Car Sharing Gets Profitable

  • Through car sharing programs, users rent cars on an hourly basis. (Photo courtesy of Zipcar)

There’s nothing unusual about renting a car by the day.
It’s commonplace at airports nationwide, but for most Americans,
renting a car by the hour is a strange notion. Renting a car by the hour
is often called “car sharing.” Car sharing is good for the environment
because its users only get the car when they need the car. They usually
take buses and bikes to get around. Car sharing has caught on in a few big
cities on the east and west coasts. That’s largely due to the efforts of a pair
of private companies, Zipcar and Flexcar. Now those firms are poised to
expand their operations. The Great Lakes Radio Consortium’s Todd Melby
has this report:

Transcript

There’s nothing unusual about renting a car by the day. It’s
commonplace at airports nationwide, but for most Americans, renting a
car by the hour is a strange notion. Renting a car by the hour is often
called “car sharing.” Car sharing is good for the environment because its
users only get the car when they need the car. They usually take buses
and bikes to get around. Car sharing has caught on in a few big cities on
the east and west coasts. That’s largely due to the efforts of a pair of
private companies, Zipcar and Flexcar. Now, those firms are poised to
expand their operations. The Great Lakes Radio Consortium’s Todd
Melby has this report:


For the past six months, a nonprofit called the Neighborhood Energy
Consortium has had the Minneapolis/St. Paul car sharing market to itself.
The non-profit group has raised about $450,000 to buy 12 cars. Those
energy-efficient hybrids have attracted about 140 people to join the
HourCar program. That’s Hour with an “H.”


(Sound of bus stop and rumble of passing truck)


On this Saturday morning, Mary Solac is shivering at a bus stop, waiting
for a ride to go pick up her HourCar. Despite the obvious inconvenience,
she says it’s worth it.


“You don’t have to worry about insurance. You don’t have to worry
about gas. It’s like okay, I’m paying what I’m paying and I don’t have to
worry about fixing the blasted car either.”


After a short bus ride, Solac does have to worry about more mundane car
concerns… such as scraping the ice and snow off the window.


(Sound of ice/snow scraping on the windshield)


To date, Solac’s only choice for renting a car by the hour has been
HourCar. That’s about to change.


The nation’s largest car sharing company — Zipcar of Boston — is
invading HourCar’s Minneapolis turf. Nearly 50,000 people now take
turns driving about 500 Zipcars, mostly in Boston, New York and
Washington, D.C.


Scott Griffith is the CEO of Zipcar.


“Over the last several years, we’ve really focused on those cities and getting
them past profitability, past the break even point, to prove that at the
metro market level, that we can make money in this business.”


That track record enticed a venture capital firm to invest $10 million in
Zipcar.


Another big new company is also getting an influx of cash. The nation’s
second-largest car sharing company — Flexcar of Seattle — is about half
as big as Zipcar. It too has a new investor: AOL Founder Stephen Case.
He rented a Flexcar, liked it and bought the company.


In Chicago, Flexcar has paired with a local nonprofit to put 47 cars on
the street.


Zipcar, meanwhile, is also trying to get into Chicago. It wants
government agencies in the Windy City to commit to using its cars
before entering the market. The company hopes that happens sometime
this year.


Business professor Alfred Marcus at the University of Minnesota says it’s
not unusual for emerging businesses to seek government help like this.


“To get this sector going, to stimulate it, it makes sense for their to be
some public involvement, but you would hope this could take off on its
own. I think this is transitional – these public and private partnerships,
and that’s very typical when industries start.”


In Minneapolis/St. Paul, the University of Minnesota is guaranteeing
Zipcar a $1,500 per month per vehicle subsidy, but once Zipcar meets the
$1,500 minimum, that subsidy goes away. Zipcar says it expects to do
just that in three months.


At the moment, Zipcar is growing fast. It had revenues of about $15
million in 2005. CEO Griffith says it expects to double that this year, but
Alfred Marcus with the University of Minnesota says over the long-term,
Zipcar faces big hurdles.


Zipcar has only had success in large, densely-populated cities. Its target
market is young people without cars who are highly price sensitive, and
then there’s the question of where to keep the cars. They have to be
conveniently located to the people who might want to use them.


Marcus says that if these start-ups continue to grow, someday they might
be gobbled up by bigger companies.


“The ultimate aim of Flexcars or Zipcars may be to build up a fringe
business, get it going and have a rental car company buy them or have even
have a conventional automobile company by them.”


But the car-sharing company owners say they have other plans. Zipcar
boss Scott Griffith says he’s working on a 10-year plan to make Zipcar an
international company. Flexcar owner Stephen Case says he bought that
firm “to build it” and not to “flip it.”


For the GLRC, I’m Todd Melby.

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Wind Turbines Stir Up Neighbors (Part 2)

Most people think renewable energy is a good idea. It’s better
than burning fossil fuel to create electricity. But “green energy”
alternatives
can be controversial. Windmill farms are springing up all across the
nation.
Some people think the windmills are eyesores. But others say windmill farms
can help preserve the agricultural landscape by supplementing the income of
farmers. In the second of a two-part series on wind energy, the Great Lakes
Radio Consortium’s Linda Stephan reports:

Transcript

Most people think renewable energy is a good idea. It’s better than burning fossil
fuel to create
electricity. But “green energy” alternatives can be controversial. Windmill farms
are springing
up all across the nation. Some people think the windmills are eyesores. But others
say windmill
farms can help preserve the agricultural landscape by supplementing the income of
farmers.
The Great Lakes Radio Consortium’s Linda Stephan reports:


For 30 years, Matt Mauer raised crops and livestock on his farm about 10 miles from
the Lake
Michigan shoreline. Today, he’s in his backyard looking at the land now farmed by
his daughter
and son-in-law. Standing there, he feels a crop they’re not harvesting.


“The good Lord makes it windy all the time for us, so let’s use it, you know.
Because I’m like
everybody else. When I get up in the morning, I want lights.”


Mauer’s hoping to put four wind turbines on his family’s farm near Ludington,
Michigan. That
would power about 24-hundred homes. Nearby, a renewable energy company’s working with
other farmers to build a hundred turbines in the area. Mauer says many of his
neighbors want in
on the deal because they think wind energy could help save their farms.


“It’s hard to make a living just farming right now. And I consider the wind one of
the crops that
we could harvest. It will help keep farmers on the land. Like if, in this place, if
we could get
seven–thousand dollars a year, six-thousand dollars a year for four of them, that’d
make it a hell
of a lot easier to keep the people here and farm.”


The state government’s backing similar projects. It’s training financial advisors
to show farmers
how they can turn a profit with windmills.


But not everyone likes the idea. Some people who live in the area around the
planned windmills
say they’re worried the towers would destroy the region’s charm. That’s linked to
property values
and to tourism. And they don’t like the size of the proposed windmills. Each one
would be four-
hundred feet tall. The blades would have a diameter nearly as long as a football
field.


It’s a story that’s heard in many places. Cape Cod, Massachusetts, the prairies of
Illinois, and
around the Great Lakes. For example, a Michigan couple who wanted large-scale
turbines on
their property ended up losing a court-battle against local government that opposed
the plan. And
two turbines already in place in Mackinaw City – between Lake Michigan and Lake
Huron –
have some unhappy neighbors as well.


Thomas and Virginia Alexander’s home is about 15-hundred feet away from the windmills.
They’re in their eighties and they both wear hearing aids… but even without them,
they say the
windmills are loud…


Tom Alexander: “There’s things about it we don’t appreciate, at times the noise –
not always –
depending upon the wind and the direction.
Virginia Alexander: “Yesterday. Very noisy yesterday. The wind was high and they,
you could
really hear them.”
Tom Alexander: “Just a continual swish, swish, swish, swish, swish.”


Windmill developers say the sound is no louder than normal speech. But this noise is
different. It
goes beyond the frequencies of normal speech. The sound can travel long distances
through both
the ground and the air. They keep Virginia Alexander awake some nights.


Tom and Virginia Alexander’s son Kelly lives next door with his family. He calls
himself a
windmill victim. He has this advice for others:


“Don’t let them go in your backyard. There are places they can go. You don’t just
put those in
somebody’s backyard. I don’t think it’s right.”


A lot of people agree with the Alexanders. Even wind energy boosters concede that
location is
key to successful projects. David Johnson heads up the program for the state of
Michigan that’s
encouraging farmers to allow windmills on their land. He says turbines should be
constructed
where there’s lots of wind and few neighbors. But he says when people say ‘no’ to
windmills,
they should consider the alternative.


“So, does that mean that you should build another big coal-fired plant? Is that the
preferable way
of doing it with the global warming impacts and the mercury pollution and so on that
go with
that? Is that the choice that the public wants to make?


States across the nation are struggling to find the right balance between clean
energy and the
beauty of an uncluttered landscape. Few regulations are in place right now. More
and more,
communities will be facing the decision of whether clean energy and keeping farmers
on the land
is worth the price of adding wind turbines to the scenery.


For the Great Lakes Radio Consortium, I’m Linda Stephan.

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