If you haven’t heard of it before, it’s just what it sounds like—a service where you rent cars instead of buying them. Pretty cool!
GetAround is an online car-sharing company that lets people share their cars with others who need them. It’s similar to Uber but cheaper. Car owner makes money by renting out their vehicle for a few hours at a time.
One of the most important questions when investing in a company is, “How does it make money?” If you can’t answer that question, then you won’t be able to make an informed investment choice.
How does Getaround earn income? What type of revenue streams does Get Around have? How does the company’s financial structure work? How much do they earn per car, and how has that changed over time? These are just some of the questions we answer below.
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About Getaround
Getaround is a new peer-to-peer sharing platform where people can rent out their vehicles for short periods of time. Unlike traditional rental services such as ZipCab or Turo, Getaround allows users to share their vehicle without having to pay any fees. Users simply list their vehicle for sale and then set a price they’re willing to accept per mile traveled. Anyone interested in renting the vehicle can contact the user via email or phone call.
So, how does the Getaround platform make its revenue? It’d be easy to assume that the company makes its income by charging vehicle owners for the use of their cars. However, it seems that the company actually makes its revenue through advertising.
Getaround operates on an online marketplace platform model by matching people who need cars with people who own cars. It charges a 40 percent commission fee for every rental booked through its platform.
Getaround gets its income from taking a large percentage of the rental fees. In fact, the fee for using Getaround is 40%, which means Getaround makes a lot of money without having to provide any services.
Business Model of Getaround
Getaround’s business strategy is revolutionizing the automotive industry and threatening traditional vehicle hire firms. The company has achieved remarkable success by disrupting the vehicle hire market with a P2P business strategy that enables owners to earn additional revenue from their cars while providing renters the ability to use their cars on demand.
GetAround has two main user groups: people who rent cars and people who own them.
For car renters, they use an app to locate available vehicles near them. These vehicles are often cheaper than traditional car rentals.
For the driver, they sign up through an app on their smartphone. Once signed up, drivers simply open the app and select the nearest vehicle. Drivers do not need to register any vehicles. They simply pay the fee per hour and drive off.
GetAround provides an app for both renters and owners. It also provides the hardware necessary to safely transfer control of cars between renters. Finally, GetAround earns a substantial commission from each transaction.
For Getaround, their business model offloads many traditional rental car expenses by not having to rent cars from companies like Hertz, Enterprise, Avis, etc., and instead renting cars directly from individuals who own them.
Getaround charges a fee for each vehicle transaction, which ensures that they don’t lose money on their transactions.
However, GetAround is still building. In 2018, they acquired Divvy, which allowed them to move into Europe. While their valuation has grown to almost $1.7 billion dollars, they’re still generating revenues under $100 million per year. They remain firmly in the startup sector.
How Does Getaround Make Money?
Getaround earns revenue from two main sources: start-up costs and rental costs. These are its primary ways of earning revenue. It has some additional, incidental sources of income including operational fees and pass-thru fees.
Startup Costs
For every car, there’s an initial $100 startup fee. Then there’s a monthly data subscription fee of $20.
A vehicle owner who wants to set up a car for rent would need to buy a Getaround Connect device at an initial cost of $100 and then be charged $20 per rental period.
As the vehicle needs to be tracked automatically, you need a data plan for that.
If an auto dealer sets up ten vehicles for his clients, he pays them $500 upfront and then charges each client $100 per month. So, the cost increases quite rapidly.
According to Getaround, by 2019 alone they had already accumulated 20,000 cars on their platform. If we assume that each car costs them $5 per month for data service, then that means that they were earning an average of $100 per car every month.
As GetAround grows, these expenses cover the growth and hopefully help the company remain scalable.
Rental Costs
Renting cars through services like Uber and Lyft is where most people rent their vehicles. When renting from these companies, they take a large percentage of the rental cost. However, when using services like Airbnb and HomeAway, there’s no middleman between renters and owners. As a result, the renter gets to keep 100% of the rental cost.
Because Getaround doesn’t need to maintain a large number of cars, its costs can be quite low.
They charge for both rental fees and insurance.
- Booking fees – These are paid directly to the user by the company (and not promotional codes).
- A licensing charge – Every driver must be charged for their driving license at least once.
- A younger driver would be required to pay an extra charge because they’re considered to be at greater risk than older drivers.
These fees go directly to Getaround and cover their administrative costs, risk, and insurance. They don’t show up on the driver’s profit margin.
Since there are so many fees associated with Getaround, they actually make more money than the 40% they take out of each ride. For example, the cost of the trip will be paid by Getaround and not become a portion of the driver’s income.
At the same time, GetAround has been growing rapidly and has spent a lot of time and resources investing in its infrastructure.
Fees Charged
There are also additional costs associated with using Getaround’s services.
- Cancellation fee – If you cancel within 24 hours of the reservation, then you pay 50% of the total cost of the rental. However, the hosts might get some money from this too.
- Cancellations: This varies by company but typically ranges between $25-$100. These are charged because of opportunity costs and they’re given to companies like GetAround to cover the customer’s inconvenience.
- When an incident occurs, Getaround will charge 100$ for claims. Incidents can happen when there are disagreements between guests and hosts.
- Cleaning fees – GetAround may charge up to $100 for a cleaning service. This is at GetAround’s sole decision.
- Mileage rate – These rates are charged for exceeding the allotted miles.
- Returning a vehicle incorrectly – if the vehicle wasn’t returned correctly, there is an additional charge of $50.
- Lost connect fees – If a car owner has lost their Getaround Connect device and hasn’t paid for an additional one, they must pay $2,500.
- Reinstallation Fee – If another Getaround Connect vehicle needs to be re-installed, it will be $100.
- Service charges – when terms of services are violated, it may cost you between $50 and $250. These service charges can be quite expensive and so they discourage people from violating them.
There are also fees that guests might incur from other guests, including key fees, fuel fees, power bills, and more. Those fees aren’t included in Getaround’s revenue plan.
There may be some confusion regarding the actual cost of insuring your vehicle via Getaround. However, there are probably third parties involved who provide the service at a reduced rate.
It is very likely that Getaround makes money from insurance, but the guests can decide if they want them or not.
Drivers who already have insurance through their current insurance plans won’t need any additional insurance policies.
All prices listed here are in US dollars. However, the European version of GetAround has very similar pricing, so they will simply be adjusted based on where you live.
Getaround Funding, Valuation & Revenue
Getaround has raised a total of $6 billion in funding since its inception. It grew significantly during COVID.
It has just secured another round of funding worth $140 million. GetAround could still raise more funds as it’s still classified as a growing company.
GetAround is backed by SoftBank and has a valuation of approximately $1.7 billion dollars. It has about five million active drivers throughout North America and Europe.
After the acquisition, Getaround expanded its service into Europe.
This acquisition was one of Getaround’ss broader expansion strategies to create the world‘s largest and most trusted online car rental platform.
It’s not necessarily focused on revenues but rather on growth.
Is Getaround Profitable?
GetAround is currently unprofitable, but its CEO Sam Zaid predicts that it will become profitable very soon. The startup has been aggressively expanding its market share in new countries and growing its global reach.
Conclusion: How Does Getaround Make Money?
Here we are at the end.
To summarize, Getaround is an app designed to help people share their cars with one another. Renters can find the best car rental deals and book their cars directly through the app. In addition, drivers who borrow cars can also earn a commission on every borrowing deal they make.
Getaround lets individuals rent out their personal vehicles instead of renting out an entire room in their house. It’s similar to short-stay rental services such as Airbnb.
At this point, you should know how Getaround makes its revenue. It’s not exactly like the traditional car rental company that charges exorbitant fees to its customers.
This allows for easier car ownership and enables users to be more environmentally friendly by reducing their carbon footprint. Getaround uses car data better because they have access to know the car’s status at all times as long as they are using it.
We’ve learned how Getaround makes carsharing profitable. It’s no surprise that Getaround has been doing so well. Not only is it convenient, but it’s also cost-effective and a great method for making some extra cash from your idle vehicle.
They make money because their service scales well and they continuously improve their service by taking customer feedback into consideration.
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