Widely publicizing Turo, a peer-to-peer car-sharing platform, are tragic incidents in New Orleans and Las Vegas. Cars rented from Turo were used during both attacks, raising questions about the company regarding its safety measures and about whether the company is ready to launch its initial public offering (IPO).
Just like Airbnb for cars, cars can be rented from private car owners as well. Turo does not involve traditional car rental companies like Hertz or Avis, because all these fleets are owned by the companies, plus all maintenance. Though the company has been around since 2010 and expanded nationally in 2012, it skyrocketed in popularity during last year’s car shortage as rental prices shot up.
In response to the attacks, Turo put out a statement of extreme sadness, confirming that its trust and safety team is interacting with law enforcement. The company added that “we do not believe either renter had a criminal background that would have identified them as a security threat,” mentioning that there is no connection between the two occurrences.
Earlier, a Turo spokesperson had further clarified the attackers to state that they “had valid driver’s licenses, clean background checks, and were honorably discharged from the U.S. military.” Such would mean that while traditional rental companies had not raised red flags, these individuals could have rented cars from such companies and even checked into hotels without red flags.
How Turo operates
As of September 2024, Turo calls itself the “world’s largest car-sharing marketplace”: 350,000 active listings across five countries and 3.5 million renters. Unlike more traditional companies, Turo does not own cars. It connects owners and renters and takes a commission.
Since it lacks the funds to purchase or maintain a fleet of cars, Turo circumvents the laws and consumer protection laws faced by more traditional rental companies. On the other hand, this model shifts the liability for risks to individual car owners and raises questions about accountability.
This platform brings all types of vehicles, from economy cars to luxury models such as Porsches and Ferraris. Renters only require a driver’s license and should be at least 18 years old if in the U.S., but do not have the requirement to have personal car insurance. Turo uses its proprietary safety system to qualify renters, and it claims that less than 0.1 percent of its trips end up seriously, such as in a theft or accident.
The prospectus to Turo’s planned IPO mentions risks, including the possibility that vehicles rented through the Turo platform may be used in illegal activities, despite the latter’s claims of safeguards in place. The document points out that such events would harm Turo’s reputation, increase costs, and lose potential users from using the platform.
Impact on Turo’s business and safety measures
These recent attacks could make the company reconsider its business ambitions, including its IPO plans. Turo had planned to go public in 2022 with the ticker “TURO” and regularly updated the filings with the Securities and Exchange Commission. Still, the timing of the listing is an open question.
After the attacks, Turo would need to rethink its safety measures and policies on compensation: car owners would get as much as $750,000 in third-party liability coverage for bodily injury and property damage, underwritten by Travelers Insurance. Turo would then reimburse car owners for eligible repairs up to the cash value of their automobile or $200,000, whichever is less.
While offering partial cover, it must still brace for an expensive outcome from high-profile events that may occur in the future. This company’s insurance partner, Travelers, hasn’t said much on how they will be compensating those affected by this week’s tragedies that left at least 16 people dead and dozens more injured.
Turo’s performance since the pandemic has solidified its place in being the best choice for budget travelers. From 2021 to 2022, Turo’s revenue grew by 213% and increased by just 8% on the first nine months of 2024 when compared to the same period in 2023, reaching $722 million. However, more than that, its future performance will depend on how successful it is in dealing with the weakness that the new events have unconscionably revealed.
Though not easy, at least for now, Turo has to fight hard to earn back public trust while traversing any potential fallout from these incidents. Whether the platform becomes an innovative trailblazer or is viewed with suspicion for safety and accountability will dictate its long-term survivability in the competitive car rental market.
