Car share: What is it and how does it work?

Close up of permit zone sign

Peter Barrett

Posted March 22, 2021

As the costs of owning and running a car rise, many people are turning to car sharing as a cheaper and greener alternative.

Jason Foote was in a bind. His Porsche was out of action thanks to an accident but he still needed to get around. Living in South Melbourne, the sales and marketing professional could walk or tram his way to most appointments. But it wasn’t so easy to get to his clients in Geelong and Colac. 

He tried car share and, even once matters had settled with the banged-up Porsche, he decided to give up car ownership altogether. “I love cars, I’ve always had a car, but the expense of running a car and parking – I’ve just decided to use car share.” 

Car sharing – affordable, short-term vehicle hire (as distinguished from ride-sharing schemes such as Uber) – is on the rise. There are two main types: fleet-based, where users access vehicles parked in designated locations and pay by the hour, and peer to-peer, where private owners list their vehicles online and make them available for short-term rental when not in use. A third, subscription-based model which involves a monthly fee and the ability to switch cars depending on needs, is emerging too.

Although the car-share movement began in Europe, the United States now leads the market. The phenomenon arrived in Melbourne in the early noughties with early players such as GoGet, and has expanded rapidly. According to Monash University transport planning researcher Taru Jain, the number of share cars in Victoria quadrupled between 2014 and 2017. While the strongest growth has been in peer-to-peer sharing, via platforms such as Car Next Door and Drive My Car, there are a host of different companies offering fleet-based services, including RACV partner Flexicar. 

How does car sharing work?

In the case of Flexicar, users join up online, search for and book their nearest car, then unlock it (using a pincode sent to their phone) and start driving. They return the car to its dedicated parking bay when finished and lock it using the pincode. Most car-share schemes include fuel, damage cover, maintenance and cleaning in the hourly price, and are available 24 hours a day.   

Taru says that at the start of 2020, there were approximately 27,000 active car-share users in Victoria (who had made at least one booking in the previous 12 months). Her research shows that among those households using car share, around one in three had either sold off a car, cancelled a car purchase or foregone buying a vehicle. “So, 33 per cent of households had decided to reduce car ownership or give up their dreams of buying a new car,” she says.   

However, she also found that the acceptability of car share is limited by the idea that private car ownership is the “default way of life”. 

But for many, particularly millennials who are delaying key life phases such as buying a home and having a family, the savings to be gained by not owning and maintaining a vehicle make a compelling argument for car sharing. “The money people are able to save is easily the biggest driver,” says Taru. “The other big one is convenience. Environment is a concern but it comes after cost and convenience.”  

Flexicar SUV parked with city in the background

The average car-share vehicle is less than two years old. Photo: Supplied.


Do the savings really stack up?

According to the latest RACV survey of vehicle running costs, the cost of owning and running a small passenger car exceeds $900 a month averaged over five years, while owning a mid-sized SUV averages costs of more than $1200 a month.   

“You could literally save thousands of dollars by losing that second car or not having a car at all and using a car only when you need it through car sharing,” says RACV’s senior manager transport, planning and infrastructure, Peter Kartsidimas. And it’s likely that car-share car will be newer, and therefore safer, than the typical second family car. “Having newer, safer, more fuel-efficient cars on the road is a good thing as well,” says Peter. 

There are benefits, too, for the broader community. One Australian study found that for every share car placed in a suburb, around 10 cars were removed from area, which means less traffic and less pollution. While Peter says car sharing is not a silver bullet for solving Melbourne’s traffic woes, it does encourage people to think twice about the need to drive to their destination.

“If you have a car sitting there idle, you’re more likely to use it rather than considering all your options, whether that be car sharing, an Uber, public transport or a bike,” says Peter. “If you’re using car share, you’ll probably drive only when you really need to.”  

Parked Flexicar SUV in the bay

For every share car placed in a suburb, around 10 cars are removed. Photo: Supplied.


Six benefits of using car share


By not owning a vehicle you can save money on registration, insurance, fuel, maintenance, servicing and asset depreciation. 


No need to worry about parking (car share vehicles have dedicated parking bays), cleaning or servicing your car again. 


On average, car share vehicles are no more than two years old, which means they are likely to be equipped with the latest safety features, including multiple airbags, reversing cameras, anti-lock braking systems and autonomous emergency braking.


Driving only when you really need to means you’ll likely consider healthier alternatives such as walking, cycling and public transport.


Fewer cars on the roads and newer cars means less pollution. 


By reducing your vehicle trips you help reduce traffic congestion.