Lyft expands to... rental cars?

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As the race for TNCs continues (especially after the demise of Lyft and Uber's stock), Lyft is trying to diversify to include rental cars in their suite of solutions. What are some of the benefits and risks?

Benefits:

  • For TNCs to scale, a host of changes need to occur including reduced car ownership. Easier car rentals for weekend trips makes this possible.
  • Lyft provides free trips to rental sites (up to $20) which could be a significant barrier to rental car usage to begin with (especially with fewer neighborhood locations)
  • Lyft owns all of these vehicles and they are new vehicles which makes this program fully operated by Lyft (not other car rental partners or not their drivers)
  • Provides a significant advantage in comparison to Uber
Risks
  • Uber has tried something like this already and failed (partnership with Getaround); perhaps this was because Getaround had not been as popular or the program allowed hourly service, which could cannabilze some of Uber's business
  • Lyft could worsen relations it has with car rental agencies like Avis with whom their drivers partner with to have a vehicle (see Avis-Lyft partnership)
  • Program may not last very long if autonomous driving becomes a reality, but it still may be worth the investment to get people to give up their cars (and this investment could likely last 20+ years)
Overall, I think it's a great starting point to see how customers react to the 1-day minimum car rental program. It would be interesting if this does pick-up to see how companies like zipcar and other car rentals respond. In addition, if Lyft wants to scale, what investments would they have to make? It seems like buying a lot of cars may be a big burden at a time where the company has yet to show profitability. Would this be something shareholders would be ok with? The dynamics of Uber and Lyft to add new offerings and services and test new faculties could be at risk with the need to become profitable. I would argue that a car rental program would likely not help in terms of short-term profitability (as there are plenty of competitors), but the signaling to have more people reduce car ownership could be beneficial.


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