In recent years, the company Free2move set up free-floating car rental operations in such major American cities as Portland, Ore., Columbus, Ohio, and Denver.
Like scooter rentals but for cars, the vehicles were spread out around each city, and drivers could book them from their phones at a moment's notice for a few minutes or a few days. The vehicles didn't need to be returned to any particular parking spot.
But the Stellantis NV-owned brand, which also operates in Europe, has been learning just how challenging -- and costly -- this type of car-sharing business is to operate. Free2move has outlasted many competitors in the space and purchased another, but in recent months it pulled its fleets of mostly Jeep Renegades off the roads in all but one U.S. city, Washington, D.C., as it looks to reset its technology and operations systems.
There were "a lot of problems that now we are recovering on, and when we will be able to deploy our own tech, it will help even more," Free2move Chief Executive Officer Brigitte Courtehoux said in a recent interview.
She said the goal was to "stop the problems, stop the bleeding" by pulling the cars off the road and then relaunching the service in more cities once a number of issues are resolved, likely over the next six months.
Courtehoux said the various costly problems included traffic violations, damage, theft and simply losing track of the vehicles.
It's a tough business to make a profit in, as other major automakers who wanted to get into car-sharing also found out. Ford Motor Co. and General Motors Co. shut down similar services several years ago. Share Now, the service formerly known as Car2Go and previously owned by automakers Daimler AG and BMW AG, exited North America in 2019, citing rising operation costs -- and then was bought up by Free2move in 2022. According to a joint Share Now and Free2move website, the service continues to operate in 15 major European cities.
Share Now "was making a significant amount of losses, and that's why two German carmakers sold it to us, and we fixed it," Stellantis CEO Carlos Tavares said at a recent forum. "We are 50% market share of the car-sharing services in Europe right now."
Yet he acknowledged that big hurdles remain for the business, including securing parking for the rentals from cities, as well as keeping insurance costs down. The CEO said there has been "a lot of destruction and a lack of security" issues in some cities. Obtaining affordable electricity rates for the fleet's battery-powered rentals is another challenge, he said.
The United States represented less than 7% of Free2move's business as of November 2023, The Detroit News previously reported. The U.S. part of the service is now focused on integrating Share Now's technology into its systems, Courtehoux said. That includes improving the app that customers see but also back-end technology that allows managers to keep track of the rental fleets in real time.
This will help employees spot what sort of damage has occurred, if a fine has been issued because of a traffic violation, if certain cars are in the shop or if a customer hasn't paid and the car's systems need to be remotely blocked.
The bottom line is that the company can't expect to be losing track of vehicles or having a large percentage offline and still make a profit, Courtehoux said. At one point in the United States, the company had just 40% fleet availability for its free-floating service, she said, but now that it's focused on Washington only, availability has grown to above 90%.
"If you lose your assets, you cannot give it to your customer, (and) you are dead," she said. "So we spent one year, since last year, working on that, and we are recovering now ... we know how to manage it now."
Traditional rental car companies such as Hertz and Avis have the benefit of a single office and compound where vehicles are picked up, dropped off and repaired, Courtehoux noted. That's nice for the rental car company: An employee gives the keys to the customer and the vehicles are often inspected for damage. But it means less flexibility for the customer.
Other services, such as Zipcar or Turo, offer more flexibility on how and where to rent but still enforce certain rules about where the car is picked up and returned.
Courtehoux said some of Free2move's main competitors in the car-sharing space now are German-based companies Miles and Sixt and the Italian firm Enjoy. She believes the convenience of free-floating car rentals in cities is a draw that can translate into success.
"If you do it well, it will be a huge differentiator, right? Because having the car 300 meters from you is a game-changer," Courtehoux said.