Automotive giant Daimler AG and South Korean conglomerate SK Holdings Co. led a $92 million investment in Turo Inc., a startup that lets people rent out their personal cars. The funding could help the young business withstand incursions from traditional car-rental companies.
More than 4 million people use Turo’s marketplace to swap cars for a daily fee. Owners list their vehicles on the site for renters hunting for a discount or a specific model to drive. Once there’s a match, the users pick a time and meeting place to exchange keys. The San Francisco-based company takes a 25 percent cut of transactions.
The new funds will go toward growth in Germany, where Turo will take control of Daimler’s struggling Mercedes auto-sharing service Croove, and throughout Asia. The investment values the nine-year-old company at about $700 million, nearly double the last round, said Chief Executive Officer Andre Haddad.
Traditional car-rental companies have Turo and its competitors, Drivy and Getaround, in their sights. They believe car-sharing services are illegal because the businesses skirt tourism taxes. The American Car Rental Association, a lobbying group for Enterprise Holdings Inc., Hertz Global Holdings Inc. and other industry giants, is pushing lawmakers to eliminate what it sees as an unfair loophole. “Car sharing is a car-rental business model and thus, should pay all appropriate taxes,” said Sharon Faulkner, executive director at the trade group.
While Turo is tiny compared with Uber Technologies Inc. or Airbnb Inc., the resistance it’s seeing from established players is reminiscent of what the larger upstarts faced from taxi and hotel companies, said Steve DelBianco, executive director of NetChoice, a trade group representing online businesses including Turo.
Turo fits into Daimler’s shift toward investing more in transportation technologies that cater to young urbanites, who are less interested in owning cars. The German automaker said this week that it will contribute $50 million to a joint venture with Via Transportation Inc., which lets people hail a shuttle from an app.
Insurance provider Liberty Mutual Insurance Co. and venture capital firm Kleiner Perkins Caufield & Byers also backed Turo in the latest funding round. “Once people understand the benefits we provide to car owners, they will be more welcoming,” said Haddad. “We know we have an uphill battle. The big rental companies don’t want us around.”