(soft music)
- Have you ever had to find a rental car
after a late flight?
Imagine if you were renting a stranger's vehicle?
Turo, a peer-to-peer car company,
brings an element of adventure to your trip
by allowing you to rent a personal vehicle
from someone looking to make some extra money
from their car.
But rentals like the one I'm doing here
are putting the company in the crosshairs
of traditional rental car companies.
So here's how it went.
After several screens full of instructions,
we find the address for our car in a nearby parking lot.
This is definitely not quite as straightforward
as renting from a traditional car rental agency.
We're in a parking lot that's maybe a quarter mile
away from the airport.
It's near the Sheraton hotel
and we were told to find the orange cones.
We found the orange cones and we've actually found our car.
It's right here.
Next step is to take a selfie of myself with the car.
Good shot.
After verifying I'm the renter,
the car's owner electronically unlocks the door for us.
We're checked in, we've done our inspection.
Let's go.
The two-day rental of this 2019 BMW X3
comes to, without insurance, $160.
A comparable luxury SUV from National Car Rental
would've cost us 37% more.
National's quote for $220 includes $66 in taxes and fees.
Turo says nowhere in the US are those same fees and taxes
being imposed on its customers.
And National points out, in this example,
that its contract includes unlimited mileage,
whereas our Turo rental does not.
All right, we've got our fancy wheels.
Now, tomorrow, we're gonna meet the owner of a car
who rents it on Turo, but it's a really different car
than the one we've got.
(door slams)
How's it going?
Jason. - How are ya, Kris.
- Good to meet you, Kris. - Nice to meet you.
- I've never seen a Slingshot before, I have to say.
- I haven't either until I went to Hawaii.
(laughter)
- [Jason] Kris Mullins and his Slingshot
is what Turo says it's all about,
extra cash for car owners
and unique experiences for renters.
How often are you renting this out?
- [Kris] Four to six times a month.
- [Jason] Mullins rents his Slingshot
for around 100 bucks a day.
With his monthly car payment,
he paid $15,000 for the Slingshot,
and other costs, he says he's pretty much breaking even.
But he says he sees the potential down the road
to come out ahead.
- The more people catch on to it, the more subscribers,
the more people that understand what it is and are aware,
the more people will be able to rent their cars.
And I don't mind adding another car to it.
- [Jason] He says he's had no major issues with renters.
Like the established companies,
Turo offers insurance to renters.
It also insures the hosts for accidents or damage
that occur during the rental.
But, as an example of these cars in Denver,
if a car is damaged or stolen between rentals,
it falls on owners and their own insurance.
The big car rental agencies
are focusing their ire less on individuals like Mullins
and more on these types of people.
Are you guys doing rental for Turo?
When I returned our BMW to the parking lot,
I met Carloz Basan.
- I've personally done around 1,800 trips with Turo.
- [Jason] He and an employee were prepping cars for renters,
assembly line style.
Most of the vehicles had lockboxes on their windows.
- A lot of business travelers rent cars.
- [Jason] Basan tells me he's among five Turo power hosts
who've got 70 cars at this San Diego lot.
So you're making a full-time living doing this?
- It is full-time living, yes.
- For Turo, is this a problem or an opportunity?
(knuckles rapping)
I went to San Francisco to meet with Andre Haddad,
Turo's CEO.
He's aggressively trying to grow his company,
now valued at more than a billion dollars.
How many people do you have now?
- We have a bit more than 350 people now.
We've been growing our team roughly 100% every year.
- So this time next year, you think you'll have 700 people?
- We might well have 700 people this time next year, yes.
- Really?
Haddad shows us the six cars he owns,
all of which he rents out using Turo.
- So let me show you how this works.
You put this button here.
- [Jason] Including this Tesla Model X
he bought four years ago.
- I'd say the first year,
when everybody wanted to drive one,
I was renting it out at more than $500 a day.
- $500 a day?
On this day, Haddad's using it to get to work.
So when people describe your company as the Airbnb of cars,
what do you say?
- I'd say that's just about right.
- [Jason] Like Airbnb, Turo is the dominant player
in its peer-to-peer market.
- Selection, price, and convenience I think are the reasons
why we think fundamentally we are better
than traditional rental car.
- When you have the slogan, Way Better Than a Rental Car,
that must antagonize the incumbents,
the rental car agencies.
- We are not intending to antagonize them,
but they are, in many ways, the reference in people's heads.
- Do you think you're eating into their business?
- Partly, but that's not really the core of Turo.
I mean, our core mission is to enable people
to monetize their cars.
We've obviously run into the antagonism
and the hostility from the rental car industry
because they're not used to seeing competition.
- It's kind of like what Airbnb dealt with
with the major hotel companies.
There was a lot of pushback.
In the case of Airbnb, the hotel companies were saying,
"Well, we have to pay all these taxes, these fees,
"and Airbnb hosts, they don't have to do that.
"That's unfair."
Is it a similar situation for you,
especially when you have people renting at airports?
- Yeah, there's absolutely the same situation for us.
- Is it fair?
- What they don't like to talk about
is the significant tax subsidy they get
because they actually don't have to pay any sales tax
on any of the cars that they purchase for their fleet.
- Enterprise, which has the world's largest
rental car fleet, calls this argument a red herring
because companies, whatever industry they're in,
typically don't pay sales tax on equipment
they purchase for commercial purposes, including rentals.
Enterprise says peer-to-peer operators
hope to avoid applicable taxes, plain and simple.
Turo's response: What we hope to avoid
is having a competitor dictate
how we should be regulated and taxed.
Airbnb says, since 2014, it's established agreements
with local governments around the world
and it's collected more than $1.5 billion
in transient occupancy taxes to date.
With Airbnb, you had people
who basically came hoteliers themselves.
They would have entire buildings
that they would start renting out on Airbnb.
Do you have some customers who are creating their own
mini car rental agencies at airports?
- We don't have the same kind of scale that Airbnb has,
but we have some car enthusiasts, like myself,
who have found Turo to be a great opportunity
to be able to get another car, a third car or fourth car,
because the reality is, when you bring these cars
and list them on the app, they can generate
a lot of earnings.
So it's still a small percentage of our community
that's going out and getting a second
or a third or fourth car.
- Well, are people creating businesses, entire businesses
of renting cars using Turo?
- I don't think there's anything of that scale
of, like, creating a business.
- [Jason] Enterprise says that many hosts
actually own or operate fleets of 10 or 15
or even more vehicles on these platforms.
It's our opinion that all rental car transactions,
including those through peer-to-peer companies,
have the same tax obligations
that every other car rental provider has today.
Turo acknowledge that some entrepreneurial hosts
have embraced the economic opportunity
the marketplace provides.
(soft music)