Anyone think rental cars (and possibly firms: Hertz, Avis, etc) are the future?

[wisdom]

I find that we often limit ourselves to our local experiences. A lot of new standards could be set by China in the future as they would have economies of scales. So we must remember that China is more likely to set transportations standards for the world going forward.

 

I cannot imagine a Shanghai or Beijing going the way cities in the US have where virtually everyone has their own car. I would look towards Asia (China specifically) to see how they plan to proceed.

 

They are looking at self driving cars and they could develop different models and the people who haven't driven before might be open to newer ideas.

[Guest ajc]

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/goog-google/msg44185/?topicseen#msg44185

"Me too, but I think this has the potential to be a bigger idea than just selling driverless cars for personal use. I think of all the things Google is doing this has the potential to be the most game changing.  If, of course, they can pull it off.  The A.I. would have to be rock solid and just simply work.  Imagine if you could just send your 10yr old off to grandma's 60 miles away alone in the car?  This may even create other options which make the need for most private car ownership uneconomical in comparison for most people.  Imagine a subscription service for everyday vehicles and maybe even fractional ownership service "netcars" for luxury vehicles.  You would always use exactly the vehicle for the task.  If you are going out to dinner with the wife, push a few buttons on your smartphone and a car comes around the corner in a few minutes to pick you up and take you to the restaurant.  After the restaurant you call again and another car comes zipping by to take you home.  Going to the movies with your 3 kids and 6 of their friends you push a few buttons and a 10 passenger vehicle comes and gets you.  Go to the grocery store in a tiny vehicle, come home in one with a large cargo compartment.  Without the need of drivers order pizza you get a pin number a vehicle shows up in your driveway that is just a big box on wheels with a number of heated compartments.  You punch in your pin and one of the compartments pops open, you take out your order, close the compartment, and the vehicle zips off to either the next stop or back to the pizza place.  You need 15 sheets of plywood, you order it online and within 20 minutes a vehicle pulls up in your driveway or jobsite with the wood for you to unload, almost like ordering pizza. Would grocery delivery be cheaper and offered almost everywhere if there was no need to pay drivers? Almost instant delivery of all kinds of things would be more economical.

 

Think of the mobility issues the very young, very old, and the disabled have in our current society and how this would change their lives.  If this works and works well, you could see fewer cars on the road and a much more efficient transportation system where everyone gets to where they want to go cheaper and easier than now and everyone gets the things they need delivered to them whenever they want them.

 

This could change almost everything about how we live our daily lives."

 

Ha. Okay, so basically I was only two years late!

 

What you're saying is it though - if some company did this at scale the revenues could be huge.

However, as you also mentioned this is not an investment idea right now and as well as that I think it could always turn out like the airlines did where no-one ever makes any worthwhile returns even as the industry grows and grows.

 

I do agree that it could be life-changing no matter what the industry economics are though.

[rkbabang]

In the 50's I don't remember which communists state figure said something in the words: "It does not make sense to buy a car if a taxi fare is cheaper than the ownership". And the whole USSR car policy was based on that vision. What they failed to understand was that having a car met being independant.

 

BeerBaron

I agree with most of what you're saying, but the one contrasting point I'll make is that I think the saturation levels in terms of public and private transport are so high in some cities now that perhaps a far more efficient and vastly more affordable system does finally make sense even if it clearly didn't 60 years ago.

 

It isn't all about being more efficient, although that can be part of it.  I don't ride on buses, because I don't like to be in a vehicle with that many other people who I don't know. The only reason I ride on commercial aircraft is that I can't afford Netjets or even charter, so economy wins out in that case.  A Taxi has almost the same problem as a bus, you need to deal with people you don't know.  Getting in an autonomous vehicle alone or with your friends/family without strangers around is still just as independent feeling as driving yourself.  The other issue is cleanliness, I'd pay a lot more for a service that detailed their cars a few times per week and looked more like a personal car and less like a bus or a taxi.  That isn't to say that there won't be discount services out there which will operate vehicles that look, feel, and smell like today's taxis.  It will be up to you which level of service you'd like to pay for.

[Guest ajc]

I find that we often limit ourselves to our local experiences. A lot of new standards could be set by China in the future as they would have economies of scales. So we must remember that China is more likely to set transportations standards for the world going forward.

 

I cannot imagine a Shanghai or Beijing going the way cities in the US have where virtually everyone has their own car. I would look towards Asia (China specifically) to see how they plan to proceed.

 

They are looking at self driving cars and they could develop different models and the people who haven't driven before might be open to newer ideas.

 

True all of this, as well as what you previously posted. And yeah, I think Geico suffers.

[rkbabang]

I think it could always turn out like the airlines did where no-one ever makes any worthwhile returns even as the industry grows and grows.

 

I do agree that it could be life-changing no matter what the industry economics are though.

 

That is my suspicion too.  I almost hope it turns out that way, because that will mean there are a ton of companies competing at each others throats to serve us better and lower costs.

 

[Guest ajc]

It isn't all about being more efficient, although that can be part of it.  I don't ride on buses, because I don't like to be in a vehicle with that many other people who I don't know. The only reason I ride on commercial aircraft is that I can't afford Netjets or even charter, so economy wins out in that case.  A Taxi has almost the same problem as a bus, you need to deal with people you don't know.  Getting in an autonomous vehicle alone or with your friends/family without strangers around is still just as independent feeling as driving yourself.  The other issue is cleanliness, I'd pay a lot more for a service that detailed their cars a few times per week and looked more like a personal car and less like a bus or a taxi.  That isn't to say that there won't be discount services out there which will operate vehicles that look, feel, and smell like today's taxis.  It will be up to you which level of service you'd like to pay for.

 

Sure, no this isn't what I'd suggested in my previous posts. As you're completely correct on, there's huge value in the service being reliable, clean, good value and quick.

The effeciencies I was attempting to describe were less congestion, greater utility per vehicle on the road, pooling maintenance costs but cramming people in wasn't on my mind and also I think you're 100% right on the issue of today's taxi's and how important it is that you know you'll have your own space and atmosphere in any self-driving vehicle.

 

Throwing Hertz's name in there was definitely more of a directional thing just because for me they represent scale and cleanliness and they already do the storage and maintenance so you throw Google and Netjets on top of that and you get the just of the idea that you originally authored.

 

This was kind of what I was going to say to StubbleJumper who was arguing the 'dirty taxi' case so I guess that's sort of clarified now (hopefully).

[rkbabang]

Of course we all have a bad impression of taxis, but that impression is due to government interference in the marketplace.  In most cities you need a license or medallion to drive a taxi.  There are so many problems with this that I'm sure people have written books on the subject, but briefly they limit the number of these so that gives the existing holders a sort of guaranteed monopoly on the market and they are less likely to need to innovate.  2nds they are expensive and highly regulated, the issuance of them is a political pull issue, not at all an issue of who will best serve the public. And in many cities the medallion is tied to the vehicle itself, meaning companies will be driving these vehicles long past the time they should or otherwise would.  All of this (and more) virtually guarantees that you will not get good, quick, affordable, reliable, friendly service in a clean vehicle by an innovative company determined to please you.  If government (city, state, or federal) heavily regulates autonomous cars, none of these predictions will pan out in any way shape or form.

[Guest ajc]

Of course we all have a bad impression of taxis, but that impression is due to government interference in the marketplace.  In most cities you need a license or medallion to drive a taxi.  There are so many problems with this that I'm sure people have written books on the subject, but briefly they limit the number of these so that gives the existing holders a sort of guaranteed monopoly on the market and they are less likely to need to innovate.  2nds they are expensive and highly regulated, the issuance of them is a political pull issue, not at all an issue of who will best serve the public. And in many cities the medallion is tied to the vehicle itself, meaning companies will be driving these vehicles long past the time they should or otherwise would.  All of this (and more) virtually guarantees that you will not get good, quick, affordable, reliable, friendly service in a clean vehicle by an innovative company determined to please you.  If government (city, state, or federal) heavily regulates autonomous cars, none of these predictions will pan out in any way shape or form.

 

Thanks, I was wondering about that. I hadn't realized how hobbled the industry was by that kind of thing.

Makes complete sense though, no wonder taxi companies have such a bad reputation generally.

 

Maybe I'm being too optimistic here though, but I do think that a huge, self-driving, fractional-ownership business would be able to drive costs down so much more that they'd have none of the expensiveness that seems to run through the taxi industry as a whole (people say taxi's are cheap, I for one don't see it).

 

I back-of-the-enveloped it before and said $10k for an emerging market manufacturer to build the car, $10k per year for Google licensing, $15k for electric charging and $5k for maintenance and storage though I figure a good CEO might get that down by 25% (or maybe I just overshot slightly on the manufacturing costs and even more so on the charging and m&s costs)?

 

If it could get down to $30k per year for 4000 passenger-carrying hours per car then you can charge 10 bucks per hour and you still make a 2.50 dollar profit per hour so in that regard the affordable taxi meme that I occasionally hear folks I talk to go on about is a somewhat misunderstood one in my opinion.

 

Appreciate the original Google thread bumping and insights.

[bargainman]

looks like there are social based apps and sites looking to crowd source taxis too:

 

http://news.cnet.com/8301-1023_3-57596389-93/airbnb-lyft-and-taskrabbit-partner-with-share-economy-advocacy-group/

 

Lyft, sidecar.

 

Relayrides looks like another version of getaround..

 

It's getting interesting in terms of making currently unused assets useful..

[jeffmori7]

An interesting study on self-driving cars and the broader implications of this technology:

 

http://www.kpmg.com/Ca/en/IssuesAndInsights/ArticlesPublications/Documents/self-driving-cars-next-revolution.pdf