Turo Marches On In Its Quest To Corner The Specialty Rental Car Market

Six years ago, we published a story about Turo, the outfit that many call the "Airbnb of rental car companies" (link at end).

Like Airbnb, Turo acts as a middleman, matching persons who want to rent something - in this case, a car - with the people (hosts) who own them. The San Francisco-based company makes its money on the difference between what it charges customers and what it pays the hosts of the vehicles - less overhead such as insurance, 24-hour, seven/day-a-week road service support, price determination models and such.

Perhaps Turo's biggest draw with renters is dexterity. Unlike traditional car rental companies, it offers more than 1,600 vehicle makes and models, many of them exotics and electric vehicles. So if a customer wants a Ferrari, for example, or a Tesla, Turo will find one from a vehicle host in the area the renter desires.

At the time of our story, Turo was licensed in 49 states (except New York, for insurance reasons), and had a stable of some 250,000 host cars. The company has grown quite a bit since, solidly operating in all 50 states and five countries now - the U.S., Canada, United Kingdom, Australia and France. It has upped its app to include 3.5 million active renters, 165,000 active car hosts and 365,000 active host vehicles.

According to Turo filings, revenues have jumped to $880 million in 2023 from $142 million in 2019, and net revenue was up 11% in the first half of 2024 over the same period year-ago.

Given the growth, one might wonder why the firm hasn't thought about going public. It has. On August 6, 2021, it quietly filed a Form S-1 with the Securities and Exchange Commission for listing on the New York Stock Exchange. Reported underwriters include Morgan Stanley, J.P. Morgan and Citigroup. Turo has amended the S-1 several times since, most recently this past summer. The delays have some analysts questioning what the company's real financial plans are.

In an interview last week with Andrew Mok, Turo's chief marketing officer, asking financial questions was off limits, as Turo continues to be in a quiet period. But Mok did mention some strategy issues like Turo's recent plans to partner with Uber, whereby Uber drivers can rent Turo vehicles using the Turo app, including electric vehicles.

In addition to its myriad stable of vehicles, Mok says Turo has been a pioneer in the EV rental space - that EV adoption on Turo is growing faster than EV adoption amongst car owners. As of Dec. 31, 2023, 15% of active vehicles in the U.S. were alternative energy cars. EVs represented 9% of Turo vehicle listings.

Conversely, Mok says, Hertz and other traditional car rental companies have tried to introduce EVs to their fleets but have pulled back in the last year. Moc says his customers prefer to book EVs with Turo as they have the opportunity to speak or message hosts when they have questions about the car such as charging, range and car-handling differences.

"At companies like Hertz or Avis, guests feel like EVs are just dumped on them, and they're stuck having to figure it out on their own," says Mok.

One trend that has changed in recent years is the personal touch of hosts meeting renters, says Mok. Before COVID-19, hosts often met customers at designated sites to hand off their car keys. During the pandemic, for obvious reasons, the keys were often left in a lock box attached to the car. Since COVID, that lock-box practice has persisted.

When will Turo follow through with its Initial Public Offering and determine a stock price for it? Who knows, but stay tuned.