Have caviar tastes but a budget that can barely afford an omelet? A new carsharing service aims to put the vehicle of your dreams within reach.
Dubbed HiGear, the San Francisco-based service is the latest twist on the carsharing concept, which is designed to let folks who don’t own or have access to a vehicle easily rent one for short periods of time at a relatively reasonable cost.
While most such services focus on low-end vehicles, such as a Smart fortwo or other basic forms of transportation, HiGear lets its customers rent privately-owned luxury cars. The fee is then split with the owner of the vehicle, helping subsidize their loan payments or maintenance costs, says the service’s founder.
“A lot of carsharing companies focus on people who need a car to go shopping,” explains Murtaza Hussein, the founder and president of HiGear. “Our business model is for people who want to be in a car like an Aston Martin for their birthday or some other special occasion.”
Unlike the best-known carsharing service, ZipCar, HiGear does not actually own any vehicles. Instead, it partners with individual owners who are willing to rent them out short-term. So far, the company has lined up 200 vehicles in the San Francisco Bay Area, including a number of Audi, BMWs, even a Bentley and a new Tesla battery car – the latter owned by Hussein himself.
Rentals typically run longer than those of a ZipCar – where customers may need a vehicle for a few hours to run errands –and significantly higher in cost. The typical HiGear rental runs three days, the company founder says, and averages $410 compared to $20 for ZipCar.
Revenues from the transaction, which is handled on line, are split with 70% going to the vehicle owner, 30% to HiGear. The customer is also billed for insurance, which is handled through Warren Buffett’s Berkshire Hathaway.
Hussein came up with the idea several years ago after selling an earlier high-tech venture and deciding to go out and “treat myself.” He bought a BMW Z4 but realized “It wasn’t practical enough and was sitting in my driveway six out of seven days. So I started renting it to my friends and they thought that was pretty cool.”
After three months in operation HiGear has already signed up 3,100 customers in the San Francisco area, most of which have reportedly rented a vehicle at least once. The company is planning to expand to five cities by year’s end, starting with Los Angeles this month, then San Diego and Portland in November.
Hussein is betting the business model has an advantage over more conventional carsharing concepts since “We don’t have any inventory to carry. It’s just a matter of getting owners and renters to sign up.”
Keeping owners committed to the HiGear concept is a challenge, he admits, and one that requires his firm to keep a close eye on renters. It limits those under 30, for example, to vehicles with no more than 250 horsepower.
“There are 5% who will drink and drive and burn the clutch, or whatever, and we spend a lot of time trying to weed them out,” Hussein stresses, adding that the insurance carries a high, $2,500 deductible, “which says don’t do something stupid or you’ll pay for it.”