Customers say Getaround has been slow to pay repair bills(bloomberg.com)
bloomberg.com
Customers say Getaround has been slow to pay repair bills
https://www.bloomberg.com/news/articles/2020-04-03/they-rented-their-cars-out-online-then-things-fell-apart
65 comments
If you do the math in theory, it sounds like an excellent idea, and the various startups tend to portray it as risk-free to attract providers.
Of course, practice looks different, and many start-ups/gig-economy/P2P lending/... prey exactly on people who don't recognize the difference between theory and practice.
Uber looks like a great thing if you only count gas money not depreciation of your car.
That camera lending startup that made the front page a couple times ago looks like a great idea until you realize that despite their assurances which sound like you're covered, you're SOL if someone just steals your camera.
Of course, practice looks different, and many start-ups/gig-economy/P2P lending/... prey exactly on people who don't recognize the difference between theory and practice.
Uber looks like a great thing if you only count gas money not depreciation of your car.
That camera lending startup that made the front page a couple times ago looks like a great idea until you realize that despite their assurances which sound like you're covered, you're SOL if someone just steals your camera.
This. People don't think things out. She probably heard or knew someone who did this and "made a killing" and decided to follow suit. I can see the allure, buy the care you want even if you don't have the cash and use to one clever trick to make payments.
It sounds like it wasn't some sort of investment decision, but a setup that worked for this person.
Say you live in a major city and need a car, but it would sit there parked 80% of the time. You can't justify the cost.
But if you could rent it out that 80% of the time, you end up in a situation where you have a car to use, but it's either costing you nothing or making you a little bit of money.
Say you live in a major city and need a car, but it would sit there parked 80% of the time. You can't justify the cost.
But if you could rent it out that 80% of the time, you end up in a situation where you have a car to use, but it's either costing you nothing or making you a little bit of money.
But that wasn't this situation:
> She purchased a Prius last year specifically to rent on Getaround, using the money to cover both its monthly costs and those of her primary vehicle.
She bought an investment vehicle (no pun intended) that worked for a while and then crashed (still no pun intended). She overextended herself and can't handle the downside.. this feels like a bit game of musical chairs and she was caught without a seat. :|
> She purchased a Prius last year specifically to rent on Getaround, using the money to cover both its monthly costs and those of her primary vehicle.
She bought an investment vehicle (no pun intended) that worked for a while and then crashed (still no pun intended). She overextended herself and can't handle the downside.. this feels like a bit game of musical chairs and she was caught without a seat. :|
I misread that statement the first time. I didn’t realize this was in addition to her primary vehicle.
Swenrekcah(1)
Alas, cars don’t operate on an artificially limited supply the way homes do, so plays like this work only for for AirBnB, not Getaround.
Oversized rents like this don’t really work out if supply is able to meet demand properly.
Oversized rents like this don’t really work out if supply is able to meet demand properly.
I guess they were engaged in a form of carry trade and are trying to unwind their trade now, so to speak.
> they were engaged in a form of carry trade
They bought a productive asset with credit and found it was less productive than it cost. This is simply capital expenditure. Not a carry trade.
They bought a productive asset with credit and found it was less productive than it cost. This is simply capital expenditure. Not a carry trade.
This pandemic is really shining light on many flimsy and questionable business models. In good times, it looks great on paper to own a business with no inventory and whose sole purpose is to be a marketing middleman between people offering a service and those in need of a service.
But in bad times, income dries up—in this case, extremely quickly—and the flaws of that business model are exposed.
Airbnb, coworking spaces, Getaround, and home services companies are just a few examples of this model. Bird/Lime also have this issue and will likely collapse as well—both have laid off most or all of their staff (Bird in particular handled it poorly.)
But in bad times, income dries up—in this case, extremely quickly—and the flaws of that business model are exposed.
Airbnb, coworking spaces, Getaround, and home services companies are just a few examples of this model. Bird/Lime also have this issue and will likely collapse as well—both have laid off most or all of their staff (Bird in particular handled it poorly.)
I don't follow this logic.
Bird/lime own their inventory.
Airbnb is better off than the hotel chains IMO. The hotel chains have to keep paying their staff and rent while revenue drops, but airbnb just sees the revenue drop.
It exposes the people who bought properties to list on airbnb on aggressive margins or like the example in the article of someone buying a car just to put on the platform. I wonder how much rental prices will be affected when the properties that were bought to use for airbnb are brought back to the long-term rental market.
Bird/lime own their inventory.
Airbnb is better off than the hotel chains IMO. The hotel chains have to keep paying their staff and rent while revenue drops, but airbnb just sees the revenue drop.
It exposes the people who bought properties to list on airbnb on aggressive margins or like the example in the article of someone buying a car just to put on the platform. I wonder how much rental prices will be affected when the properties that were bought to use for airbnb are brought back to the long-term rental market.
AirBnB will be worse off, because post COVID19, people will trust hotels more than random strangers' houses. You know the hotel will be cleaned. You can't say the same of an AirBnB.
And it's very likely that AirBnB restrictions will increase post-COVID19 to eliminate a lot of the apartment units that were (illegally) converted to AirBnB units, and that enforcement of existing AirBnB restrictions in cities like NY and LA will increase dramatically, both for safety reasons and to protect the hotel companies that actually employ workers, pay hotel taxes, and contribute to the local economy.
And it's very likely that AirBnB restrictions will increase post-COVID19 to eliminate a lot of the apartment units that were (illegally) converted to AirBnB units, and that enforcement of existing AirBnB restrictions in cities like NY and LA will increase dramatically, both for safety reasons and to protect the hotel companies that actually employ workers, pay hotel taxes, and contribute to the local economy.
I can't speak for every city, but where I live, a lot of Airbnber's are hurting for the sudden drop in revenue. Hotels might get bailouts or credits from the government but short term rental companies will get nothing and be hard pressed to find the resources to continue paying their mortgages. We're already seeing condos that were rented out as Airbnb's pop up on the real estate market.
That is a good thing. Those condos should never have been converted to unregistered hotel rooms, and I'm sure the other people living in those developments will be glad that the parade of strangers will no longer be invading their buildings.
This is also the perfect time for jurisdictions to tighten up their regulations that pertain to Airbnb.
Meh. If hotels can have bed bugs, they have Coronavirus, too.
Yes, Airbnb will be better off because they've offloaded all the risk on the hosts -- which is really what we're talking about here. Sure there were some hosts just renting out their basement suite but many others were effectively running makeshift hotels by buying up properties. Those people are going to be in big trouble.
Actually, I know some people who bought whole homes in vacation destinations that are doing fine as they are advertising their properties as good places to quarantine. It's the market for shared spaces that is completely dead.
That's got to be the exception rather than rule.
I'm under quarantine at an Airbnb!
I agree with you about Airbnb. Airbnb itself will be fine, but those who bought a property to rent out are hurting.
But Bird/Lime are in deep trouble, and not just because of cost of the scooters they own. Who is going to rent one, not knowing the health status of the previous renter?
But Bird/Lime are in deep trouble, and not just because of cost of the scooters they own. Who is going to rent one, not knowing the health status of the previous renter?
I don't follow your logic. AirBnB will be fine even though nobody wants to use their service, but Bird/Lime won't be fine because nobody wants to use their service?
I'd be much more comfortable using a scooter because I can just wipe down the handles. I have no idea what's going on in someone else's house, and in my experience AirBnB hosts are pretty shitty about cleaning up their properties even though they make you pay for it.
I'd be much more comfortable using a scooter because I can just wipe down the handles. I have no idea what's going on in someone else's house, and in my experience AirBnB hosts are pretty shitty about cleaning up their properties even though they make you pay for it.
No, Airbnb will be fine because their expenses are running the servers, not owning the houses. They won't be making money, but they won't be losing it, either. The people who bought a house to rent via Airbnb, on the other hand, are going to get crushed.
Sure, you can wipe down the handles, if you brought wipes with you. That makes it a lot more spontaneous to use, though (unless you carry wipes everywhere, which is in fact a reasonable thing to do).
Sure, you can wipe down the handles, if you brought wipes with you. That makes it a lot more spontaneous to use, though (unless you carry wipes everywhere, which is in fact a reasonable thing to do).
AirBnB, to the best of my knowledge, has never been actually profitable even when business was booming. The notion that they will suddenly be okay now that they're not making money is ridiculous, even if they have fewer costs than hotels.
I understand your point about hosts bearing the brunt of the costs, but that's comparing AirBnB the business to AirBnB the users. I was comparing AirBnB the business to Bird/Lime the business, because that was a juxtaposition you made in your original comment.
Anyway, agree to disagree I guess.
I understand your point about hosts bearing the brunt of the costs, but that's comparing AirBnB the business to AirBnB the users. I was comparing AirBnB the business to Bird/Lime the business, because that was a juxtaposition you made in your original comment.
Anyway, agree to disagree I guess.
A pile of unused scooters is probably not that expensive either to store somewhere while they're not used (and many are probably just out on the street). Aren't employee costs going to hurt both models more? Bird already laid of hundreds of their 1,000+ employees. Airbnb has 12,000+ employees.
The scooter companies might have less reserves though, and their market is probably oversaturated even in good times.
The scooter companies might have less reserves though, and their market is probably oversaturated even in good times.
I don't think that follows.
What's hurting e.g. Airbnb is not that they are a marketing middleman between people offering a service and people in need of a service. It's that the need for that underlying service has greatly diminished--if people don't need the underlying service anymore then they don't need a marketing middleman for that service either.
What you need to make your point are examples where the underlying service still does fine in bad times, but the marketing middleman for that service do not.
What's hurting e.g. Airbnb is not that they are a marketing middleman between people offering a service and people in need of a service. It's that the need for that underlying service has greatly diminished--if people don't need the underlying service anymore then they don't need a marketing middleman for that service either.
What you need to make your point are examples where the underlying service still does fine in bad times, but the marketing middleman for that service do not.
According to your logic all of the restaurants, hotels and bars have a questionable business model since they are suffering now because of the pandemic
I specifically stated “a business with no inventory and whose sole purpose is to be a marketing middleman between people offering a service and those in need of a service.” Restaurants, hotels, and bars provide services directly and are not examples of this.
Those businesses work perfectly well -- see banks, retail stores (who often don't even own the inventory they're selling), Amazon. The ones that don't work are the ones whose markets are affected by natural disaster, which is true of any business.
I think that industry statistics show that many restaurants always have questionable business models.
It would certainly be ideal if Restaurants, Cruise Lines, Hotels, Airlines had the balance sheets to handle an event like this, so far a 2 month slowdown, especially as there are things like cancelled events, hurricane season, recessions reducing travel, etc.
It would certainly be ideal if Restaurants, Cruise Lines, Hotels, Airlines had the balance sheets to handle an event like this, so far a 2 month slowdown, especially as there are things like cancelled events, hurricane season, recessions reducing travel, etc.
"questionable business model => may collapse during a pandemic" is not equivalent to "may collapse during a pandemic => questionable business model".
(No comment on whether these things have a questionable business model, this is just how implication works.)
(No comment on whether these things have a questionable business model, this is just how implication works.)
Isn't it actually better for them not to have the liabilities of cars, hotel rooms etc on their books? They can lean up and cut costs and spring right back up once the pandemic is under control. At least theoretically.
Exactly. Actual car rental companies are down more than 60% because they have debt payments to make whether people want to rent the cars or not.
AirBnB etc have (relatively) fixed infrastructure and staffing costs.
Companies can negotiate loan payment holiday if they can persuade their creditors that it makes more sense to get an extra few months of debt relief than to be closed down - which would probably take a few months anyway.
Not so with fixed staffing costs. Even if furlough is an option you need to decide who's essential, and who can be layed off temporarily - not always simple, especially if you're not sure if the downturn will be short.
If furlough isn't an option you suddenly start burning your cash reserves after a huge drop in income, and investors start getting very nervous.
Companies can negotiate loan payment holiday if they can persuade their creditors that it makes more sense to get an extra few months of debt relief than to be closed down - which would probably take a few months anyway.
Not so with fixed staffing costs. Even if furlough is an option you need to decide who's essential, and who can be layed off temporarily - not always simple, especially if you're not sure if the downturn will be short.
If furlough isn't an option you suddenly start burning your cash reserves after a huge drop in income, and investors start getting very nervous.
> Companies can negotiate loan payment holiday
By the time bond holders are taking a haircut, shareholders are wiped out.
> Not so with fixed staffing costs.
Layoffs aren't easy, but owners have more flexibility and control than they do negotiating with bond holders.
By the time bond holders are taking a haircut, shareholders are wiped out.
> Not so with fixed staffing costs.
Layoffs aren't easy, but owners have more flexibility and control than they do negotiating with bond holders.
[deleted]
All the "sharing economy" businesses like Airbnb and "Airbnb but for x" (like this one with x = cars) have the same model anyway, be the middle-man, promise protection for both sides, take 30%, great if everything works out, but be slow to respond and offer a pittance if one of the parties gets shafted.
[deleted]
Coronavirus was the impetus for pricking the bubble. As Warren Buffet so eloquently put it: “Only when the tide goes out do you discover who's been swimming naked.”
Turns out there were a lot of unsustainable businesses like this. The Fed and government stimulus will not be able to reflate that bubble. No matter how many companies we nationalize.
Turns out there were a lot of unsustainable businesses like this. The Fed and government stimulus will not be able to reflate that bubble. No matter how many companies we nationalize.
I think it's important to separate "the bubble" pricking from the very arbitrary nature of which industries are affected by coronavirus. I mean, for travel, restaurants, gyms, non-emergency healthcare etc. it's a great depression, while for distance learning, Amazon, videoconferencing, gaming, etc. it's boom times. But it's not like travel, restaurants etc. are inherently bad businesses.
Is Amazon booming? In Canada, some Amazon shipments for non essential equipment is going to take over a month which is why I'm not bothering to order anything from them during this time and finding other stuff locally.
That's because their customers are going bananas and buying everything. Amazon is trying to hire like crazy. https://abcnews.go.com/US/wireStory/amazon-seeks-hire-100000...
After I bought an electric car, I kept my other car around just in case. I figured I'd rent it out on Turo since I wasn't concerned about maintaining the condition of the vehicle (it's a 6 year old Nissan).
Even though I wasn't concerned about my car being mishandled by renters, I couldn't believe the condition some renters would return it. After this experience, I would NEVER rent out a nice car through these services. If people treat your car like shit, imagine what they do to big rental car company's vehicles.
Even though I wasn't concerned about my car being mishandled by renters, I couldn't believe the condition some renters would return it. After this experience, I would NEVER rent out a nice car through these services. If people treat your car like shit, imagine what they do to big rental car company's vehicles.
Big rental car companies can keep coming after you for the damages though. A lot of people don't have the same fear of some startup making the same effort for a vehicle that isn't theirs in the first place.
It's a common theme with many of these "sharing economy"/"gig economy" companies:
"We're like X but without all the stodgy process and procedure!"
[a few years pass]
"Turns out all that extra stuff was there for a reason and now we're going to either punt on it and screw over our customers and/or contractors, or monkey-patch it onto our business that wasn't built with it in mind."
"We're like X but without all the stodgy process and procedure!"
[a few years pass]
"Turns out all that extra stuff was there for a reason and now we're going to either punt on it and screw over our customers and/or contractors, or monkey-patch it onto our business that wasn't built with it in mind."
One might say they pay when they... get around to it.
I'm sorry, I couldn't resist.
I'm sorry, I couldn't resist.
The rentier economy, aided by automated systems online, is now proving to be a total failure.
The downside risks versus the short-term gains are too asymmetric.
Car rental - damage is very expensive, margins are tiny House rental - long term loans, short term lets that have proved very volatile in the pandemic. Office space rental - wework, again long term borrowing, short term rental.
The idea that we can endlessly slice and dice risk to get a "free" gain is rotting society.
Learn a skill. Create value. If everyone does this we live in a better society. We cannot all live off each other. Someone has to create value.
The downside risks versus the short-term gains are too asymmetric.
Car rental - damage is very expensive, margins are tiny House rental - long term loans, short term lets that have proved very volatile in the pandemic. Office space rental - wework, again long term borrowing, short term rental.
The idea that we can endlessly slice and dice risk to get a "free" gain is rotting society.
Learn a skill. Create value. If everyone does this we live in a better society. We cannot all live off each other. Someone has to create value.
I was thinking more businesses will question their long term commercial rentals and seek more flexible alternatives with a lighter overall footprint - benefitting the likes of WeWork.
>>The rentier economy, aided by automated systems online, is now proving to be a total failure.
But for the founders and investors that offload shares. I agree with you, you can't value a gazillion times down the chain.
But for the founders and investors that offload shares. I agree with you, you can't value a gazillion times down the chain.
[deleted]
but they are creating liquidity in the car rental market! /s
But they are, for the buyer. More sellers = more liquidity. It just also turns out they (the sellers) are making money by picking up pennies in front of a steamroller.
I've been cynical about liquidity arguments in general too, but actually there's nothing to be sarcastic about here, that's precisely what they're doing. I've used Getaround to avoid having to own a car or go to a car rental office. Unfortunately for them, I don't need to do it more than a couple times a year because Uber/Lyft is more convenient and roughly the same cost.
At least if Getaround disappears, I'll be able to delete my Facebook account. For a long time they were only allowing Facebook or Google based logins.
At least if Getaround disappears, I'll be able to delete my Facebook account. For a long time they were only allowing Facebook or Google based logins.
amiga_500(1)
Umm the economic world is falling apart unfortunately! Thus, put any startup or company's name here in which their business deals with ppl congregating or where germs are spread and the story is the same.
There should be a list of what businesses will remain strong and become stronger so entrepreneurs can quickly create new businesses ..anything food related, medical, online sales & delivery, anything internet/communication infrastructure related, govt services, COVID prevention, COVID research... are some I can think of
There should be a list of what businesses will remain strong and become stronger so entrepreneurs can quickly create new businesses ..anything food related, medical, online sales & delivery, anything internet/communication infrastructure related, govt services, COVID prevention, COVID research... are some I can think of
What this is most affecting is the service industry. If your company makes a product that can be put in a box and shipped to the customer's door, people can still buy it. Maybe even more people buy it because they're working from home but still getting paid or just got a $1200 check or both, and they're not about to spend that money on restaurants or theater tickets right now.
That may even carry forward somewhat. You have someone who doesn't have a washing machine, well the laundromat is closed or they don't want to go there and they just got $1200, plus there are lower interest rates and cheaper financing, so now there's a truck delivering a washing machine and they're never going to go to the laundromat again. Even if it eventually breaks they'll buy another one because by then it's the status quo.
It may be a good time to get into the business of making stuff.
That may even carry forward somewhat. You have someone who doesn't have a washing machine, well the laundromat is closed or they don't want to go there and they just got $1200, plus there are lower interest rates and cheaper financing, so now there's a truck delivering a washing machine and they're never going to go to the laundromat again. Even if it eventually breaks they'll buy another one because by then it's the status quo.
It may be a good time to get into the business of making stuff.
> well the laundromat is closed
For what it's worth, in every emergency shutdown order I've seen, laundromats have been classified as "essential businesses."
For what it's worth, in every emergency shutdown order I've seen, laundromats have been classified as "essential businesses."
Indeed making stuff and selling online only that is delivered to doorsteps. Of course we have Amazon now, but as we can see they are slammed and no one wants to wait weeks for essentials.. if fear indeed kills all businesses where germs are spread then we need a few Amazons.
A great business for the GetArounds of the world is to focus on using their capital to create things that are in demand now and will continue to be in demand until a proven vaccine is found. That could take weeks, months, years and those with the capital now who shifted to meet demand will survive. Those who wait for a vaccine and who didnt change gears will be mostly gone. They waited thinking this will soon pass and yes the curve might be flattened soon, but the fear and how it changes society (until we have a proven vaccine) will remain!
A great business for the GetArounds of the world is to focus on using their capital to create things that are in demand now and will continue to be in demand until a proven vaccine is found. That could take weeks, months, years and those with the capital now who shifted to meet demand will survive. Those who wait for a vaccine and who didnt change gears will be mostly gone. They waited thinking this will soon pass and yes the curve might be flattened soon, but the fear and how it changes society (until we have a proven vaccine) will remain!
Very unlikely that someone going to the laundromat cannot afford a laundry machine.
Many buildings, houses, simply cannot accommodate a laundry machine, many prohibit installation.
Many will go to the laundromat because of convenience.
Many buildings, houses, simply cannot accommodate a laundry machine, many prohibit installation.
Many will go to the laundromat because of convenience.
That seems like a risky move, and an attempt to compete in the general car rental business without the protections of a well established business (compared to a startup).
While it may make sense for a car owner to assume some risk to recoup costs on a vehicle they already own, buying one for the sole purpose of renting it out seems less sensible.