failing

Writing in Next City, Nithin Coca attempts to suss out why car-sharing companies keep going out of business: largely, their for-profit model, which doesn’t lend itself to the type of service coverage they would need to provide. 

According to Coca, “For-profit car-sharing models have a fundamental challenge: They need to set prices high enough to at least break even. Often, that means prices are too high for those in low-income communities, who tend to have less access to cars and public transportation in general.” For this reason, companies have stuck largely to more well-off neighborhoods where residents are already more likely to own cars.

One new California car-sharing service, Míocar, operates in low-income areas supported by a grant from the California Air Resources Board. “It’s also seeing high utilization rates, with cars sometimes booked months in advance.” However, Caroline Jane Rodier, Associate Director of the Urban Land Use and Transportation Center at the University of California, Davis, warns that “Without subsidies, it’s not going to work.” 

If successful, Míocar “could point towards a new non-profit model for car-sharing, where the focus is on equity, access and climate benefits from reduced emissions and fossil fuel consumption.”

Coca points out that ‘free-flowing’ car-sharing systems are thriving in other countries, perhaps signaling a stronger demand in places where car ownership is itself more expensive.