Does Car Sharing Make Sense for Your Business?

by Jennifer Gregory

2 min read

Do you have a company car that rarely gets used? Do you pay a hefty sum to reimburse employees for mileage when they use their own cars for business? Perhaps it’s time to consider using a car-sharing service instead. The move could save you money.

Car-sharing services are available in most major U.S. cities and college towns, with expansion under way to other markets, especially given Avis’s recent purchase of Zipcar. Most service providers charge an hourly fee to rent a vehicle that’s often available with limited or no advance notice, though reservations are often an option, too. Some even offer reduced rates to businesses midweek, because the drivers who rent cars for personal use typically need transportation on weekends.

Understanding the Fine Print

Car sharing can be a smart choice, but it isn’t a viable solution for every business. Here are a few key points to consider:

  • If you use your business vehicle for advertising, find out whether a car-sharing service in your area will let you put a large “slap-on” magnet (bearing your company’s logo, of course) on the car while you are using it.
  • If your only occasionally need wheels for business purposes, car sharing may be perfect for you. But if you need a car on a regular basis, you may save money by purchasing a company car.
  • If you need a car for only a few hours, car sharing is less expensive than renting a car for a full day. However, depending on the terms of your car sharing options and rental car rates if you use a shared car for more than a few hours, it can be more expensive than a full-day rental. If you live in a location where rental car rates fluctuate by season, be sure to compare costs for different months of the year.
  • Mileage allowance and hourly fees vary. The national chain Zipcar includes gas and mileage in its hourly rate up to 180 miles. Other companies, such as City CarShare in San Francisco and eGo CarShare in Colorado charge a per mile rate in addition to the hourly fee.

Doing the Math

For the next month, track the use of all company and personal vehicles for business purposes. Record the number of miles and the length of time that each car was used on each occasion.

Meanwhile, research the car-sharing companies in your area to determine the rates and nearby rental locations. Find out whether the programs require an annual fee in addition to the hourly rate and, if so, factor this cost into your calculations.

Use all of this information to calculate what the costs of car sharing would be in the following scenarios:

  • Full-time ownership of a business vehicle;
  • Renting a car at a daily rate on the days a vehicle was used;
  • Participating in a car-sharing program based on the total hours you would need it; and
  • Having employees use their personal vehicles and reimbursing them for mileage at the 2013 business rate of 56.5 cents per mile.

Then, just compare the costs of these different scenarios to determine whether participating in a car-sharing program could save your business money. You might be surprised!

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