There’s consolidation afoot in the peer-to-peer car rental space. San Francisco-based RelayRides, which launched about five years ago and is now available nationwide, has gobbled up fledgling competitor Wheelz. That includes all the assets, IP, and about 10 employees from Wheelz, which launched about a year-and-a-half ago.
The acquisition was announced as RelayRides is seeing record growth in its peer-to-peer car sharing marketplace. It now has cars in more than 1,500 cities across the U.S. since launching nationally a year ago. Over that time, it’s also seen rental reservation hours and active listings both increase more than 500 percent.
But RelayRides believes that it can accelerate that growth by bringing on the assets and the technical expertise of the Wheelz team. Unlike RelayRides, which enables car owners to list their cars and hand off keys, Wheelz requires that they install a piece of hardware into their cars. Its proprietary DriveBox technology would then enable renters to unlock the vehicles and get access to them without having to meet owners to hand off keys.
On the one hand, that gave users more instant access to Wheelz’s inventory of cars. On the other hand, it slowed down the startup’s ability to expand into new markets. At the time of the acquisition, Wheelz was available in San Francisco, Los Angeles, and on some university campuses in California.
For Wheelz, the combination with RelayRides will enable it to bring its technology and user experience to more renters around the country. According to RelayRides CEO Andre Haddad, Wheelz has been working on lower-cost hardware that would make DriveBox technology more widely available to RelayRides listers.
That will enable RelayRides to better reach its most passionate users. Haddad, who was formerly an executive at eBay and Shopping.com, compared RelayRides’ dependence on so-called “super users” to his days at eBay, where about 5 percent of users made up about half of all revenues.
In the same way, RelayRides will be able to leverage Wheelz hardware to facilitate rentals from its own super users. By looking at its inventory of cars and seeing which car owners are most active, RelayRides will be able to pick which are likely to make the most out of that hardware investment. Wheelz founder and CEO Jeff Miller also said there could be an opportunity to have car owners pay for their own equipment.
Either way, the idea is to make car sharing a more seamless experience for both car owners and renters. Installing Wheelz hardware is one way that RelayRides does this. Another way that it’s simplified the rental process is through a partnership with GM and OnStar to let renters gain access to cars by connecting with the automaker’s on-board computer and unlock doors, control and track the vehicles that have been rented.
Over the next several years, Miller expects more OEMs to provide access through OnStar-like integrations. In the meantime, though, the Wheelz hardware will make car sharing a lot more accessible to users who don’t have cars produced by GM or other manufacturers with similar technology.
Wheelz had raised $13.7 million ahead of its launch in San Francisco and L.A. last year. RelayRides, meanwhile, has raised a total of $13 million since being founded in 2008.
While they wouldn’t really disclose the terms of the deal, executives said that Wheelz investors — such as Zipcar and Fontinalis Partners — would become shareholders in the combined entity. As part of the acquisition, RelayRides receive all assets and IP from Wheelz, and 10 employees will be joining the team. Wheelz founder Miller will remain on through the transition, and afterward will serve as an advisor and shareholder in the combined company.