The smarts when it comes to cars

WHEN you go into business you can do more of the same, play by the rules and compete with lots of businesses already up and running -- or you can break all the rules. Playing by the rules might be less risky but, normally, the real money is made by turning things on their head. Let's say you wanted to take on the car industry. It is quite literally worth trillions and dominated by
a dozen or so global companies. Try to compete with these guys playing by the rules and you will die. But let's think about the car industry. It is built on the idea of individual car ownership.

There must be more than a billion people who own cars. We use them to drive to work, potter around on weekends and go on holidays. Numbers out last week show that the cheapest car costs just over $100 a week to run, the most expensive about $350 a week. Much of this winds up in the pockets of the industry. What if we could change the model of car ownership? What if a billion people no longer owned their own car? What impact would that have on the industry?

I came across a tiny business called Charter Drive. I paid my $25 membership and received a smart card. Now, when I want to drive, I go to a car park, swipe the card, jump in a new Mercedes, drive around and then return it to the car park. During the day it costs about $12 an hour plus a bit for petrol. But, get this: on evenings you can hire the car for just $13 a night or $66 for a weekend. Let's say I own a car and drive it into the city each day. It costs me about $200 a week (for a typical car) in running costs plus about $100 a week for parking.
Or, I can sign up to this deal, pay $13 for four nights a week and $66 for the weekend. Total cost is just under $120. I don't pay parking, rego or insurance. I am always driving a relatively new model.

When you look at the business model you realise that this is actually an alternative model to individual car ownership. We all still drive around everywhere, so there is no reduction in the miles we drive or traffic levels. It is just that we all share the same fleet of vehicles. The efficiency comes from cutting back on the billions of dollars in cars that sit in car parks all day depreciating while doing absolutely nothing.

I, for one, am a convert.
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E-mail: moriarty@thewrittenedge.com
Caption: New idea: Owning your own car is expensive but is there an alternative
Column: Taking Stock Your Money; Section: FINANCE