Big Car Rental’s Attack on Peer-to-Peer Car Sharing — And What Legislators Should Do About It

The internet has revolutionized the way we think about travel. Not only is it easier than ever to book flights, accommodation, and transport, the internet has also enabled new products to enter the market, giving consumers greater choice.

Greater choice encourages lower prices as price comparison shopping takes only a click.

Peer-to-peer car sharing is one such new innovation that is lowering prices for travelers and making money for car owners. Simply, peer-to-peer car sharing enables car owners who don’t always need their car to list it for others to use.

While car sharing may seem identical to car rentals, genuine differences exist between car rental companies like Avis and Enterprise and peer-to-peer car sharing platforms like Turo.

In this blog, we examine why the two products are not the same, and should not be subject to the same tax and regulatory structure. We also examine why Big Rental — especially Enterprise Holdings — is working so hard to undermine peer-to-peer car sharing.

The Difference Between Car Sharing and Big Rental

Peer-to-Peer car sharing companies don’t own any cars

Big Rental, including companies such as Enterprise and Avis, is a traditional business model. These companies own huge fleets of hundreds or thousands of cars and have locations across the country where customers can walk in and choose what car they want to rent. Their stores are often conveniently located in places like airports and other transit hubs.

Peer-to-peer car-sharing services like Turo don’t own any cars or physical stores. Instead, they provide an online platform where individuals can list their cars to be shared.

Enterprise and Avis have special tax breaks not available to car owners

As discussed below, big car rental companies like Enterprise and Avis enjoy $3 billion a year in special tax carve-outs — carve-outs not enjoyed by car owners or peer-to-peer car sharing users.

Sharing with your neighbors, not renting from a company

When you share a car through Turo, you’re not renting a car from a corporation that earns $25 billion in yearly revenue, you’re sharing a car with your neighbor.

It could be a young professional who can walk to work but has a car sitting idly at home, or with someone who uses car sharing so they can afford their dream car.

Why is the car rental industry complaining about peer-to-peer car sharing?

While peer-to-peer car sharing and car rental are different products, they do still compete with one another. Consumers looking for a different experience to car rental can use peer-to-peer car sharing instead.

Unhappy with increased competition, Big Rental has decided to attack peer-to-peer car sharing through lobbying rather than innovating and competing.

Big Rental claims that individual car owners who use Turo have an unfair advantage over multi-billion dollar car rental companies because car sharers aren’t obligated to pay local rental taxes.

But these taxes weren’t designed to target individual car owners, nor platforms which enable peer-to-peer car sharing.. They were designed for traditional car rental services that own huge fleets and are physically present in city-owned transit hubs and require significant infrastructure, including at airports, for storing, maintaining and managing their fleets.

Big Rental knows that forcing individual car owners to pay city rental taxes would hinder competition from the peer-to-peer car sharing market.

The Hypocrisy of Big Rental

It would be one thing if the biggest disagreement between peer-to-peer car sharers and Big Rental was over the definition of rental services, however Big Rental has not been transparent about other key differences in taxes associated with the car rental industry.

Big rental doesn’t discuss its $3 billion in tax subsidies it receives every year — exemptions not extended to personal car sharers. Why are personal car sharers not extended this same subsidy? Because they are not considered rental companies.

When a person buys a car they pay sales tax — regardless of whether they use their car exclusively for personal use or for sharing it. Big car rental doesn’t pay this sales tax. Enterprise and Avis claim that since they are going to sell their fleet of cars every year, they should not pay sales tax when they buy cars for their fleet.

Not only does this car rental tax not extend to personal car owners, it’s also not extended to online platforms like Turo because they don’t own any cars, they simply connect car owners with car seekers.

Does Big Rental believe peer-to-peer car sharers should be offered this subsidy? They’ve certainly never said so, as that would provide a great incentive for more people to share their cars, providing even more competition against Big Rental.

Lessons for Legislators

Legislators should not be taken for a ride by Big Rental’s campaign. Instead, they should see this campaign for what it really is: an attempt by entrenched interests to use the government to protect them from further competition and stifle consumer choice.

Understanding peer-to-peer car sharing and rental car services as different products competing against each other benefits consumers with greater choice and lower prices.

Peer-to-peer car sharing is a new, innovative, competitor in the transportation market, but taxpayers would not be best served by hindering competition. Citizens are not well served when legislators and regulators deny their citizens from using peer-to-peer car sharing while giving big car rental companies $3 billion in tax subsidies every year.