Wheels in Motion: Should Cities Get Behind Car Sharing?

As car sharing becomes a mainstay in the ever-growing panoply of big city transportation options, its implications for consumer and resident behavior is no longer a negligible issue for city administrators. How municipalities address operators like Zipcar and RentMyCar will not only affect residents’ access to affordable and convenient transportation, but also sets a precedent for how to approach car sharing’s new, sexy sister: private car pick-up à la Uber and Lyft.

In order to understand car sharing’s long-term viability, The University of California, Berkeley’s Susan A. Shaheen, Mark A. Mallery, and Karla J. Kingsley explored the platform’s attractiveness, economic benefits, and hurdles to implementation.

According to the authors, a meta-analysis of 18 studies performed both nationally and regionally over the last two decades suggests that car sharing is associated with a statistically significant downward effect on vehicle ownership and purchase, as well as average vehicle miles traveled. In fact, a 2008 study of North American car share participants found a 50 percent decrease in car ownership among the subject pool. While critics claim this, along with decreased public transportation usage, is a costly outcome in a fledgling economy, proponents point to decreased carbon emissions and an increase in healthy behaviors, such as biking and walking.

Despite the benefits touted by fans of the car sharing model, there have been numerous barriers to adoption in North American cities, notably ambiguity among legislators and insurance carriers over how to address complications caused by a new and unfamiliar phenomenon.

With a car sharing compatible insurance policy costing upwards of $2,500 per year, car owners face relatively low profit margins and little incentive to participate in the system. The authors suggest consistent and strict screening of both vehicles and drivers as a means to lower premiums paid by car owners. Additionally, the unavailability of historical data about car sharing participants complicates the traditional appraisal of risk used by insurance carriers to calculate premiums.

According to the authors, “accurate insurance pricing requires as much as 10,000 vehicle-years of operating data…The most immediate means of reducing insurance coverage costs…is for personal vehicle sharing operators to aggregate non-identifying operational data.”

How municipalities classify car sharing vehicles further affects the program’s chances of success. The differential treatment of commercial relative to non-commercial vehicles has led certain states (namely, California, Oregon, and Washington) to pass legislation that ensures car sharing as non-commercial use and places the liability on carsharing operators during “shared” time. In states where similar laws are not passed, car owners participating in car sharing are subject to cancellation of their insurance policy and increased premiums.

It is no surprise that the car sharing model is encouraged in primarily liberal regions, as its environmental and social effects may not be compelling enough in more conservative municipalities to justify decreased private and public revenue. As the next-generation options made available by Uber and Lyft face additional heat from taxi operators and labor activists, city administrators struggling to promote efficiency and sustainability may be forced to do so at the expense of consistent regulations and spending. How a city responds will affect far more than its record on transportation and will speak volumes about its commitment to innovation and competition.

Feature Photo: cc/(Alfredo Mendez)