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Car sharing has emerged as a potentially highly profitable enterprise for anyone looking to make a passive income. So, if you're looking for a great side hustle, let's look at how car sharing companies make money.

Car sharing companies make money by charging hourly or daily rental fees, fuel costs by mileage, and several other fees. Depending on location, car value, and utilization rates, these fees can yield varying revenues. Profit margins will depend on the size of the fleet.

Creating a financial model requires countless considerations that determine whether your car sharing company can turn a profit and yield a significant passive income. This article will take you through the important details. 

How Do Car Sharing Companies Make Money?

Car sharing companies typically use one of four models – round-trip, one-way, peer-to-peer (P2P), or fractional.

The round-trip model is where a renter will pick up and drop off the car at the same location. The fee structure will generally be determined by the hours, miles driven mile, or a combination of both.

A one-way model uses similar payment structures but involves the renter picking the car up at one location and dropping it off at another designated parking location.

The P2P model, however, is coordinated through a facilitator, who acts as a third party that connects the renter to the car owner and processes transactions for a fee. The payment structures are similar to other car-sharing models.

Finally, the fractional model is an ownership structure that shares vehicle costs and use between co-owners of the vehicle.

What Is Car Sharing?

Car sharing platforms like Turo are to car rentals what AirBnB is to short-term accommodation. Effectively, it is a method where people can rent cars provided by individual car owners for hours or days at a time.

Unlike traditional car rental services, the cars aren't owned by a company but by individuals in a decentralized model, where the car owner and the facilitator are separate entities.

This decentralized model makes the service less expensive for users, but if the facilitator is taking a cut, it will decrease the car owner's profits. However, assembling a sustainable fleet of varying sizes can yield significant profits.

How To Make Money On Turo

A new way to make easy money is through the peer-to-peer car-sharing app Turo, which hosts the world's biggest car-sharing marketplace.

It allows you to book cars from individual owners the same way you would with a traditional car rental company, but through Turo's platform.

Owners and drivers are connected via Turo's platform to message each other at least 24 hours before the reservation, allowing the owner to fuel, clean, and park their vehicle at the agreed-upon location. They also take pictures to prove the car's condition in a dispute over damages.

Once the car is ready for the driver, they can locate, unlock and start the vehicle through Turo's app through a Turo hardware device called Turo Go. The driver is also encouraged to take photos of any damages they find.

How Much Money Can You Make With Car Sharing?

Experts believe a car-sharing company's most profitable fleet is roughly 50 cars between 2,500 different owners in a fractional model.

They've also agreed that smaller, less expensive cars with low fuel consumption are ideal for adding to one's fleet. With customers paying an annual membership fee and/or rental fees of between $2 and $15 per hour, the owners of the vehicle can yield significant revenues of as much as $3,000-$4,000 per month, while the cost of owning a car can be as high as $10,000 per year. This means that, depending on utilization rates, you can make profits as high as $26,000-$38,000 per year per car!

However, costs, revenues, and profit margins will differ from car to car, depending on the car's value, the age demographics of your location, demand, insurance premiums, gas prices, the facilitator's cut, and contingencies such as damage and maintenance costs.

If you want to make money through Turo, the peer-to-peer car-sharing platform has a calculator that calculates what your car can earn for you. Factors including location, the car's age, make, and model will determine your potential earnings. 

To emphasize the disparities between potential earnings per car, we looked at what a 2006 Toyota Camry would make if rented out near Phoenix, Arizona, compared to what a 2018 Range Rover in Los Angeles would fetch.

According to Turo's calculator, the Toyota will get around 23 bookings per month, earning $22 per day and $509 per month.

The Range Rover would be booked out for around 17 days per month, earning $91 per day and $1,575 per month.

To find a good middle ground, we looked at the US average for what a 2016 Ford Mustang EcoBoost would be booked out for around 19 days per month at $55 per day and $1,061 per month.

So, you will need to find vehicles that are in demand, inexpensive to run, and for which you can charge relatively high fees. Striking a balance between expensive and affordable cars will affect the demand, as will your location.

Conclusion

Car sharing is a great way to earn a passive income, and starting your own car-sharing company or a personal fleet can become an incredibly profitable venture that would be more than enough to earn a living. 

One of the great models for car sharing is Turo's peer-to-peer app that allows individual car owners to enter car-sharing agreements and utilize the infrastructure they provide for a share of their earnings. The simplified process of renting a vehicle out is also more affordable for the renter and easier to manage for the private car owner.

Depending on various factors, your car can earn a passive income of as much as $2,000 per month, a significant addition to anyone's monthly paycheck.

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