AutoShare president Kevin McLaughlin says increased urban density benefits his company but it has also prompted more rivals.Michelle Siu/The Globe and Mail
Kevin McLaughlin is one of Canada's car-sharing pioneers, having started by-the-hour car rental businesses in both Vancouver and Toronto. His Toronto company, AutoShare – Car Sharing Network Inc., has $6-million in annual revenue and more than 12,000 members, but he now faces direct competition from Zipcar Inc. (recently bought by Avis Budget Group Inc.) and Car2Go Canada Ltd. (owned by Daimler AG). And there could be more on the horizon, with Ford, General Motors, Volkswagen, BMW – and several traditional car rental companies – looking at going into the car sharing business.
Is this where you expected the company to be, when you started it 15 years ago?
I was always optimistic. In some ways, it has been a lot harder and it has taken a lot more effort and it has gone a lot slower. We hit 300 cars last year for the first time. In some ways, it is quite amazing that we are actually there. One thing we did not forecast is the intensity with which people are moving into Toronto; the density really benefits us, with people starting to think about living an urban life.
You have competition in Toronto from Zipcar and Daimler's Car2Go. Has that hurt you?
It shaves at the edges of your margins, but it certainly expands the industry in general. It hasn't been a bad thing. [The problem] is the shifts we can't respond to – changes in technologies. If something changes and, all of sudden, our products are old or outdated or we can't renew our fleet … if everyone wants Bluetooth in every car, we are stuck with three-year leases.
Toronto has a lot of car-sharing activity compared with most other cities.
We have about 300 cars. Zipcar has probably 400 cars today, and Cars2Go has about 350. So there are 1,000 cars in Toronto. I don't think it's a stretch to say there are 40,000 people in Toronto using shared vehicles in one way or another. In seven years, it is up from 2,500. That is enormous. So in some ways we have finally arrived at what we dreamed about.
Zipcar has been acquired by car rental giant Avis. What impact will that have on your business?
It is still up in the air. They now have even more scale to add cars … and to invest in technology. But they have to battle harder against the bureaucratic demons that kill innovation and customer service. For us, it also further emphasizes the choice between a megacorp and a local [company].
Is there still room in the car-sharing business for independent companies like yours, when the big car rental companies and car manufacturers are jumping in?
Yes, I think there is. I often compare ourselves with the coffee business, in the sense that location is very important. If you have a great corner, and as long as you run a good business, it is probably going to make money. Many people think local: If you see two things and they are identical, you would probably chose the local one and feel good about it.
But at the same time, we are subject to costs and investments in technology and all that stuff, and that is very difficult for an independent company to do. My sense is that five to 10 years from now, we will be stronger if we can figure out ways to hitch our wagon to more networks and third-party suppliers and things like that.
How has the business model evolved since you started?
When we started we looked at very low prices, with a small number of people driving the cars quite a bit. Now we are solidly a middle-class, urban service. We are certainly not [geared to] low income, which we initially thought we might be. We had to adjust the kinds of cars [to newer models]. We just had to raise the quality of service along the way.
You initially marketed car sharing as good for the environment. Do people still sign up for that reason, or is it purely economic now?At some point, we realized that people were doing this to save money, and for convenience. But they also like the [environmental] side of things. [Businesses join because] increasingly their smart, well-educated, urban employees in their 20s or 30s don't want to own a car. This is a great perk to be able to say, "You don't need to own a car when you work for us because you have access to AutoShare."
Are you experimenting with electric vehicles?
We have three fully electric vehicles, and two plug-in hybrids right now. But it gets more complicated because we can't just find a parking spot – we have to find a parking spot with a charger of some kind.
Are people comfortable with electric cars?When we first put a Prius into our fleet in 2005, people were reluctant to use them. But over the years people got more comfortable. About 25 per cent of our fleet is hybrid now.The same is true with electric cars. Some people love them. I certainly see a larger part of our fleet becoming electric, and I definitely see a larger part of our fleet becoming plug-in hybrid. We cover the cost of gas, so anything we can do to reduce the cost is to our benefit.
What big changes do you see in car sharing in the next decade?
My sense is that people like the one-way car sharing from Car2Go and BMW's DriveNow. I don't see us being able to turn back the clock on that idea. [More broadly], I think you are going to have a lot of choice in different products. People will have access to shared taxis, or all kinds of other services. There will be peer-to-peer services, or one-way services, or co-op mini-bus jitney services that pick up the kids for soccer.
At one time you talked to Zipcar about selling your business to them. Would you still consider a sale of the company?
I'd have to say yes. There is a price for everything. I love the business and I am here to stay, but at the same time I am definitely an ideas kind of person and I have a whole raft of other ideas, all to do with transportation, that I'd be happy to go and work on.
What else would you like to do?There are opportunities for a lower-income service. There are 1,000 older apartment buildings in Toronto. There is a tremendous opportunity to come up with some kind of car-sharing business for those buildings and those communities. There is an opportunity for a door-to-door service to go to the airport, where you would share that ride with other people.
How long has it been since you owned a car?
I have only owned one car. When I finished university, I bought a 1972 BMW. I owned it for about a year and a half. I didn't drive it very much and I ended up selling it.
Do you get any government support?
Oddly, the government has almost never been involved in [supporting car-sharing in] Canada. In the U.S., the government has funded a whole bunch of non-profits over the years, but in Canada it has been almost 100-per-cent private money. There have been co-ops, but there have been almost no grants.
KEVIN McLAUGHLIN
President, AutoShare – Car Sharing Network Inc.
Personal
Born in Montreal; 46 years old.
Education
Commerce degree from Queen's University in Kingston.
Career highlights
Co-founded the not-for-profit group Evergreen in Toronto.
Co-founded the Co-Operative Auto Network in Vancouver (now called Modo) in 1997.
Launched AutoShare in Toronto in 1998.