The Stellantis NV brand is expanding its monthly car subscription service with U.S. dealerships, however
In recent years, the company Free2move set up free-floating car rental operations in such major American cities as Denver, Portland, Oregon, and Columbus, Ohio.
Like scooter rentals but for cars, the vehicles were spread out around each city, and drivers could book them from their phones at a moment’s notice for a few minutes or a few days. The vehicles didn’t need to be returned to any particular parking spot.
But the Stellantis NV-owned brand, which also operates in Europe, has been learning just how challenging — and costly — this type of car-sharing business is to operate. Free2move has outlasted many competitors in the space, and purchased another, but in recent months it pulled its fleets of mostly Jeep Renegades off the roads in all but one U.S. city, Washington, D.C., as it looks to reset its technology and operations systems.
There were “a lot of problems that now we are recovering on, and when we will be able to deploy our own tech, it will help even more,” Free2move CEO Brigitte Courtehoux said in a recent interview.
She said the goal was to “stop the problems, stop the bleeding” by pulling the cars off the road, and then relaunch the service in more cities once a number of issues are resolved, likely over the next six months.
Courtehoux said the various costly problems included traffic violations, damage, theft, and simply losing track of the vehicles.
It’s a tough business to make a profit in, as other major automakers who wanted to get into car sharing also found out. Ford Motor Co. and General Motors Co. shut down similar services several years ago. And Share Now, the service formerly known as Car2Go and previously owned by automakers Daimler AG and BMW AG, exited North America in 2019, citing rising operation costs — and then was bought up by Free2move in 2022. According to a joint Share Now and Free2move website, the service continues to operate in 15 major European cities.
Share Now “was making a significant amount of losses, and that’s why two German carmakers sold it to us, and we fixed it,” Stellantis CEO Carlos Tavares said at a recent forum. “We are 50% market share of the car-sharing services in Europe right now.”
Yet he acknowledged that big hurdles remain for the business, including securing parking for the rentals from cities, as well as keeping insurance costs down. The CEO said there has been “a lot of destruction and a lack of security” issues in some cities. Obtaining affordable electricity rates for the fleet’s battery-powered rentals is another challenge, he said.
The United States represented less than 7% of Free2move’s business as of November 2023, The Detroit News previously reported. The U.S. part of the service is now focused on integrating Share Now’s technology into its systems, Courtehoux said. That includes improving the app that customers see but also back-end technology that allows managers to keep track of the rental fleets in real time.
This will help employees spot what sort of damage has occurred, if a fine has been issued due to a traffic violation, if certain cars are in the shop, or if a customer hasn’t paid and the car’s systems need to be remotely blocked.
The bottom line is that you can’t expect to be losing track of vehicles or having a large percentage off-line and still make a profit, Courtehoux said. At one point in the United States, the company had just 40% fleet availability for its free-floating service, she said, but now that it’s focused on Washington only, availability has grown to above 90%.
“If you lose your assets, you cannot give it to your customer, (and) you are dead,” she said. “So we spent one year, since last year, working on that, and we are recovering now … we know how to manage it now.”
Traditional rental car companies such as Hertz and Avis have the benefit of a single office and compound where vehicles are picked up, dropped off and repaired, Courtehoux noted. That’s nice for the rental car company: An employee gives the keys to customer, and the vehicles are often inspected for damage. But it means less flexibility for the customer.
Other services, such as Zipcar or Turo, offer more flexibility on how and where to rent but still enforce certain rules about where the car is picked up and returned.
Courtehoux said some of Free2move’s main competitors in the car-sharing space now are German-based companies Miles and Sixt, and the Italian firm Enjoy. She believes the convenience of free-floating car rentals in cities is a draw that can translate into success.
“If you do it well, it will be a huge differentiator, right? Because having the car 300 meters from you is a game-changer,” Courtehoux said.
Yes, you can take an Uber or Lyft for many short trips, she noted, but not for certain types of trips, and some people don’t like having someone else drive them around.
“You don’t go with an Uber for a weekend, eh?” the CEO said. “You take a car. So you have the car 300 meters from you. You use it for the weekend. You use it for 30 minutes. You don’t have the burden of having a bad driver.”
Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions LLC, said there are at least two factors that will will continue to hold back the car-sharing industry in the United States. One is a strong car culture, with Americans connecting so much of their personalities to their vehicles. Another is lingering concerns over germs or other cleanliness, especially in the wake of the coronavirus pandemic.
“It doesn’t see like anyone has found the right formula yet,” Fiorani said. He added it’s possible the next generation of American drivers won’t feel the same strong connection to their personal vehicles — creating an opening for car-sharing to gain momentum in some cities — but that’s probably at least a decade out.
Free2move did get a warm welcome when it expanded into Portland as its first U.S. city beyond Washington, in 2021. City officials pitched car sharing as one way to limit auto ownership and the resulting congestion and pollution issues. The Portland Bureau of Transportation said after the company closed up shop there last November that 175,000 trips had been taken using the service since it launched. A spokesperson for the agency did not respond to a request for additional details on the service’s stint in the city, or Portland’s plan for car-sharing now.
After Portland, the company later expanded to cities that included Denver, Columbus and Austin, Texas, and announced plans last year to move into additional cities including Dallas and the Los Angeles area. But all of that was paused in recent months as the company decided it needed to fix the technology and vehicle-management issues.
Craig Harlow, 56, was one of the Portland residents who frequently used Free2move vehicles, as well as its predecessor, Car2Go. He doesn’t own a car, and usually gets around the city on foot, bike or public transit. But for longer trips, or treks out of town, he liked to rent one of the vehicles, and there was usually one sitting within a few blocks of his home.
“That was very handy for casual use,” he said.
The service did often have issues, from really dirty cars to a highly glitchy app, Harlow said. Sometimes it wouldn’t work to open the car or start it up, he said, which meant he was constantly calling the company’s support line. Still, he said he’d gladly have Free2move back in the city, and wished Portland had done more to incentivize it and other car-sharing services to stay.
Courtehoux said Free2move has continued to expand its “Car on Demand” subscription service in the United States — a separate offering where dealers can provide a vehicle to customers for a month or two. Prices in Metro Detroit run from $799 per month for a Jeep Compass, up to $1,149 for a Ram 1500. The cost includes maintenance, insurance and roadside assistance.
According to Edmunds.com, the average new vehicle payment in the first quarter of this year was $735 per month.
The car subscriptions, which were first rolled out in the United States last year, have expanded to about 50 dealerships around the country, the executive said. Free2move has also been working to install fast chargers for electric vehicles at hundreds of dealers around the country in a separate initiative.
lramseth@detroitnews.com
@lramseth
