Every day, carsharing conquers new markets across the globe. This type of shared mobility has already proved itself viable, and there’s still room to grow. Carsharing looks appealing as a business idea, and modern technologies make it possible to provide customers with high-quality service. This article tells you how to start a carsharing business and which features to include in a mobile app.

Carsharing is a rapidly growing business. It’s a healthy alternative to private car ownership, offering fewer responsibilities and more freedom. There’s no need to purchase a car, spend money on fuel and maintenance, and constantly search for a parking spot. Moreover, Millennials and those in Generation Z like to share. They prefer to rent, borrow, and swap everything from hiking gear and power tools to homes and yachts rather than buy them.

This is why shared mobility has become a trend. It includes services such as ridehailing (Uber, Lyft), carpooling, scooter sharing (Lime, Bird), and, of course, carsharing. The most prominent carsharing operators are car2go, Zipcar, Getaround, Turo, and Maven.

Carsharing is a healthy alternative to private car ownership that offers fewer responsibilities and more freedom.

Carsharing services differ by both business and sharing model. For example, car2go uses a business-to-customer (B2C) model and provides a free-floating service. Getaround and Turo offer peer-to-peer (P2P) carsharing.

Benefits of carsharing

Initially, carsharing was akin to traditional car rentals: people rented cars for long distance travel or special occasions instead of using their own car. However, gradually more and more people started to consider carsharing as a means of everyday transportation.

This tendency is wholesome, as it helps to solve immediate problems by:

  • reducing CO2 emissions
  • minimizing urban congestion
  • addressing parking problems

It’s true that by switching from car ownership to carsharing (and other eco-friendly means of transportation) people can greatly reduce their carbon footprint. Although carsharing doesn’t solve the traffic congestion problem completely, it’s a move in the right direction. One shared car takes 15 private cars off the road. This helps to solve issues with the lack of parking space, as streets in urban areas are usually overloaded with vehicles.

How to start a carsharing company

Many entrepreneurs see carsharing as a lucrative market and have latched onto the idea of starting their own carsharing companies. According to Roland Berger, the carsharing market will grow by as much as 30% annually through 2020, potentially reaching more than $6 billion in global revenue. You can be part of this growth, but first you need to learn what steps to follow before entering the carsharing market.

Decide what type of carsharing service you’ll provide. You can own a dedicated car fleet and use a mobile app to manage it and gain more users. Or you can bring together car owners and renters with your app and generate income from membership fees.

Choose the business model for your service. Common models are station-based, free-floating and A to B.The latter type suits EV fleets since it ensures that trips end near charging stations.

Study the market and competitors. See what competitors are lacking and what you can offer to meet the immediate needs of end users.

Think about marketing strategies from the start. Prior to the official release, decide how you’ll promote your carsharing app. Include advertising costs in your budget.

Meet legal issues. As a carsharing service operator, you need to receive permission from local regulatory bodies to conduct business in their jurisdiction.

Figure out the financial aspects. There’s no denying that carsharing is a costly venture. In the US, once you launch your own carsharing company, you become subject to taxes for rental businesses along with regular income taxes. You also have to think about insurance, maintenance, software licenses, and staffing costs.

One shared car takes 15 private cars off the road, partly solving the parking problem.

Shortlist mobile app developers. Find a team of developers experienced in developing apps for the shared mobility market. It’s best to choose a company that provides a full development cycle: business analysis, development, UI/UX design, testing, after-launch support. This will save you both time and money.

Make your app eye-catching and handy at the same time. Apart from the key features, every carsharing app should have a user-friendly interface and an up-to-date design.

Mistakes a carsharing operator should avoid

    • Deciding to ignore local authorities and launch your fleet without permission. If you do this, you’ll be in a situation where you don’t know where to park your cars, as all parking spots are off limits for illegal carsharing operators.
    • Forgoing marketing analysis and offering the same service and technologies as other carsharing companies in your area. In this case, you can’t compete. Things will be even worse if your main competitors are ridesharing monsters such as Uber and Lyft that provide many services, including car rentals.
    • Underestimating your budget needs. In this case, you may decide to cut some expenses to stay afloat. So your app won’t get updates, your fleet will start getting worn out, and your employees will go to your competitors.
If you fail to provide a sufficient number of vehicles, your service will be labeled as inconvenient.
  • Forgetting to put the product in front of the customer. Perhaps you’ve successfully launched your carsharing service and everything is going seemingly well. But if you fail to provide a sufficient number of vehicles, your business is doomed. Your service will be labeled as inconvenient.
  • Having a fleet that consists solely of electric cars. This is forward-thinking; however, you shouldn’t forget that very few cities have recharging stations on every street. This likely won’t affect a station-based type of service so much, but will make a free-floating model impossible.

Weigh the pros and cons before diving into the carsharing business and make sure to avoid common mistakes.

Behind the scenes of carsharing

How is the carsharing process organized? It appears to be pretty simple from the user’s perspective. However, what work is done in the background? Below, we describe the basic steps a user should follow to start using a carsharing service and what actions the system performs in response. The number of steps depends on the carsharing operator, but the overall process is quite similar.

 

StepUser actionsBackground operations
RegisteringTo become a member of a carsharing program, a user needs to register via an app. Usually, this involves completing a form and submitting personal details, credit card data, and driving license information.The app checks the information the user has provided to ensure the user meets membership requirements (age, driving experience). Once registration data is verified, the system creates an account and sends an email confirmation.
Sign inOnce membership is confirmed, the user can log in to the app and use it right away.When users sign in, their account information is retrieved from the system and sent to the app. This way users can view their profiles and book cars. The app constantly syncs with the back end to keep vehicle availability up to date.
Reserving a carTo reserve a car, a user must choose a car from a list, view its specs, and check its availability and current location. The user can then book and drive immediately or schedule the reservation for a later date.When a user requests a car, the system checks whether it’s available. Once the booking is confirmed, the system communicates with the vehicle’s in-car system so it knows the reservation was made.

 

A big amount of work is performed by the background system which consists of a server and an in-car device.

 

StepUser actionsBackground operations
Accessing the vehicleWhen it’s time for a ride, user heads over to the vehicle and uses the phone to unlock the car. The key is usually deposited in a key holder [or the vehicle doesn’t require a key to start the engine].When users tries to unlock car, the system contacts the in-car vehicle hardware to confirm it’s the same user that booked this car. Once the vehicle knows user has a valid reservation, the doors will unlock. The system starts recording the trip information the moment user enters the car.
Ending the tripOnce the ride is over, the user has to park the car, return the key back to the key holder and close the door. Within seconds the vehicle doors will lock automatically.The moment the key is returned to the key holder, the system knows the user has ended the trip. The system and in-car hardware checks whether the car is parked properly. The door will lock once the user gets out of the vehicle. Once the current trip ends, the system will make the vehicle available to other members again.
Post-tripAfter the trip is completed, user will see an update made to their account. It will include trip details: the start/end time, as well as the cost of the rideOnce the trip is completed, the system receives the trip details like trip duration and calculates the total cost of the trip. That amount is automatically billed to the credit card user entered at registration.

What technologies carsharing relies on

Carsharing wouldn’t be the same without modern technologies. They help to organize the whole process and make fleet management easier. Let’s name some of these technological wonders.

Eco-friendly engines
One of the main technologies used in modern carsharing services are eco-friendly engines powered by emission-free energy sources such as electricity and hydrogen. Eco-friendly cars are not only cleaner than gasoline-powered cars but are also more affordable for carsharing services.

GPS
GPS devices receive data from satellites and use it to calculate a vehicle’s location in real time. GPS devices don’t require an internet connection, which is a big plus.

E-vehicles are cleaner than gasoline-powered cars and also more affordable for carsharing services.

Internet of Things
Unlike GPS devices, IoT devices require a network connection. IoT devices include embedded in-car hardware that’s connected to an app. This technology updates the system on the vehicle’s status and also receives data from the system, such as a user’s ID, to manage keyless access to vehicles.

To make your service technologically on par with competitors, you can check the leading technology vendors who provide ready-to-use solutions for carsharing businesses: INVERS, Mobiag, MonGeo, Omoove, Ridecell.

 

The back end of the carsharing app consists of an operational system (server) and the in-car device.

Communication devices
Nowadays, car manufacturers equip cars with devices that connect to networks using radio, Wi-Fi, and cellular modems (GSM/CDMA, 3G, 4G, 5G). This enables communication between users and service providers.

Onboard systems
Onboard systems allow carsharing providers to control a whole fleet. They provide real-time data on a vehicle’s location, fuel/battery level, and security. With the help of special hardware installed in each car, you’ll always know where your cars are, whether they require a recharge or repair, etc.

Basic features for a carsharing app

If you want to create a custom carsharing app, you should implement the following features in your MVP.

  • Registration
  • Sign-in
  • Maps
  • User profiles
  • GPS tracking
  • Smart lock
  • In-app payments
  • Ride stats
  • Bookings
  • Push notifications
  • Support

Registration
The registration process should be fast and easy. No need to request full information from new users right from the start. Users can provide additional details later when updating their profiles.

Sign-in
Your app can have its own sign-in form or offer users to sign in using social accounts or email.

To integrate maps, developers connect the Google Maps API for Android apps and MapKit for iOS apps

User profiles
After registering, users should be asked to provide further information about themselves (upload a profile photo, fill in personal details).

In-app payments
Integrate a payment gateway into your application to accept cashless payments from customers. You can choose among Stripe, PayPal, and Braintree. Stripe offers its own Android libraries and a card input widget. For iOS, you can use the Stripe SDK.

Maps
To integrate maps, developers connect the Google Maps API for Android apps and MapKit for iOS apps.

GPS tracking
To determine the current location of a vehicle, developers use GPS. Geolocation for an Android app can be implemented with the help of Google’s Location APIs. iOS developers rely on CoreLocation.

Key features and stylish design will make your app more engaging.

Smart lock
A smart lock feature enables keyless locking/unlocking of a vehicle via an app. Once the in-car system confirms that the user has a reservation, it will unlock the door. After the trip ends and the user gets out of the car, the doors lock again.

Bookings
A user can request a car right away or make a reservation for a later date using the booking feature.

Ride stats
This feature allows users to see the duration of their ride and track their booking history.

Push notifications
In order to notify users about the status of their reservations or about cars available near them, you’ll need to connect some APIs for sending push notifications. For iOS devices, this feature is provided through the Apple Push Notification Service. Android apps can rely on Google Cloud Messaging.

Support
In case a user encounters difficulties during the trip or the vehicle is damaged – whether or not it was the user’s fault – they need to contact the carsharing operator for instructions. Built-in support will significantly improve the quality of your service. You can enable live chat, a сhatbot, or direct calls in your app.

Advanced features

The following features are optional, and you can add them after you release your MVP.

Multilingual support
By default, your app will support only one language. However, if you’d like to cover a larger market, you can add more languages. Note that some languages are written from left to right while others are written from right to left, so you need to consider this peculiarity prior to development.

You can start with MVP functionality and add more advanced features later.

Rating system
To make your service credible, give users an opportunity to rate their ride experience and leave feedback about cars. This will help other users to choose a car that’s suitable for them.

Built-in messaging
With a built-in messenger, users will be able to contact the owners of shared cars (assuming you provide a peer-to-peer carsharing service).

Admin panel

An admin dashboard is a web application that stores data and manages all activities in the app. Basically, it’s the hub that connects the vehicle’s in-car hardware and the app. It can be created either from scratch or using an admin panel template. Common features of an admin panel include:

Fleet management
This feature allows a carsharing provider (admin) to determine the location of each car, check its fuel/battery level, and see metrics for in-car systems.

Admin dashboard stores data and manages all activities in the app.

User management
With the help of this feature, admins can accept or reject registration requests, get access to profiles of registered users, and see their booking history. If necessary, admins can ban users who violate the rules. User management also allows admins to reply to customers’ inquiries via live chat or direct calls.

Payment management
This feature lets admins set rates based on the duration or distance of the ride and issue refunds or charge fines.

Reports & analytics
With this feature, admins can see an app’s statistics and performance reports in downloadable tables and diagrams.

The cost of developing a carsharing app

The cost of developing a carsharing app depends on the complexity of the features and the hourly rate of your development team. Usually, the highest rates are charged by vendors from the United States and Western Europe. Companies in Eastern Europe have lower rates but the same level of professionalism.

Below is the approximate cost of developing a carsharing app. Note that these numbers refer to the cost of any native app, as basic functionality is quite similar for Android and iOS.

 

Basic featuresEstimate in days (min-max)
Registration2–3
Maps1–2
GPS tracking2–4
In-app payment2–3
Sign-in1–2
User profile1–3
Smart lock2–4
Ride stats24
Support1–2
Push notifications2–4
Bookings2–4

 

Advanced featuresEstimate in days (min-max)
Multilingual support4–12
Rating system3–6
Messenger4–9

 

Admin panelEstimate in days (min-max)
Fleet management2–4
User management5–8
Payment management2–3
Reports & analytics6–12

 

 

Note that the app development process also includes business analysis, project management, UI/UX design, and testing. Moreover, your app will require after-release support, which includes regular updates and ongoing maintenance.

The cost of a carsharing app depends on the complexity of the features and the hourly rate of the development team.

The costs can go even higher if you request to build the app from scratch, which means developing a server that will provide complete control over the app (connect with the in-car system, track vehicle locations, store information, process user requests, etc.).

Summary

Now that you have the basic knowledge to start your own carsharing service and an understanding of how the car rental process is organized, you can give your project the green light. Of course, it will require a lot of funding and planning. But if you do it right, you can generate good revenue just like existing carsharing operators do. Considering that carsharing goes hand in hand with mobile technologies, finding an experienced development team has to be your top priority. If you’re shortlisting development companies, we’ll be glad to help. Mobindustry is well versed in e-commerce, agriculture, healthcare, and tourism app development. Share your business idea with our team and we’ll provide you with an expert estimate for your carsharing app.

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