Unveiling Turo’s Business Model

Revenue in the global car-sharing market is expected to hit US $12.88 billion in 2023 and reach US $16.04 billion by 2027. Enhanced mobility, affordability, a wide range of car options, and the emergence of peer-to-peer car-sharing platforms, such as Turo, have contributed to the growth of this segment.

What is Turo?

Shelby Clark founded Turo, the world’s biggest car-sharing marketplace in San Francisco, USA. It caters to the USA, Australia, Canada, and UK markets and aims to put the world’s 1.5 billion cars to better use.

This platform empowers car owners to build their car-sharing businesses by making it easier for them to lend their vehicles when it’s lying idle. Subsequently, consumers can browse cars by make and category to pick the one that suits their needs and budget.

Turo Customer Segmentation

Turo caters to two types of customer segments:

Hosts: Vehicle owners can list their cars and trucks within 10 minutes for free. There are no sign-up or monthly fees associated with Turo. Hosts can set car rules and personalize the daily price for their car, depending on its availability, or let the platform adjust it automatically to maximize their income.
After a renter books a car, hosts decide how and where to hand over the keys before checking them in with the Turo app.

Renters: Renters need to enter their location and date to browse and book one among the numerous options, such as convertibles, luxurious cars, minivans, SUVs, trucks, vans, sports and retro cars, and electric automobiles shared by their local hosts.
Turo is a leading car-sharing platform in over 7500 cities globally, but why do hosts and renters trust Turo? Let’s find out.

Turo’s Value Propositions

For hosts

Turo’s value propositions for hosts include:

1. Source of revenue

Turo empowers hosts looking to earn some side income, build an alternative source of income, or generate money primarily by sharing their automobiles. Depending on the insurance protection plan they choose, hosts make between 60% and 90% of the trip price. They can earn up to $10,000 per car annually and are compensated for fuel charges and mileage beyond their set limits.

2. Flexible earning model

Hosts are free to list their vehicles however they want and at the price they want. There are no monthly charges or minimum limits.

3. Enhanced security

All Turo renters are thoroughly screened before being allowed to book cars. Additionally, there’s a two-way review system, allowing hosts to check their guest’s guest’s reviews before booking.

4. Insurance protection

Turo offers liability insurance—provided by Aioi Nissay Dowa Insurance via Turo broker Aon—for all its trips. Hosts can also choose among the 90, 85, 80, 75, and 65 plans to protect their cars from physical damage. Regardless of the protection plan, every plan comes with $750,000 in third-party liability insurance.

5. Round-the-clock customer support

Hosts can access 24/7 customer support with a single click.

For renters

Turo’s value propositions for renters include:

1. Increased convenience

Renters can choose a car based on location on the day they need it. Since several hosts deliver the vehicle to popular spots like airports, hotels, and train stations, car delivery is convenient.

2. Multiple car options

Renters can choose from a myriad of car make and type options for the occasion for as low as £30 per day.

3. Free cancellation

Renters can cancel for free up to 24 hours before the trip time. If they book a car within 24 hours of the trip time, they’ll get a full refund if they cancel it within an hour of booking. But even if they cancel after the expiration of the free cancellation period, they only have to pay a small fee. In case a host cancels, guests are notified immediately.

4. Security and protection

Turo includes liability protection, and guests can choose among Premier, Standard, and Minimum protection plans to insure the car against physical damage. Consumers just need to place a call to access 24/7 support and receive roadside assistance for enhanced protection.

Who are the Key Partners of Turo?

Turo’s partners have helped the company become the best in its segment. Its key partners are:

Car owners: Turo partners with car owners to offer its consumers the best car-sharing services at competitive rates.
Investors: Several investors have invested in Turo to help it remain afloat.
Insurance partners: Turo partners with insurance providers to offer its hosts and guests liability and vehicle protection options.
Developers and IT partners: Technology partners ensure that Turo runs smoothly without glitches.

What are Turo’s Key Resources?

Turo’s key resources include:

Profitable partnerships with car owners to host an endless collection of cars, approximately 161,000.
Turo’s ecosystem consists of over 1.3 million customers.
An intellectual database comprising details about millions of hosts and renters.
IT infrastructure to deliver a seamless and user-friendly experience for every marketplace member.
Excellent brand image in the travel and tourism industry.

What are Turo Channels?

Hosts and guests can access Turo through its website. It has dedicated apps listed on Google Play and the App Store that serve Android and iOS users.

How does Turo Maintain Customer Relationships?

Turo is intuitive, and its user-friendly website and app are a hit among hosts and guests. Its social media platforms and online and offline marketing strategies also help it connect with its consumers directly.

Hosts and guests have access to 24/7 support. They can also visit the hosting and guest FAQ pages to use self-service tools like blogs and articles.

What is Turo’s Cost Structure?

Turo spent $124 million for the nine months ended September 30, 2021. Its cost and operating expenses include product development, general /administrative, and sales and marketing expenses.

How Does Turo Generate Revenue?

With over 1.1 billion host earnings since inception and 114% YoY growth of active renters, Turo’s nine-month revenue for September 30, 2021, was $330.48 million.

Turo’s revenue streams can be categorized into four sections:

Service fees

The marketplace generates revenue from all bookings made through the platform. It collects service fees from hosts and guests as host fees. The amount charged is a percentage of the trip value and depends on the vehicle type, day of the week, and time and duration of the trip.

Turo charges service fees for platform usage, customer support, and payment processing.

Insurance fees

Turo earns a substantial amount of income from its protection plans, which are charged upfront to its customers (both hosts and guests).

Turo Shop

The platform sells apparel, accessories, and automotive products on the Turo Shop.

Cancellation fees

Turo levies cancellation fees to its guests if they cancel their booking up to 24 hours before the trip.

Turo offers a user-friendly interface, accessibility, an assortment of cars, 24/7 customer support, enhanced flexibility, and a lack of hidden charges which have made it a hit among car owners and renters.

It’s empowering hosts to turn their idle automobiles into money-making devices without breaking a sweat or dedicating too much time and effort. Competitive prices and added convenience are the reasons behind its massive customer base and YoY growth.

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