Electric cars

Turo rents cars but insists it’s not a rental company

Turo rents cars but insists it's not a rental company

Three drive mode options – smooth, fast or sprint – appeared on the touchscreen inside the state-of-the-art “dream edition” of an electric vehicle Lucid Air, a chic car that gives a Tesla the feels like a simple sedan.

Andre Haddad, CEO of car rental marketplace company Turo, opted for “gentleness” and spun his electric vehicle around the Presidio’s bends in quick silence, as the vehicle makes almost no noise. It’s a fun detail considering that the current and future state of car rental is anything but quiet.

Over the past decade, Haddad and the company he oversees have uniquely disrupted the car rental market. Formerly called RelayRides, the San Francisco-based startup defines itself as a peer-to-peer business, offering car owners a platform to share their cars with drivers in need of a rental.

Coming out of the pandemic, when some car rental companies sold their fleets to stay financially afloat, Turo’s popularity accelerated as a low-cost option for travellers.

Haddad called it the ‘rental car crisis’ and noted that Turo’s popularity was evident especially in places like Hawaii, where there was a shortage of rentals. He explained that prices on Turo remain competitive with traditional car rental companies because the platform offers an intact market.

“We allow our hosts to price their cars however they choose,” he said. “It’s an open market where prices will find their equilibrium. We do not force prices but provide recommendations to our guests.”

In reply to Turo gradual rise, the traditional car rental industry is actively working to rein in the tech enterprise by calling for regulations like those that already apply to car rental companies. Turo, however, remains defiant and insists that it is not a car rental company.

“At the end of the day, there’s a car and you go places, but it kind of ends there,” Haddad says.

“We don’t have the same price structure as a rental car. They must maintain a fleet, a distribution network with agencies and car parks. We don’t have that model with peer-to-peer car sharing. For this reason, our fixed costs are quite low. It’s basically just the software.

Turo CEO Andre Haddad pictured in his Lucid Air electric vehicle near Fort Point in San Francisco on Friday, March 18.


Charles Russo/SFGATE

The electric vehicle Lucid Air, owned by Turo CEO Andre Haddad, is one of many cars available for hire as part of his company's service.

The electric vehicle Lucid Air, owned by Turo CEO Andre Haddad, is one of many cars available for hire as part of his company’s service.


Charles Russo/SFGATE


Turo CEO Andre Haddad pictured in his Lucid Air electric vehicle near Fort Point in San Francisco on Friday, March 18. (Photo by Charles Russo/SFGATE)

The differentiation did not convince the American Car Rental Association (ACRA) and its spokesman Greg Scott.

“They rent a motor vehicle to another person for a fee. If that’s not what Avis and Enterprise do, then I don’t know what is,” he told SFGATE.


Scott added that while ACRA welcomes innovation in the industry, it challenges the boundaries of how innovators are viewed and regulated.

“I’ve heard it from other peer-to-peer companies and that seems to be the safety net: ‘We’re new, therefore we’re different, therefore we should be treated differently,'” Scott said. “It didn’t last very long for Airbnb and Uber. Yes, they’re different, but the fundamental concept of driving someone is the same even if you do it in [an Uber]. Eventually, the state catches up with the regulations.

A particular regulatory battleground has been at the San Francisco airport. Turo users vary, from car enthusiasts looking to tick off a dream mobile to test drivers wanting an informed experience before making a purchase, but around a third of Turo users are connected to airports.

One of the company’s slogans tells consumers to “skip the rental car counter and book anything” with Turo.

The company has a long history of working from SFO. In November 2016, then-City Attorney Dennis Herrera sent a letter to Turo about his dealings with the airport.

According to the letter, the company attempted to invoke Section 230 of the US Communications Decency Act to exempt it from liability for the “conduct” of its car owners and lessees, a claim Herrera has described as “misplaced”.

Turo continued to collide at the airport. According to a complaint filed by Herrera’s office in 2018, the company operated at the SFO from 2013 to August 2017 under an off-airport car rental company permit which required Turo to pick up customers from a remote car rental center.

Turo CEO Andre Haddad pictured in his Lucid Air electric vehicle heading to Fort Point in San Francisco on Friday, March 18.

Turo CEO Andre Haddad pictured in his Lucid Air electric vehicle heading to Fort Point in San Francisco on Friday, March 18.

Charles Russo/SFGATE

In August 2017, Turo revoked its off-airport car rental license and announced that it would cease operating at the airport. However, as the complaint states, the company continued to advertise and promote SFO car rentals on its website. “Turo’s willful non-compliance with SFO’s licensing and fee requirements … constitutes illegal and unfair business practices,” the complaint states. The company was asked to pay an AirTrain royalty and a gross receipts royalty on its SFO revenue.

“They don’t pay 10% of their gross revenue to SFO which supports all of the airport infrastructure,” Scott said.

Haddad said Turo is still in litigation with SFO and its car owners are offering cars at the airport by arranging offsite pickups.

He said SFO is “one of the few airports where we haven’t been able to come to an agreement for clearance yet.” Turo has circumvented the need to obtain a rental car permit at other airports in the country. He made deals to work out of Tampa and Orlando airports and entered a pilot program at Denver International. Haddad said Turo should operate with a peer-to-peer car-sharing permit, instead of a traditional car rental permit.

“We strongly believe that we don’t fit into that category,” Haddad said. “The car rental permit is designed for companies with hundreds or thousands of cars parked at the airport. They pay all the costs of using the maintenance stations and have car cleaning infrastructure. That’s a big chunk of real estate. We don’t take advantage of that infrastructure. Our hosts meet their guest on the sidewalk, hand them the keys, say hello, and leave. We argued that the model is different and we need a peer-to-peer permit.

Faced with its setbacks at SFO and other airports, including Boston’s Logan International Airport, Turo’s business model is paying off, confirming its status as a “unicorn” company.

The electric vehicle Lucid Air, owned by Turo CEO Andre Haddad, is one of many cars available for hire as part of his company's service.

The electric vehicle Lucid Air, owned by Turo CEO Andre Haddad, is one of many cars available for hire as part of his company’s service.

Image courtesy of Turo

According to his recent Filing of Form S-1used by companies planning to go public to register their securities with the United States Securities and Exchange Commission, the business has grown significantly during the pandemic.

The filing shows that between 2021 and September, Turo more than doubled its annual revenue to a net income of $330.5 million, with a user count of 1.3 million “guests” and 85,000″ active hosts.

One such active host is Haddad himself, who offers five of its own cars for rent on Turo. In March, it added the Lucid Air to the company’s vehicle roster for $699 per day. It’s a far cry from the first car he ever owned, a 1989 Opel Corsa.

Currently available on the Turo platform is a 2017 Opel Corsa in Madrid, Spain. It is offered by a Spanish car rental company called Carflet Rent a Car, reinforcing the complicated relationship between car rental and peer-to-peer car companies.