Big business bullies versus scrappy innovators

Why David should always fight back against Goliath

Life isn’t fair. So your mother told you when you were growing up, and the older you get, the more you realize her sage words are all too true. But you also realize the profound importance of fighting back against injustices. Competition is what makes business exciting — everyone’s always jockeying to be the first, the biggest, the brightest. But when the gloves come off and the punches fly, you realize that businesses don’t always play fairly.

Enterprise Rent-A-Car, the biggest car rental company in the world, has been waging a multi-front war against Turo for over two years now, using misleading legislative tactics that show that they’re in to fight dirty. Their narrative equates Turo hosts with corporate car rental companies and asserts that hosts should be taxed and regulated as such. Enterprise has been aggressively perpetuating this story in state capitol halls around the US, using their sizable clout to tax, regulate, and bully Turo out of existence.

A peer-to-peer car sharing marketplace, Turo connects people who need a car with folks who have one to spare. It empowers people to offset the costs of these expensive assets, while creating a collaborative community and creating unparalleled choice for consumers, since our “fleet” is a vast network of privately owned vehicles — from daily drivers to exotic head-turners.

As the Washington Post recently reported, incumbent bully Enterprise is threatened by Turo as an innovative alternative to their aging business model. They’re fighting their battle for relevance with their deep pockets and political influence rather than where it counts — by improving the consumer experience and innovating to keep up.

What’s going on

The most significant volley in their war of attrition came from the city of San Francisco, who, lobbied by Enterprise, recently sued Turo claiming that we were dodging regulatory fees at San Francisco International Airport, despite California legislation clearly differentiating peer-to-peer car sharing from car rental,(1) and many olive-branch efforts by Turo to collaborate with SFO on a fair permitting regime. Turo responded to these baseless claims assertively, counter-suing the city of San Francisco for unlawful and unconstitutional practices.

The most recent attack has been in Maryland, where Enterprise and its mouthpiece, the American Car Rental Association, have pushed legislation that would define peer-to-peer car sharing hosts as rental car companies, thus imposing the same permitting and fee structures on both parties.

Equating a multi-billion dollar corporation with a network of local car owners sharing their cars to help make ends meet is unfathomably unfair and unethical. Enterprise asserts that they just want a “level playing field.”(2) While they collect rental car taxes from consumers, they fail to mention that they don’t pay sales tax on vehicle purchases (which everyday citizens certainly do) and enjoy tens of millions of dollars in annual savings from federal tax breaks in Maryland, and billions nationwide. Ironically they save far more in sales tax deductions and federal tax exemptions than consumers pay in rental car taxes! They get a free pass on their own taxes, and then pass the buck to consumers for rental car taxes.

To “level” the proverbial playing field, they blocked passage of a sensible car sharing law in Maryland until legislators relented to their pressure and imposed an 8% tax on peer-to-peer car sharing in Maryland, with no consideration for the outsize benefit afforded to them on sales tax exemptions on vehicle purchases. The arithmetic for leveling the playing field with everyday consumers just doesn’t add up.

Enterprise has undertaken similar efforts all across the country, but fortunately, Turo has been prevailing in these state-level legislative battles based not on campaign contributions, but on objective fairness. In 2018 alone, Turo has worked to block harmful and anti-competitive legislation and proposals pushed by Enterprise in Indiana, Iowa, New Hampshire, Maine, West Virginia, Utah, New Mexico, Hawaii, and California.

To level the playing field truly, Turo has been championing legislation that would recognize peer-to-peer car sharing as a distinct industry from car rental, and we’re firmly resolved to prove that innovation cannot be boxed into traditional frameworks.

Building walls around the past

For years, Enterprise has been gobbling up its competitors — it acquired Vanguard Automotive Group in 2007, the parent company of National Car Rental and Alamo Rent a Car, and has been collecting small car sharing companies for the last decade. The result is a behemoth company with massive market share. In 2017, they had more than double the fleet size of their next largest competitor (Hertz) with 1.2 million cars in the US alone,(3) and they reported $22.3 billion in revenue.(4) Despite controlling nearly half the car rental market, they’re still battering the little guys and demonstrating monopolistic behavior. They’ve poured significant time and resources into consolidating the market, investing in their own profitability, and securing tax breaks at the state and federal level, rather than innovating their business model.

Incumbent monoliths resist modern innovation, but innovation consistently wins in the end.

The rental agency experience hasn’t changed in decades — you still linger in line at the rental counter, fill out form after form, and all for some lackluster car “or similar” that was bought wholesale from the manufacturer’s surplus supply. It serves its purpose, but it couldn’t be more commodified.

Contrastingly, the peer-to-peer car sharing business model has been evolving for years, and is now being recognized as a legitimate threat to traditional models. Sweating under the pressure, antiquated big businesses are trying to quash their modern, technology-enabled competition with their heavy-weight might instead of fighting where it counts — with innovation.

Bullying away their own shortcomings

This narrative, of course, is not new. All incumbents have tried the same tactics over the years — something newer and smarter emerges, and the granddaddy bigwigs try to swat it away like a housefly. Telecoms tried to regulate VOIP providers like Skype out of existence, taxis tried to shoo Uber and Lyft away, hotel chains tried to snuff out Airbnb, auctioneers and traditional brick and mortar businesses tried to jettison eBay, Blockbuster tried to kill Netflix. And look how those battles turned out.

Until these big businesses invest in clever solutions to modern-day problems, they’re just fighting to preserve their outdated glory days. They also are positioning themselves as bullies, and no one likes a bully. Incumbent monoliths resist modern innovation, but innovation consistently wins in the end.

Enterprise simply can’t offer the selection and personalized customer experience that Turo hosts can. Hosts, like their cars, run the gamut — from families trying to make ends meet, to students paying off their loans, to car collectors who want to share the experience of their cherished collectibles. A study we conducted in early 2017 reported that over half (52%)(5) of Turo hosts surveyed use their earnings to pay down their car loan or lease payments. As a result, the cars available run the spectrum from the affordable and practical to the extraordinary and rare, and the experience is personal, unique, and categorically different from a rental car experience.

A rally cry for the underdogs out there

The Turo community is anyone working to pay off their car or make ends meet. They’re neither a corporate entity, nor do they enjoy the huge tax breaks that rental car companies do. They’re regular folks.

On behalf of all the Davids out there fighting their Goliaths, we fight with you. We fight for our community, we fight for the innovators, we fight for the people turning towards a brighter, smarter future, and we fight against big business bullies in favor of a level playing field for consumers.

(1) Source: Cal. Ins. Code § 11580.24.

(2) Source: The Verge, February 23, 2018.

(3) Source: Auto Rental News, Market Data — US Car Rental Market

(4) Source: Reuters, October 23, 2017.

(5) Source: Turo host survey, January 2017. 645 respondents.