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Transportation Research Record 1702 ■ 31

Paper No. 00 - 0521

Evaluating Carsharing Benefits

Todd Litman

Carsharing is an automobile-rental service intended as a substitute for North American carshare organizations typically charge a $300
private-vehicle ownership. Carsharing emphasizes affordability and to $500 refundable deposit, $1 to $2/vehicle-h or $25 to $45/day
convenience. Vehicles are located near residences, rented by the hour, rate, and a $0.15 to $0.25/km ($0.25 to $0.40/mi) charge (2, 3).
and require minimal effort to check in and check out. Carsharing ser- These charges cover all regular vehicle expenses, including fuel and
vices are common in some European countries and are increasingly insurance. Many carsharing organizations also offer pricing options
common in North America. Carsharing gives consumers a practical alter- suitable for extended trips and infrequent users. Carsharing is con-
native to owning a personal vehicle that is driven fewer than 10 000 km sidered a cost-effective alternative to owning a vehicle driven fewer
(6,000 mi)/year. Carsharing has lower fixed costs and higher variable than about 10 000 km (6,000 mi)/year. Carsharing organizations
costs than private-vehicle ownership. This price structure makes occa- typically have 8 to 15 members/vehicle.
sional use of a vehicle affordable, even to low-income households. It also Members reserve vehicles, usually by telephone. Carsharing orga-
gives drivers an incentive to minimize their vehicle use and to rely on nizations with multiple vehicles in an area are able to satisfy most
other travel options as much as possible. Carsharing typically reduces schedule requests (more vehicles in a pool result in fewer conflicts).
average vehicle use by 40 to 60 percent among drivers who rely on it, Time and mileage are recorded before and after each trip. Users refuel
making it an important transportation demand-management strategy. the vehicle as needed, using a carshare credit card. Staff perform
Despite these benefits, the use of carsharing is growing slowly and will cleaning and maintenance. Members usually are billed monthly.
need to overcome several barriers to achieve its full potential. Station cars are a variation of carsharing (4). Station cars are
rented at transit stations for trips from terminals to local destina-
tions. This makes transit use more feasible, particularly in suburban
Consumers have many choices when they purchase or lease an auto-
areas. Because they are intended for short trips, station cars can
mobile but few practical options if they want to use a car only occa-
employ small, alternative-fuel vehicles, such as battery-powered
sionally. Most vehicle-rental services are located at transportation
electric cars (5).
or commercial centers, and rental services are priced by the day or
the week, making them unsuitable for a typical short errand. This
limited range of options contributes to several problems, such as the
As illustrated in Figure 1, carsharing offers a middle option between
• Some low-income households cannot afford to drive at all,
having no vehicle and owning a private vehicle. It allows (in fact, it
leaving them mobility-disadvantaged in an increasingly automobile- virtually requires) consumers to use a combination of modes rather
dependent society. than relying entirely on automobile travel.
• Low-income households often spend an excessive proportion
Table 1 compares the convenience and price of five common per-
of their incomes to own cars they seldom need. This can be a sig-
sonal travel options. Private-vehicle ownership offers the most con-
nificant financial burden and contributes to problems such as unin-
venience. It has the highest fixed charges and lowest variable charges.
sured driving.
Carsharing offers medium convenience. It has low fixed charges and
• Many automobiles are used only a few times per week. These
high variable charges. Conventional rentals are convenient at major
low-annual-mileage vehicles have high costs per vehicle-mile.
transport terminals but less convenient elsewhere. They have high
• Because private vehicles are expensive to own but cheap to
daily rates but low mileage costs, so per-mile costs are high for short
drive, owners have the incentive to maximize their use. This increases
trips but low for longer trips. Taxis are relatively convenient and have
external costs such as traffic congestion, facility costs, accidents, and
no fixed charges, but they have the highest variable charges. Public
environmental impact.
transit has moderate to low convenience (depending on location) and
moderate to low charges.
Better vehicle-rental options could reduce these problems. Car-
Figure 2 compares the typical variable charges for each mode.
sharing describes vehicle-rental services intended to substitute for
These obviously vary. For example, conventional vehicle rentals are
private-vehicle ownership (1). Carshare vehicles are located near
often cheaper per mile than carsharing for long trips but are much
residential areas, have hourly rates, and are convenient to use. Car-
more expensive for short trips. Here are typical variable costs for a
share organizations range from small, informal cooperatives to
large, sophisticated businesses with many vehicles. Carsharing is 25-km (15-mi) round-trip errand by different modes:
common in some European countries (particularly the Netherlands, Mode Typical Cost
Switzerland, and Germany) and is being introduced in some North Carsharing $10.00
American markets. Conventional Rental $32.00
Private Car $2.00
Victoria Transport Policy Institute, 1250 Rudlin Street, Victoria, British Columbia Taxi $15.00
V8V 3R7, Canada. Transit $3.15
32 Paper No. 00 - 0521 Transportation Research Record 1702

FIGURE 1 Carsharing is a middle option.

Less than a quarter of private-vehicle expenses are variable, as Approximately one-fifth of the vehicles in North America are cur-
shown in Figure 3. This price structure gives vehicle owners an rently driven fewer than 6,000 miles (10 000 km)/year (10). Lower-
incentive to maximize driving to get their “money’s worth.” Car- mileage motorists are particularly common in higher-density urban
sharing allows drivers to pay as they go, with minimal fixed costs areas, where carsharing is more practical. Of course, not all lower-
but much higher variable costs. Carshare rates typically average mileage motorists want to shift to carsharing. On the other hand, how-
$0.60/ vehicle-mi driven, five times the variable charges of a private ever, many motorists who currently drive more than 6,000 mi/year
automobile. This gives consumers an incentive to drive less and use could find carsharing cost-effective by reducing their driving time and
other transportation options when possible. distance.
As a result of these differences in pricing, households that join car- Assuming that 30 percent of North American drivers live in higher-
share organizations typically reduce their vehicle use by 40 to 60 per- density, multimodal neighborhoods and 20 percent of these have low-
cent (6–8). Although some households that would not otherwise have annual-mileage vehicles, approximately 6 percent of current privately
access to a vehicle increase their vehicle use due to carsharing, this owned vehicles could shift to carsharing.
is usually offset many times over by reduced mileage among drivers A market survey of potential carshare customers conducted in
who would otherwise own a personal automobile. As a result, there Calgary, Alberta, Canada, (11) revealed the following:
is usually a significant net reduction in total vehicle travel among
• High fixed fees (such as a $300 to $500 deposit) are a major
carshare users as a group.
barrier to membership. Members seem to prefer low or fixed higher-
variable charges.
• There is little preference for a cooperative organization structure.
• Potential members appear willing to walk more than 400 m
It is difficult to predict how much carsharing can ultimately grow. (437 yd) to access a car.
• Residents of urban neighborhoods with restricted on-street
European experience indicates that carsharing can be useful to a wide
range of consumers, including many relatively wealthy households parking, and households with lower incomes, appear particularly
amenable to carsharing.
that avoid owning a second or third vehicle.
• There is little preference for new cars; however, there is a pref-
Carsharing requires a sufficient number of users within conve-
erence for having a minivan as a vehicle option.
nient walking or cycling distance of where vehicles are parked and
is most effective in areas with good travel alternatives. To have
three carshare vehicles stationed in a neighborhood with 10 mem-
bers per vehicle requires at least 30 member households within
approximately 1 km2. Increased Mobility
Carsharing is therefore most suitable for higher-density urban
neighborhoods with good walking, cycling, and public-transit ser- Carsharing offers persons who cannot own a private car the ability to
vices. Approximately one-third of U.S. residents live in cities use a vehicle occasionally. These benefits can be significant because
(9, p. 382). Some clustered suburban neighborhoods also may be the mobility of nondrivers is often so constrained. For example, giv-
suitable for carsharing, particularly if they have good transit service, ing someone who currently has no access to an automobile the ability
pedestrian-friendly streets, and local commercial centers. to drive just once or twice per week is likely to result in relatively

TABLE 1 Comparison of Five Common Vehicle Use Options

Litman Paper No. 00 - 0521 33

FIGURE 2 User expenses for various modes (6– 8).

high-value trips. Such trips are currently forgone or are performed changes. This is called option value (14, p. 5). For this reason, people
inefficiently by other modes. who currently own their own vehicles may value having carsharing
options in their neighborhoods, the same way that many drivers value
the existence of public-transit services.
Economic Development

Carsharing can increase economic productivity by allowing job User Savings

seekers, who cannot afford a personal vehicle, the use of a car if
needed for job searching and employment (12). Carsharing also Vehicle ownership is a major household budget expense that can be
can fill special market niches. For example, small businesses could a major burden to moderate- and low-income households, as indi-
use carsharing as a more efficient and flexible alternative to own- cated in Figure 4. Households that share, rather than own, a car can
ing vehicles. This is particularly the case for vehicles that receive reasonably save $500 to $1,500/year. Some households also can
only occasional use if no conventional vehicle-rental service is save on residential parking costs (15).
located nearby. Although carsharers forgo some benefits when they reduce driv-
ing, they must be better off overall if their incremental savings are
compared with their incremental costs, or if they would not make
Equity such changes (16). Carsharers also may value the convenience of
avoiding vehicle maintenance and cleaning tasks and the security of
That nondrivers enjoy less mobility and a competitive disadvantage having no unexpected repair bills.
compared with drivers, when competing for jobs and education, is
unfair and inequitable (13). Carsharing can, therefore, increase equity
by improving the mobility options of people who are transportation- Vehicle Choice
Motorists often purchase vehicles that exceed their usual require-
ments for capacity and performance, such as a van or a light truck, to
Option Value meet occasional peak demands. A cheaper, more resource-efficient
vehicle usually would suffice. Many carsharing organizations offer
Even people who do not currently use carsharing may benefit from a choice of vehicle types so that a user can choose a vehicle that best
having it available in the case of emergencies or if their life situation meets the needs of a particular trip. This benefits consumers and may
provide external benefits by reducing the use of oversized vehicles in
cases in which smaller vehicles are adequate.

Introduction of New Technologies

Carsharing, and particularly station cars, may help introduce and

test new technologies. For example, some station-car programs are
testing neighborhood electric vehicles (17).

Transportation Demand-Management

By reducing per capita vehicle travel, carsharing supports transporta-

tion demand-management (TDM) objectives (18). It can help reduce
FIGURE 3 Vehicle costs (9). congestion, road and parking facility costs, accidents, pollution,
34 Paper No. 00 - 0521 Transportation Research Record 1702

FIGURE 4 Transportation expenditures as percentage of household income (19).

resource consumption, and other environmental-impact issues. By Improve Travel Choices

reducing vehicle traffic and parking requirements, carsharing allows
more flexible infill development and helps create more livable com- Good public transit, ridesharing, cycling, and walking conditions
munities. These benefits can be particularly significant in higher- allow people to reduce their vehicle use and benefit from carsharing.
density urban neighborhoods, where carsharing is most feasible and
the external costs of automobile use are greatest. Specific examples
of avoided costs are described next. Integrate Transportation and Land-Use Planning

• Urban-freeway congestion costs are estimated to average Higher density, multimodal, mixed-use neighborhoods, and flexible
$0.06 to $0.09 under moderate congestion 83 km/h (50 mph), and parking requirements allow residents to reduce their vehicle use.
$0.37 when congestion is heavy [traffic flows at less than 66 km/h
(40 mph)] (19).
• An average vehicle receives $414 to $1,232/year in parking Manage Parking for Efficiency
subsidies (20).
• One study found that local governments spend about $275/ Building development and management practices can be changed so
that residential parking is rented and sold separately from housing.
vehicle on local roads and traffic services that are funded by general
This would significantly increase ($500 to $1,000) annual savings
taxes (21).
• Motor vehicles are major contributors to urban air, noise, and from carsharing (23, 24).
water pollution.
Implement Commute-Trip-Reduction Programs
MAXIMIZING CARSHARING BENEFITS Establish Transportation Management Associations in commercial
centers. Encourage employers and employees to cooperate to develop
Several barriers must be overcome before carsharing can provide its
better travel choices and to develop incentives to use alternative modes
full potential benefits. Some carshare organizations have reported
of transportation. Another alternative is to cash out free parking,
difficulty obtaining loans and insurance. Overhead costs for vehicle
which means offering commuters cash instead of free parking (25).
management, reservations, and billing can be significant, so inno-
vations that reduce these costs would help make carsharing more
Integrate Carsharing with Other
A major barrier is the need to establish and maintain a critical mass
Mobility Services
of users (typically 30 members or more) in individual neighborhoods.
Carsharing cannot develop until enough potential users in each area For example, carsharing could be bundled with public-transit passes,
are familiar with the concept, understand how it can benefit them, taxi service, and rideshare matching, giving users an integrated
and develop trust in the organizations. This will require education package of mobility options.
and marketing. Carshare organizations may require “seed money”
to become established.
Carsharing both supports and is supported by most other TDM CONCLUSION
strategies (22). TDM strategies include measures that increase travel
choice and reduce market distortions that encourage excessive auto- Carsharing need not be managed as a cooperative to achieve the ben-
mobile travel. These strategies tend to have synergetic effects—they efits described earlier. For-profit neighborhood car rentals may pro-
are more effective implemented together than separately. Over the vide comparable service. They could become more economically
long term, they help create a more diverse transportation system viable if rental transactions could be self-serviced or handled as a
and reduce automobile dependency in a community. Other TDM sideline by existing businesses, such as local stores and service sta-
strategies that integrate with carsharing are described next. tions. Ironically, one of the best ways to reduce automobile depen-
Litman Paper No. 00 - 0521 35

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