Turo To Go Public When The Car Renting Industry Is Extremely Volatile
When Mr. Haddad was 49 he was the CEO of European internet auction marketplace iBazar SA, then tech market collapsed in 2000 and the company failed.
“We did not manage that crisis very well, so that experience stayed with me,” Mr. Haddad said.
Turo is a website where private car owners rent their vehicles by the day, week or month. After the Pandemic began to debilitate the US in March, Mr. Haddad laid off a third of his 330-person workforce. The following month, he cut marketing spend completely (the company went the entire second quarter with no marketing spend). The company's financial turnaround indicates he made the right decisions.
Mr. Haddad plans to take Turo public, but is undecided whether he will pursue a traditional IPO and is open to alternatives. One would think the pandemic would have caused the demand for Turo’s business to drop, but people swapped air travel for local excursions, and needed cars. Additionally, people left the cities to work remotely and needed to rent a cars only short term in their new areas. Some customers even rented sports cars or Teslas for joy rides.
“The platform model is a lot more nimble and flexible,” said Arun Sundararajan, a New York University professor and author of a book on the sharing economy. Because marketplaces like Turo don’t own assets, as hotels or traditional car-rental companies do, they “are much less likely to go into financial distress,” he said (Hertz filed for bankruptcy in May).
In recent years Turo has seen revenue climb more than 60% year over year, but with the pandemic the second half of the year only showed a 7% growth from the year-earlier period. Still, Turo said it finished 2020 with approximately $153 million in revenue (it's best year to date). I also has cut its losses to $7.2 million in the second half of 2020 from $46.9 million a year earlier. Mr. Haddad forecasts achieving full-year profitability in 2022.
This section of the industry has been hard as Turo and rival Getaround are then only ones that seem to be surviving (General Motors Co. ’s car-sharing service Maven and Daimler AG and BMW’s car-sharing venture Car2Go have closed in the past year).
By late summer, Getaround’s revenue had more than doubled from before the pandemic, said the company’s deputy general counsel, Andrew Byrnes.
“We have not actually moved the needle in terms of reducing individual car ownership, and it is that which will drive these car-sharing models,” said Ms. Brozen (who studies public policy and transportation at the University of California, Los Angeles).
Both Turo and Getaround have accept PPP money with Turo receiving about $6 million and Getaround getting $6.9 million. Turo said the money helped to hire back about half of the 110 people it laid off and reverse the roughly 25% pay cut given to all employees. Getaround’s Mr. Byrnes said the loan enabled the company to save jobs.
“Ethically it felt right to us to add the PPP to our arsenal of all of the measures that we were taking,” Mr. Haddad said.