Why Turo, the ‘Airbnb for Cars’, Is Angering Rental Companies | WSJ

Why Turo, the ‘Airbnb for Cars’, Is Angering Rental Companies | WSJ

(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)

About the Author: Michael Flood


  1. ALL I CAN TELL YOU GUYS IS I TRIED TURO ABOUT 3 WEEKS AGO AND IT IS FREAKING AWESOME no credit check no credit card needed, NO down payment or credit hold. It was fast and easy,

  2. I would love to know who out there deciding the word "disruption' is the go-to for anyone on Wall Street. Group think. They all walk off the cliff together.

  3. Traditional rental car companies are ruthless thieves, Avis at Fayetteville,NC gave me a discounted rate via internet and then when I returned the car at the end of my two weeks, they came up with hidden fees and that my rate expired lol and made me pay 30% more of the actual rate they offered me.

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  5. The sales tax was already paid by the owner of the car a while ago. You can't DOUBLE tax on same issue to my knowledge. Especially when he still owns the car.

  6. Airbnb caused rents to skyrocket in cities where it's available. Let's hope this doesn't have any negative effects.

  7. Rent it my car made good money in a month, but when i got it back it smelled like 100 % Colombian lettuce..cannot get the smell out..no more rentals..

  8. A few reasons why I am still going with the rental car companies. I will pay more for the convenience of being able to pick up and drop off right at the airport. It saves me time and that's important over the course of many trips. I get a clean, well maintained car with support service if I break down and a replacement car as well if needed, nice to have those things. I don't care to send my picture to strangers. Getting bonus points and miles from the rental car companies is a positive factor in cost that's not discussed unless Turo awards them?

  9. This is only possible because people are afraid to lose their cars to the repo business. (Granted anyone with a car can use this for a startup auto rental business, which is the perfect revenge actually.) Banks are just printing funny money and inflation is high and interest rates are low. Why should they encourage saving when they can just print money out of nowhere? It's pycho! See DW documentary on money: https://www.youtube.com/watch?v=t6m49vNjEGs

  10. Turo worked amazing for us in Atlanta, we got a little Mercedes gle for like $60 a day and barely any taxes/fees picked up curbside at airport, dropped right back off at curbside to the owner

  11. You can choose EXACTLY the car you want on Turo. You can only choose the class of vehicle at a traditional rental agency. I’ll stick with Turo.

  12. Enjoy while you can because like AirBNB the regulations and taxes are coming. Governments will catch up and taxes will be levied. You can count on it.

  13. Nice but does not take in to account true costs. Like hotels have to put up with slobs and thieves, insurance costs covered here? I f insurer fully informed as to commercial usage rates would spike. Fees partly due to law enforcement involvement. Will have limited life IMO.

  14. I love it. Similar to Uber and Lyft. Undercutting the big companies ridiculously high prices. And as far as Uber and Lyft go, offering much better service. A wait for a regular cab can take an hour. For Uber it is usually 10-15 minutes. It's time we started seeing mom and pop companies rise up again and offer serious competition to big business.

  15. Don't go into debt to buy cars and rent on turo. You never know when the competition might pay the government to "protect" them, and then you lost your business and livelihood in debt.

  16. F**k the car rental companies. Their making money hand over fist. They want to level the field then bring your prices down.

  17. We are a renters society.
    30 year mortgages and high housing prices make renting look better.
    Rising Car prices make leasing cars look better.
    Marriages dont last for life anymore…so people are basically "RENTING" relationships by living together but never getting married or having kids.
    Women are RENTING handbags now.
    We are a society that is not committing to ANYTHING long term.

    This is a sign that america has LOST its faith in home ownership, car ownership, marriages, and overall the american dream.


  18. Turo is not directly competing with rental firms yet. Because majority of those on vacation these days are boomers and they still rent the old fashion way. Turo is for the younger generation that prefers renting a niche or specialty car. Like Doug Muro who frequently rents on Turo looking for that rare car to post his experiences on Youtube.

  19. Dare I go here? Yes, those businesses run through Turo and Airbnb pay the proper and legal taxes. The citizens actually pay their income taxes instead of funneling it overseas. Unlike some multinational businesses.

  20. The real lesson here: government regulations and taxes drastically change the competitive landscape. Rental companies: taxes applied. Turo: tax free.

  21. While premium vehicles are cheaper via Turo, standard vehicles and minivans are about the same price as a low cost rental company. With the proper credit card and membership, established rental cars are actually cheaper, since there are no membership discounts or rental coverage via credit card on Turo. For price-sensitive travelers (like myself) lower tier rental agencies are a better alternative, and there is no reliance on a Turo owner cancelling or not showing up.

  22. Isn't hoping to legally avoid as much tax as possible the goal for everyone. In fact a necessary component of capitalism.
    The "red herring" is on both sides if Turo participates are complaining that rental agencies don't pay sales tax on the cars they purchase, and rental agencies are complaining that Turo doesn't have to pay rental taxes and associated fees.
    Regardless, I would say that Turo is just too new of method which likely falls outside of how current regulation is specifically defined.
    One thing we can count on is, eventually the government will establish new guidelines so that they will get the biggest peice of pie they can from Turo.

  23. Turo is annoying employers like myself that deal with employees taking time during work to broker deals in the parking lot…

  24. I've been a turo host since I purchased my car. I have never had an issue that turo didnt take care of. From a scratched fender to toll reimbursement. I've made a considerable amount of money over the past two years. This video is funny though. I have and will never leave my car in a random place for pick up. Its either at my house or where the customer request. I do like the fact I have control over who rents my vehicle. I have to approve all request and I set the milage limits.

  25. I think this is a great idea maybe security should be safer but screw car rental company's thg here a RIP off and I'm going to do this to I hope rental goes out of business!!!

  26. I was trying Turo for awhile but started to notice a reoccurring theme with many of their car providers…..they put off routine maintenance on their cars to maximize uptime & to maximize profit. My first bad experience was a Mercedes that was a great car except one problem I forgot to check the manufacture date on the tires of the vehicle.
    We went on a trip to LA & suddenly a tire comes completely apart. When the tow guy shows up he points out the tires on the car are 6 years old. This happened over & over when accepting cars & it got to the point where it became a hassle when I was in a hurry. I rented a Tesla where while on the trip the doors would not open & the same with the rear trunk. Guess what Turo provides almost zero support. I had a car where the tire went flat & the owner had no jack in the car to lift the car. I called Turo & they told me 'to try my best getting the tire changed & they would reimburse'…..guess what still waiting for that reimbursement. Too much trouble for too little enjoyment.

  27. Have used Turo once on a trip to the US
    Awesome experience and would definitely use them again
    Car was amazing for the price and really smooth rental

  28. I love this because right now i am in a court battle with enterprise. I locked the keys in my rental and called enterprise THEY sent out somebody who then damaged the car to get inside. Now they are trying to charge me $2200 to replace the entire door. And get THIS! They dont even have the car anymore and did not spend the money to get it fixed! So they want me to pay something i didnt do for something they dont even own anymore!

  29. I have been renting from hertz for a couple of years, with a good discount code you can get some great prices even better than turo, I rented 2 cars with turo and both of them where dirty and badly mantained, one had the brakes down to metal, i will keep renting from rental companies.. due to newer models, better maintnance and because i feel bad beating and abusing a car that belongs to a person 😉

  30. Don't be mad at Turo, Uber or Airbnb, they just found a loophole and capitalized on the opportunity.period🤷‍♀️🤷‍♀️🤷‍♀️🤦‍♀️🤦‍♀️🤦‍♀️

  31. Turo is awesome! I rented a mustang for a day for my birthday. It’s a way for people who can’t afford new cars to try them out! Which you cannot do with rental companies. So to them I say, good riddance

  32. Turo is great for young travelers. I've rented multiple cars on Turo and not having to pay several hundred dollars extra for insurance and "underage driver" fees (I'm 22) has saved me a lot of money.

  33. Screw those rental car companie. My fiance rented a car from avis. Never got his deposit back from them. Plus was charged an arm and a leg. Im so happy with Turo. Since we first started using it 3 wks ago. We're on a 3rd car now. We rented one for 4 days n then another fo 10 days. N now we got this one for another 7 days. Its fun easy n simple and you get to try out different cars. Great way to see if you want r2o buy a similar car too. Wish there were morw truck options tho. But its up to locals not Turo. Lol

  34. Regulations are merely rules set by each government. Until the respective government acknowledges the situation to be an unfair practice in its domestic market, I dont think there should be any obligations from the independent operators to follow any regulations that registered agencies currently have to follow.

  35. Turbo sucks entitled people can rent, trash and damage your car. Turo will shrug it off and send you on your way with the bill stating that your paid Turo insurance with them doesn't cover it.

  36. ho ho ho. The statement that hotel companies think airbnb is unfair isn't really just an opinion they have. It's a fact. Hotels pay a lot of taxes to local governments and that money is necessary. It's so necessary that I would be all for the same rates that hotels pay in local occupancy taxes. There is even a nifty network of computers and records (airbnb is online) that would accommodate this. Having those taxes disappear would hurt several departments that there is no private incentive for.

  37. AirBNB, Lyit/Uber, now Turo. I didnt hear much about hotels bitching about AirBNB, but it makes sense. I DO remember Taxi companies bitching about Uber. They pretty much gave the same arguments (but they dont pay taxes).

    If they want them to pay taxes, then they should also not be required to pay sales tax, and also let them lobby lawmakers 😛 Fairs fair, right?

  38. Nah, it's not for me. Give me a car rental. All the rental car co's need to do is buy Turo, and then close down the business.

  39. Turo is a joke. Some car rental companies are way cheaper. I have rented cars for $800 for one month many times. 20 to $30 per day for sedans.

  40. 2017 – My Card Number got Stolen and Turo allowed $2500 in charges to be used to rent a Lamborghini in San Francisco. DO Better with your Payment Verification.

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