Turo: A magnificent invention spawned out of the creative process of voluntary exchange. It’s concept is simple: It allows individuals car owners to rent out their vehicles to others seeking to rent their cars for a period of time. This is a win/win for those involved: The owner of the vehicle earns cash from his car, and the renter can use the car to fulfill their needs. Sounds perfect? Not so quite..if you asked the traditional car companies.
Turo has raised the awareness of the mainstream rental car companies. The reason is quite simple: Turo is able to provide a similar service at a lower cost. Note: Cost does not always mean price. It could be more convenient. And that is subjective to the people involved in the transaction.
Having lower costs can come from increased competition. This increased competition benefits consumers, as firms seek to become more efficient, and attempt to provide a higher quality product at a lower cost. Still sounds great? For the consumers and Turo..YES! Avis et al…NO.
The issue with traditional rental car companies: They feel they can not compete effectively with the myriad of regulations they must contend with to stay in business, yet Turo’s car owners do not have to contend with this regulations. So, is it the fact Turo is competitive in the marketplace, or is it that the Government regulations are highly costly? I say the latter.
If I were a betting man, and I’m not by the way, the traditional car companies will lobby to make Turo have the same regulations as the main line firms. This sort of economic madness has been seen with other similar scenarios. It would make more economic sense to have the regulations reduced or removed! Oh no..to the traditional firms, the status quo is benefiting them. It also demonstrates that the economic cost of government regulation hurts smaller businesses and consumers. Allowing the creativity and ingenuity to prosper can produce more firms like Turo, and consumers will benefit from having reduced regulations and economic costs.