Launch HN: Carve (YC S19) – Rent Cars from Local Dealerships
We're Amos and Sam, co-founders of Carve. (https://www.drivecarve.com)
Carve is a car sharing marketplace where you can rent cars from local dealerships. So if you don’t own a car but need one for a few days, you can get a car that fits your needs at a reasonable price.
We built this product because when we moved to New York after college, we both gave up cars, and even though most places we needed to be were easily accessible via Subway or Lyft, there were still lots of things we wanted to do that we couldn't using public transit or ride share apps. When it came to leaving the city to ski in Vermont or hike upstate, for example, the existing options were all either expensive (Zipcar, Car2Go), inconvenient (Avis, Hertz), or inconsistent (Turo, Getaround).
Sam and I are both from the Midwest, so neither of us are strangers to car dealerships—drive ten miles in any direction from our childhood homes and you'll see massive lots filled with cars waiting to be sold. We started speaking with these businesses and realized that keeping all those cars sitting around is really, really expensive. Compounding this problem is the fact that new cars sales are falling and dealership inventory levels are historically high.
In response to the issues that dealerships face and the slate of bad rental options, we built a platform on which dealers can list their cars to be rented. It's good for dealers because they can offset financing costs and depreciation of idle inventory without much effort. For renters, it means a short-term rental option that’s on average 30% cheaper any other comparable option, offers a wider selection of cars, and allows for human-free pickup and drop off.
It works as follows. First, browse our site for a car. Once you make a reservation, we'll email you an Uber voucher for $20 off your trip to and from the vehicle pickup location (a 24-hour valet lot in the city). When you arrive at the pickup location, show the attendant your reservation email and they'll fetch you your car. Once you’re done with the car, drive back to lot and hand the keys to the attendant. Use the Uber voucher to call a car to bring you back home.
At the moment, we're only operating in San Francisco, but we'll be expanding soon to Oakland and LA. If you're in SF, try us out and use the promo code HN10 to get 10% off of any rental!
We’d love to get some feedback and are happy to answer questions!
168 comments
[ 4.1 ms ] story [ 230 ms ] threadAs to why you'd choose us over Hertz, Enterprise, etc., the prices you're seeing on our website include things like taxes and fees, so by and large they're substantially lower than the big rental car companies for comparable cars.
Convenience is also a big thing we've focused on. Our lots are all downtown, as opposed to rental car company branches, who have a few lots downtown with limited inventory but tend to do most of their business at airports. We also pay $20 towards the Ubers to get you there and back again. Finally, since our lots are valeted 24/7, all you have to do is show an attendant your reservation email and the car is brought to you, which makes for super smooth pickup and drop-off process.
We're currently renegotiating our insurance product, so hopefully we'll be able to bring the deductible down to $500. We're also most likely going to offer an add-on option to reduce the deductible to $0.
When it comes to luxury cars, the depreciation tends to be steeper up front, so they'll need to be on the platform longer to make up for depreciation. We also take used luxury cars.
But can a rental that is simultaneously trying to undercut the incumbents on price while exceeding them in service? That's a harder question.
It seems like the big innovation this service is offering is (aside, presumably, from the standard startup initial subsidy of investor cash funding artificially low prices to build position) is leveraging a short-term market fluctuation that leaves dealers with unusual sunk unsaleable inventory costs that are, in effect, subsidizing the rentals from money that the dealer was going to lose anyway, but those go away if either sales pick up or dealers adjust to the new normal of sales levels.
Enterprise rent-a-car buys new cars, rents them, and then sells them at their own dealerships. They time it so they buy the cars as cheaply as possible, and then sell them when it's most profitable.
So, they do things like buy excess inventory of convertibles in the fall, and then sell them as used in spring.
IMO, I suspect that, for this business, most rentals will be 2-4 year old new-ish cars that are sold as used: Lease returns, trade-ins, ect.
In practical terms you will one day have to manage the schedule of your rentals to allow dealerships to sell cars whenever they want, regardless of the booking situation of a given car, somewhere above you already hinted at that problem. This becomes easier with scale as more comparable cars will be available. But at that point you basically have a rental car company to run. Unless you figure out a way to do that automatically, which would be a great value proposition in itself.
Two years ago I rented a Pacifica to move a snowblower, and my wife liked it so much that she talked me into buying one.
The dealer was confused when we told them we didn't need to test-drive the minivan.
I could see this working quite well.
Those are both 'new' in the dealership's eyes
Most of the big players, have a small "fleet" they use as loaner vehicles (maintenance, body work, etc). Since new cars have pretty big markups, they run them for a year and basically take a small loss when they go to sell them.
It seems like this system provides the missing piece to easily rent idle vehicles from the "loaner fleet".
You can also search Google/Bing for local dealerships and check if they have a rental section.
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We're planning to do something similar to test some of the lane keep systems on a long road trip.
The Honda system seemed better (2019 CRV) to me, though I didn't test it for quite as long.
I'm really interested in LKAS, but none of the car bloggers seem to touch it.
We have a lot of country highway driving and LKAS seems like a nice way to reduce fatigue. Bummer that it's not up to par yet.
If Toyota were committed to OTA updates, I'd probably have bought a RAV4 by now. But if they're going to keep the driver assist technology static in the hopes of getting you to upgrade sooner, I'm not going to buy until the tech is up to snuff. It's also pretty lousy that all of these companies brag about how all of their driver-assist safety tech is included in the base model — but they force you to upgrade if you want blindspot warnings. For me, that's a much more critical and commonly-used feature than automatic braking, for example.
As for the car bloggers, Tom Voelk sometimes touches on it, and I try to encourage this by commenting about it or asking about it in the comments.
Obviously, it only works when the road is well-marked. And I did find that it usually put me a little further to one side of the lane than I like, but maybe it’s just me that’s off and not the car.
Overall, I had a good enough impression that this is now a feature that I will actively look for on any new car we might buy.
Not if the car is a trade-in that would be sold as used, anyway. Otherwise, I can't see how it makes sense: it takes a lot for rentals to make up for the “new” to “used” transition.
If you ever go to buy a new car and it has more than 20 miles on the odometer, you should verify the warranty in service date before buying. If it has been activated, you should be getting a price that makes the transaction financially worthwhile.
As a potential new car owner, you don't know how that car was driven for those tens or possibly in this case hundreds of miles.
Maybe not everybody cares, but there will definitely be a segment of the market that does. I don't think that's really an issue for this startup, but would be for any dealer they're working with that doesn't want to take significant hits because of it.
These prices seem insanely high though, maybe it's just I live in the south but... $65 a day for a Ford Explorer? I have a luxury German car and pay $34 a day, which again is not cheap.
I'll probably only end up doing my manufacture plan a couple of months, as honestly I don't drive that much. Spending $300-400 a month in Uber is actually eaiser and significantly less money.
* Full disclosure, above is a referral link. Though I can provide a promo code to waive the activation fee.
For me and my cofounder and friends living in cities, it's typically 2-7 days a month, in which case rentals makes sense. If you need car for longer than that, than other options can make a lot of sense, and though you'll pay more overall, you'll 100% save on a per-day basis.
https://www.drivecarve.com/search?startDate=2019-11-8_3-00pm...
^^ I know it's 2019 and this is expected but I really appreciate this URL structure for search results. I have spent a lot of time working on booking sites and it used to frustrate me to no end that some projects used a very un-friendly URL structure. This will help your marketing team so, so much over time.
I'll offer some critique of the booking process that you probably already know of: travel is highly dependent on trust signals and push mechanisms like Best Purchase Guarantees, People Looking at This Hotel, countdowns, etc. Some I find gross while others necessary. I think you could look at the booking experience and find plenty of room to grow there. Right now, the car experience feels barren and fake to me. I bet there are some things you will find very helpful, like MPG, etc. so it's just about testing those assumptions.
Best of luck!
100% agree with this. This is V1 so we're working on updating the homepage and individual car pages to make it look less barren and add a degree of social proof and trustworthiness.
I use DriveFlow, which is a Car as a Service. It is owned by a dealership chain.
It is $1100/mo. I love it.
https://www.driveflow.com/
Holy crap, really? How much do you use it to justify that high of a cost? My car, and this number is going down monthly because I paid for it in one lump and it's getting older every month, only costs me $416/mo with maintenance and fuel. I suppose it saves on storage, but I already had a place to store said car, so that's not really an added cost?
Edited to reflect an accurate number after I realized I double entered insurance in fuellog for a year.
- Insurance (1K deductible)
- Unlimited vehicle swaps
- 1200 miles/mo
- Each car comes freshly detailed and is usually under 3000 miles
- Unlimited (local) roadside assistance swaps - eg if I get a flat tire they will come swap me out into another car and I just drive away - this happened to my wife and it was amazing to just grab and go
- Allowed to put pets in the car (extra $100/mo)
As I have customers I drive around in-town frequently, I always need to have a nice, modern, clean car on short notice. The cars so far have been BMW m240i, Audi S3/S4, Audi Q5, Land Rover Discovery.
I feel it is worth the cost. My BMW lease before this was $700/mo. And then add in insurance, detailing, maintenance (tires). It is about the same honestly. I just have a lot more flexibility now.
Also it is a monthly operating expense, which makes the tax situation a lot easier (versus lease/purchase and then reflecting that on taxes).
-No manufacturer lock-in (different manufacturers excel at different things)
-No maintenance burden
-No long/medium term commitment to a single vehicle (maybe I want a minivan for a long summer roadtrip but not all summer or all year)
... but the cost is truly eye-watering.
I had my first kid last year so I got a more family-friendly car than the little coupe I'd been driving. I struggled to decide between a midsize sedan (cheaper, more fun to drive, easier to park, suitable for 95% of the family's driving tasks) or a larger SUV (generally worse, but suitable for 100% of the family's driving tasks).
This would have solved the dilemma for me ... except I think I could just own a decent midsize sedan AND a decent larger SUV for $900 or more per month.
I have a problem with this - the prices you list are much higher than comparable offerings from the national chains. Maybe that's because your pricing is more transparent? If so, you should bake the user's drive-away pricing right into the marketing of the page and compare against "the other guys". Or have a cost calculator that shows how much they would be saving.
You have a super-interesting value prop, but none of it is really available on the site. Even a dorky "how it works" on the home page would be nice.
The prices we're showing on the site are the all-in daily rates. So if the price for an Explorer is $65/day and you rent it for 2 days, you'll be charged $130. Whereas when I look at Hertz, the price for renting a standard SUV for their downtown location from the 28th to the 30th is $140 per day, but for two days the total all in cost is $320 without any extra add-ons.
It might actually make sense for us to show the prices on our site without taxes+fees included so as to look comparable with other companies' prices.
Them: would you like to purchase insurance?
Me: No, I have my own thanks.
Them: okay.
Maybe since I rent almost exclusively from airports, I have a biased experience, but I don't think of rental insurance as being high-pressure.
(I also find airports to be the WORST possible environment for this kind of thing; you’re always rushing to return your car so you can catch your flight. You are forced to just accept that the scratch on the back left bumper wasn’t there when you rented the car, because fighting about it will cause you to miss your flight. So it’s a $500+ repair fee or a $500+ plane ticket. They have you over a barrel.)
I've never had such an insurance pitch. They usually pitch a “damage waiver” gap insurance which assures that any amount not covered by your insurances deductible is covered.
> I also find airports to be the WORST possible environment for this kind of thing; you’re always rushing to return your car so you can catch your flight. You are forced to just accept that the scratch on the back left bumper wasn’t there when you rented the car, because fighting about it will cause you to miss your flight.
Never had that experience either, everytime I've rented at a major chain we've done a damage walkaround at pickup, often the rental agency employee has noted things I would have missed, and on return (even at airports!) there's never been a problem.
Of course, I've never been so late back to the airport with a rental that pointing out that the damage was identified on the pre-rental walk-around would jeopardize my flight, either.
I try to do this by having my credit card and drivers license in my hand and putting in on the counter right when I walk up. I also don't ask any questions about anything and give very brief answers to all their questions.
For example, you borrow your friends truck and wreck it, etc.
It probably doesn't matter that much - I suspect that for your target clientele (urbanites who need a car for a weekend trip), this is probably the range you want to be competitive in anyway.
(disclaimer: I work in automotive, and very closely with dealers)
One thing is leaving information about the car and the dealership in the vehicle + providing dealer contact info in case the person wants to reach out to the dealer. Do you have any other ideas?
Dealerships live and breathe leads. People renting cars definitely do not want to be sales leads for dealerships. So I think this may be a pothole along your way to the success I hope you achieve. :)
i find those sorts of statements to be a sort of “biz-smell”. it is easy to make dismissive claims about incumbents...and dangerous when those claims do not clearly map to value statements about your product/service. They are “inconvenient because of X, unlike us because of our feature/service/attribute Y”.
if someone has never rented a car from a national chain, or if they have never had an issue doing so (which is my experience) your assertion without context may fall flat.
the uber voucher is neat, but i’ve had avis bring a car out to my house and drive me home after returning it to the lot. all i had to do was chat with a human for 1-2min and explain my personal logistics. my experience is an outlier...but informs my analysis of the “inconvenient” claim.
Regardless, great work launching! I will be looking forward to you expanding geographic coverage so I can give you a spin :)
But in a lot of use cases, specifically for people living in big cities that don't own cars, the experience is slow and expensive. To use me as an example, when I was living in New York I wanted to go skiing in Vermont and needed a car for the weekend. On the several occasions I used one of the big car rental companies, I'd pay in excess of $80/day for a midsize sedan, trek to a branch which was often far from where I lived, and wait in line to sign a bunch of paperwork at a desk. Another thing I found problematic was that I never new exactly which model I was going to get until I got there.
Peer-to-peer services solve certain aspects of these problems but were, in my experience, inconsistent--sometimes the car was nearby and great and other times it was far away, dirty, and the host was unresponsive.
We're trying to combine the scalability and variety you get with peer-to-peer services and the consistency you get with direct-to-consumer car rental.
i’m not now, nor ever have i been a member of a national chain’s loyalty program. as i had noted, my experience is an outlier. i’ve never had the dreaded endless-line issue, could handle two signature and a half dozen initial boxes without it being an undue burden (at the time). i never rent from airport locations, only local franchisees. this alone may account for my experience; a small franchise location in an area with a major airport may be more inclined to strive for great customer experience where possible. obviously my experience doesn’t scale!!
best of luck. i’m sure you will see success and light a fire under national chains to up their game. win:win
I'm none of those things, and when I've rented the experience has been great.
> On the several occasions I used one of the big car rental companies, I'd pay in excess of $80/day for a midsize sedan, trek to a branch which was often far from where I lived, and wait in line to sign a bunch of paperwork at a desk
Every rental agency I've rented with has had pickup service of some sort (in the last few years, usually Uber/Lyft ordered by the rental office), and because they are smaller footprint and have business driven by accessibility, they tend to be more conveniently located for more people than dealerships.
2. We don't put mileage limits on our cars, so dealers don't really have a way of limiting mileage once the vehicles are on the platform.
UX tips: let user choose times later, initially show date options only. Also show am option to select the city, to make it clear where this service is available.
Re: the UX feedback--I'll let Sam know!
This is a great idea, and I don't think you need to make it a much cheaper option in the long run for it to attract customers (understand the incentive in the short term to acquire customers).
I live in SF, but travel to MSP a lot, and there is a local dealer that rents their fleet out and I usually rent from them, because they're close to the airport, they have a decent selection and the cars are well maintained. I would consider testing other markets than SF/Oakland/LA, and focus on places where people from those markets travel to (i.e. the midwest).
Excited to see what you accomplish!
Our main focus right now is on people living in urban areas that don't own cars rather than on travel, which is a much more price-competitive market. That said, we're definitely not opposed to moving in that direction once we're a bit larger!
Delivery, especially at our size, turns out to be pretty expensive to do, so we think it makes more sense in most cases to deliver the customer to the car, not the other way around.
If you rent the car for just 1 or 2 days, its pretty comparable to the national brands (but certainly not 30% cheaper). The cheapest car they offer is $45 per day, while the national brands seem to be about $55 per day or $90 for 2 days (in the city itself. Airports are much cheaper).
Any periods longer than that and the pricing breaks down. For a rental of 1 week, you can get a car from Alamo for $200 in downtown SF, but its $315 from carve.
Also, I've rented a lot of cars in my life, and the quoted price is always what I pay. They try to upsell you on two things - the insurance, and the prepaid gas, but as long as you say no to them, you shouldn't be charged any more than the quoted price.
That being said, depending on how smooth the pickup service was, I would consider using this. The worst part about renting a car is going to the office, watching someone type into a computer for 15 minutes (what are they typing for so long anyways?), and trying to upsell you on a bunch of crap. If I don't have to deal with that, and the price was comparable, I would certainly go for it.
2 questions
1. how do you handle paying for gas?
2. are there any mileage limits?
On price, typically the cheapest cars they're offering are slightly lower end than our cheapest, though we're definitely trying to add some more budget cars to our service. Also, as our insurance costs go down, we'll be able to lower prices--maybe not massively, but I think it will certainly make our service an easier sell.
Re: mileage limits, we don't have any. With gas, we give it to customers on a full tank and ask that they return it full.
Haven't tried Zip car. Too many NYC Zip car reviews of dirty cars left w/ empty pizza boxes etc and wouldn't want to be in such a small car in a highway in upstate NY.
I feel like there is a huge market for ages <21 as that would be the time that new adults would need a car and would not necessarily accept the responsibility of paying monthly loans or have access to credit that would allow them to buy one outright. They would have the capacity to have enough money saved to rent a car for a few days or weeks, but they are turned away by every player in the space.
I guess this is more of a general question than pointed at you, but since you guys have researched the market maybe you'd be equipped to answer it. How come nobody offers rentals to <21 drivers? Furthermore, a question for Carve specifically, why 25 instead of 21? Would dealerships not bite even though the common minimum age for rentals is 21?
I understand that accident rates among this demographic are incredibly high and that would complicate your liability. What I don't get is why seemingly nobody in the car rental business wants to service this market - couldn't you just offer beaters or end-of-life cars to high risk drivers? Nobody needs a brand new Nissan Murano to drive 70 miles upstate. You can do the same drive in a 25 year old Corolla. I suppose I am biased because I am <21 myself (20), but I also own my car outright so I wouldn't be in the target market for this.
[1] https://help.drivecarve.com/hc/en-us/articles/360031105291-H...
That being said, we're currently negotiating with a different carrier and will hopefully be able to rent to people 22 and up within the next 6 weeks.
> I understand that accident rates among this demographic are incredibly high and that would complicate your liability.
As you mention, the liability cost is simply very high for drivers under the age of 25 (prefrontal cortex is not yet fully developed), which is why most rental car companies do not service that age cohort.
They work out of dealerships as well as airports which can provide an edge for some local rentals.
Dealers pay substantial fees for the short term credit required to keep these things on their lots.
It seems like bad business to pay a huge finance fee only to rent the car out and have it not be on your lot anymore.
I’m also pretty curious about the tax and registration implications here. Dealers currently enjoy very different insurance, tax, and registration modalities than consumers do. State regulatory bodies are really sensitive to fraud in this space (getting a dealers license so you don’t have to pay tax on your super car is a common structure). If you are now buying/financing vehicles for the purpose of renting them out, it seems like you’re in a different classification than an automotive dealer.
Seems to me that targeting consumers a la Turo is much smarter. Curious the rationale surrounding this model.
The reason we're targeting institutional owners (i.e. dealerships) rather than individual owners a la Turo is because it's generally less expensive to acquire dealership cars (i.e. much easier to onboard a dealership group with hundreds of cars than to get consumers one by one).
“New” cars? Wouldn’t the act of renting them out transform them into used cars and illegal to sell as new?