Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

General Motors Company (GM), Avis Budget Group Inc (CAR): Automakers Invest in Car-Sharing Industry

General Motors (NYSE:GM)Car sharing is part of the growing peer-to-peer rental networks that rose shortly after the global financial crisis began between 2008 and 2010. And the internet has made the process of pairing owners and renters very easy. New ventures include Airbnb, which plays matchmaker to those who want to rent out a vacant room, and RelayRides, which let’s you find individuals willing to rent out their cars for a fee. The arrangement can be a win-win on both sides; the owner gets a chance to earn extra income and the renter can save money by avoiding renting or leasing services offered through more traditional means. Business consulting firm Frost and Sullivan estimates that car-sharing revenues in North America could reach $3.3 billion by 2016. In addition, leading venture capital firms, such as Google Ventures and Sequoia Capital, have provided funding for companies engaged in “sharing” schemes, or as Silicon Valley likes to call it “underused asset utilization.”

Car manufacturers enter playing field

Large automakers and car-rental companies, such as General Motors Company (NYSE:GM) and Avis Budget Group Inc. (NASDAQ:CAR), have entered the game and are starting to pay attention to an industry that could prove to be disruptive. In 2011, GM’s investment arm, GM Ventures, was one of several investors who invested $13 million in RelayRides. In return, RelayRides has been given easy access to GM’s Onstar navigation system and Onstar users also have a faster sign-up process for the rental service. RelayRides’ vehicles equipped with Onstar also have the option of having the vehicles locked or unlocked using an app rather than a key. GM hopes these perks will encourage car owners to sign up for their Onstar service, which could bring additional revenue of $715 a month to the car maker.

According to the Economist, Avis purchased ZipCar in January 2013 for $491 million. ZipCar rents cars by the hour, maintains its own fleet of vehicles and also has a $14 million investment in Wheelz, a peer-to-peer car rental service. With the ZipCar purchase, Avis also gained a stake in the Wheelz rental service.

Across the pond, Fast Company reports that German car maker Daimler AG (USA) (PINK:DDAIF) has a Car2Go, a service very similar to ZipCar’s. The service is currently operating in two pilot cities, Ulm, Germany and Austin, Texas. It allows anyone walking down a street to locate a Smart car via app, access the vehicle via a windshield car reader and PIN, drive it to a local area, and leave it there for the next user. Daimler has also started developing apps for vehicles made by other car manufacturers; for example, its Car2Gether app matches car drivers with riders through social media networks like Facebook and Twitter.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.