The car-sharing economy is booming, and Turo has emerged as a leading player by revolutionizing how people rent vehicles.
Unlike traditional rental businesses, Turo operates as a peer-to-peer car rental platform.
Say they are Airbnb for cars.
But how exactly does Turo make money, and what is their business model?
Here, we'll uncover just that. Let's start!
How Turo works
Renter’s workflow
Renters can quickly sign up and find the car they want to rent by entering their location and desired dates.
Once the host accepts the booking, the renter can enjoy a hassle-free rental experience.
Regardless of the host's approval, the renter can cancel the booking up to 24 hours before the trip starts.
Renters pay both the host (for the vehicle rental) and the platform (for associated service and insurance fees.)
Host’s workflow
Becoming a host on Turo is straightforward and takes as little as 10 minutes.
Hosts register with their personal information, list their vehicles, and are ready to start earning. Turo does not charge sign-up or monthly fees.
Hosts have full control over their listings, including setting ground rules and adjusting vehicle availability.
Pricing is flexible and can either be determined by the host or managed dynamically by Turo’s platform.
The host can relax once the car is rented, as Turo handles the rest.
However, the host is responsible for tasks like delivering and picking up the vehicle.
For all these conveniences, Turo charges a fee ranging from 10% to 35%, depending on the protection plan chosen by the host.
The value proposition Turo delivers
Customer support
Turo makes car rentals not only affordable but also convenient.
When it comes to customer support, Turo sets its bar high and leaves no room for competitors to match its service quality.
If users face issues with the platform, their booking, or any other aspect, Turo’s support team is ready to assist promptly.
Their commitment to resolving problems is evident, as they addressed and resolved approximately 666 complaints in the 12 months leading up to June 2022.
Comprehensive insurance
Turo offers host multiple protection plans that cater to their needs.
The standard plan includes $750,000* in third-party liability insurance through Travelers.
Additionally, Turo offers 24/7 roadside assistance for all trips booked on the platform.
Every protection plan automatically includes key features such as insurance coverage, physical damage reimbursement, and roadside assistance.
Turo’s key activity
1. App maintenance and platform development
Turo prioritizes delivering a seamless and bug-free user experience.
The company continuously refines its app and platform to ensure a smooth and reliable interface for users.
2. Marketing and advertising
Marketing helps Turo to be anywhere near its audiences.
Through strategic marketing and advertising efforts, Turo enhances its reach and persuades both hosts and renters.
3. Research and development
By staying attuned to market trends and consumer preferences, Turo leverages research and development to inform its business strategies.
This makes sure that they meet emerging demands and capitalize on new opportunities.
4. Customer support
The company is dedicated to resolving user queries and issues promptly.
Comprehensive plans and policies give users access to the help they need.
Revenue channels: How Turo makes money
1. Commission fees
Turo charges a commission on each booking, typically ranging from 15% to 40%, depending on the service level chosen by the host.
This percentage is deducted from the host's earnings.
2. Trip fees
Renters pay a trip fee, calculated as a percentage of the booking cost, which contributes directly to Turo's revenue.
3. Insurance fees
Insurance is a key component of the platform.
Renters and hosts can opt for coverage plans, and Turo earns a margin on these insurance packages.
4. Optional services
Add-ons such as delivery services (where hosts drop off the car at the renter's location) are another revenue source, with Turo taking a cut.
End note
Since its launch, Turo has expanded to over 7,500 cities worldwide, with an impressive 360,000+ active listings as of March 2024.
Its rapid growth isn’t just due to convenience, they have also built a strong reputation for exceptional user support, trust, and safety.
This makes them a top choice for both car owners and renters.
That wraps up our deep dive into Turo’s business model and revenue streams.