A car-sharing system that allows business people to access vehicles in central locations promises to cut costs - and greenhouse gases.
An entrepreneur keen to take advantage of interest in sustainability has taken a European business model to Australia, with backing from a Swiss company.
Charter Drive founder Paul Reichman has launched car sharing as a business-transport option, one that cuts business budgets and greenhouse gas emissions.
Reichman, formerly a technology investment analyst in South Africa and Australia, hit upon the idea when he linked the large fringe benefits tax bills of Australian businesses and the car-sharing concept of European cities. Reichman understood that the business model was inhibited by technology, but once a system of keyless entry through smartcards was designed in Europe, he felt expansion was inevitable.
Reichman's model comes from Switzerland, where car sharing is integrated seamlessly into the public transport system. Customers get off a train and into cars parked nearby to run errands or attend meetings. Car-sharing credit can be added at station terminals. Greenhouse gas emissions are reduced by increasing the use of public transport.
Europe's largest provider, Mobility CarSharing, turns over 43 million Swiss francs ($44 million) a year with 1850 cars in 1000 locations. Growth has been fast. In 1993, there were 3000 people using Mobility cars; today, the customer figure is 69,400.
With seed funding from a Swiss firm, Charter Drive is designed around a hub-and-spoke model where one or two cars are located in central locations. The cars are unlocked with a smartcard. Once a personal identification number has been entered into a keypad, the keys are available from the glovebox. The billing system is based on a monthly fee plus hourly rates for each trip. The main expenses for Charter Drive are car leases, insurance, marketing and technology; the company has licensed French software and adapted it for Australia and New Zealand.
Reichman has found support in his search for car spaces from an unlikely source. Building owners and parking stations are keen to supply cheap car spaces because they see it as an amenity to the location. "[Car sharing] engages progressive people and stimulates them to think they can be more environmentally friendly or provide a more intelligent service to clients," he says.
Unlike his Australian competitors GoGet and Flexicar, which focus on individuals, Reichman attributes the early growth of the company to his focus on the business market. The Charter Drive service consists of 12 Mercedes-Benz cars in Sydney equipped with global positioning service navigation and hands-free mobile phone cradles.
The Australian business market is large, with 400,000 people working in Sydney's central business district and 250,000 people working in Melbourne on an average work day. Reichman says city-based businesses are wary of supplying cars and parking to employees because of hefty fringe benefits taxes or the direct costs of running car fleets, which may not be managed efficiently. Taxi companies are the only alternative.
A second growing concern is encouraging employees to use public transport on journeys to and from work to cut greenhouse gas emissions.
Charter Drive's initial marketing efforts have targeted medium-size companies such as Watermark architects, a practice of about eight architects who use the cars for work meetings. KU Children's Services uses the facility to ferry information technology team members to child-care centres around Sydney. Another client, travel company Voyagers, uses a special overnight service to allow late-shift information technology employees to get home safely and return the cars early in the morning.
The six-month start-up period for the Sydney premium service netted $140,000 in revenue based on a limited number of cars. Reichman is projecting revenue of $450,000 in the next 12 months based on extra cars and a new joint venture.
The company is launching a shift to the consumer market with a new brand, Smarter Drive. Charter Drive will use its website and technology to support the model of an existing company, Smart Pilot, which places advertising on a new range of two-seater Daimler Chrysler smart cars. Previously, Smart Pilot used long-term and one-day lease arrangements.
Reichman says the advertising revenue will subsidise the cost of the vehicle to allow Smarter Drive to undercut its car-sharing competitors. "The aim is to be the Jetstar of transport," he says.
The expansion will see 20 new cars launched in Sydney. The service will be extended to the Melbourne CBD mid year with 20 cars and Brisbane later in the year.
Reichman insists the service will not be overloaded by new customers, saying the expansion plans must progress slowly.
"We will have a waiting list," he says. "We are always buying new cars, but we have to manage cash flow."
Transport success
* Seek funds from investors where the business idea has flourished.
* Explore alliances such as car-share spaces at parking stations.
* Design a 24-hour business model - an overnight service for customers who work late.
* Reduce costs by seeking alternative income such as advertising space.