Streetcar: Brett Akker and Andrew Valentine

Brett Akker on why his car sharing business is streets ahead of the competition


Although still a relatively new business idea, car-sharing is gaining momentum. Growing Business talks to the founder of Britain’s primary exponent of the concept, Streetcar, about leading the field and what’s driving people away from vehicle ownership

It’s been particularly busy this week,” Brett Akker says as he crams in some time to chat between meetings. “But then I’ve been saying that for the past five years.”

Streetcar, the pay-as-you-go car-sharing club he started with Andrew Valentine in 2004, has certainly made headway since it was featured in these pages as a One2Watch back in 2007. The biggest player in the UK market by a mile, the business currently has 75,000 members on its books, sharing 1,300 vehicles.

“When we started, we were different from the competition, because there wasn’t really any competition,” he says. And although there are now a few similar offerings for the car-less driver to choose from, Streetcar looks set to retain its leading position in the market for some time.

The service works by allowing members to book a nearby car online for as little as an hour at a time. When they arrive, they swipe the keycard over a reader on the windscreen, which unlocks the vehicle. Drivers are asked to leave the car with at least a quarter of a tank of petrol, which they pay for with a card that charges the amount to Streetcar. The vehicles are cleaned and maintained regularly by regional teams.

First mover

The concept of car-sharing has been around since the mid-20th century, and has been popular in Switzerland, albeit on an informal basis, for some time. However, over the past decade several successful ventures in the field have made real headway. Globally, American firm Zipcar leads the way for market share, with around 6,000 vehicles and more than 250,000 members. The firm, which was started in 2000 by Massachusetts residents Robin Chase and Antje Danielson, arrived in the UK three years ago, but at present, only has a couple of hundred cars on the road.

Streetcar’s closest UK rival, City Car Club, is also miles behind. The business, which recently acquired smaller offering WhizzGo, has 500 cars and 16,000 members.

Along with its first-mover advantage, another factor working in Streetcar’s favour, according to Akker, is the strong relationships he and Valentine have fostered with the public sector. To date, the company has won 99% of all tenders from local authorities to provide car club services, most of which are two or three-year contracts.

The big, traditional vehicle rental firms have yet to make a splash in the car-sharing pond, but this could soon change. Hertz launched its Connect car-sharing service a year ago, with aspirations of becoming the global market leader in the sector. Although it currently has just over 100 cars in and around the London area, the company’s strong European presence through its traditional rental service could allow for rapid expansion. But it’s not something Akker is worried about. In fact, he views more market players in a positive light.

“I guess Hertz coming into the market proves it has potential for growth, but with others entering the sector, all it will do is create more noise around the concept,” he says. “We’ve spent a lot of time, effort and money creating awareness of the service, as well as the brand, but it’s still a relatively unknown idea that’s very much in the growth phase.”

Up the junction

It’s this scalability that attracted Akker and Valentine to the business model in the first place. Having already decided they would work together on some kind of commercial venture, the pair came across an article about the success of similar businesses in US and European cities. “When we read that, we thought: ‘If it doesn’t work in London, it shouldn’t work anywhere.'”

The business started in Clapham, South West London, with eight cars, which Akker and Valentine managed to lease through a firm in Scotland. They’d already spoken to more than 70 potential funders, most of whom thought the model was great, but wouldn’t back it until it had been proven. By this point, the pair had already given up their jobs – Akker had held a sales position at Mars, while Valentine came from ferry company P&O.

They were the perfect target audience for their own service – young urbanites with a steady income, but not enough driving hours to justify buying a car.

“We had confidence in the idea, not just because of the success in other cities, but due to the direction London was moving in terms of environmental concerns,” says Akker.

Like many businesses with an environmental message in its service offering, Streetcar can combine its green credentials with a focus on price. The company claims it has taken 20 privately owned cars off the road for every one it has introduced into the club. In addition, the Streetcar Volkswagen Golfs are newer and more fuel efficient than many of the cars members give up. By its very nature, the Streetcar service eliminates the temptation to use a vehicle for that lazy five-minute journey to the shops. Akker says, on average, Streetcar members drive 71% less after joining, cutting  CO2 emissions by 24,000 tonnes every year.

While we’re talking statistics, Akker says typical Streetcar usage compared to owning a similar car equates to an annual saving of more than £2,000 for the member. This is an attractive proposition at any time, but recent global financial conditions have really allowed Akker and Valentine to hammer the point home. “This year, people have really started to understand the true cost of car ownership,” says Akker. “If you asked someone three years ago how much they spend to run their car, they’d probably just talk about petrol. Now they’ve started to add up the MOT, tax and parking costs and realised it’s more of a luxury than a necessity.”

A big part of what makes Streetcar attractive to its members, says Akker, is that the car doesn’t feel like a rental. The Golf was chosen as result of focus-group input before the service launched. Of eight possible choices, the Golf was identified as the vehicle people would be most likely to give up their own car for. Akker points out that it’s fairly “classless” – smart enough for business and perfect for the weekly shop. “A lot of members think of the car as their own,” says Akker, and it’s this illusion of ownership which removes the option of branding on the vehicles.

“We’re fully aware of the marketing trick we’re missing by not branding them up,” he adds. “It’s a debate we’ve had on a daily basis from day one, but it’s just not what our members want. They use the cars for first dates, business or things like weddings, and given that 50% of our membership comes from word of mouth, we need to keep them happy.”

It’s a different story with the company’s Streetvans, however. People don’t tend to use these for weddings, and any prospective romantic interest probably wouldn’t be too impressed if you turned up in one on a first date. As a result, the vehicles act as their own billboards as they do the rounds to and from various Swedish flat-pack furniture outlets.

Driving growth

In March 2007, Streetcar took on £6.4m from Smedvig Capital. The funding has been key to the company’s significant expansion over the past two years. The investment also saw Sir Trevor Chinn come on board as chairman. Chinn, a former managing director of Lex, which acquired RAC under his leadership in 1999, has more than three decades of experience in the motor industry. He has also spent time on the boards of both The AA and Kwik-Fit.

“Trevor has been fantastic,” says Akker. “He contributes an awful lot and we have monthly meetings with him. I wouldn’t say he’s changed our direction in any way, but he has focused us even more on customer service – an area that was key in all of his own businesses. He saw, as we did, huge potential in an idea that was at the start of its growth curve, and he was excited at how far it could go.”

Streetcar’s growth, both in terms of vehicles and area coverage, has involved careful planning. The density of the network is key. There must be enough cars in one location, so that if a member’s usual vehicle is booked out, there’s another close by. After saturating the Clapham area, the service moved across the Thames to Fulham and has since introduced pockets of cars across Greater London. Of the 1,300 Streetcar vehicles on the road, 1,200 are located in the capital.

The first foray outside of London was Brighton, in 2005. The city was picked as it had many of the properties that made London such a good fit – a dense population and a good enough transport network for members to make the majority of their journeys on. The same factors are currently being identified in other cities as Akker and Valentine eye up international expansion.

However, the company’s recent focus has been on the business-to-business (B2B) sector, where revenues have risen to 10% in the past 18 months, and more than 2,000 companies have accounts with Streetcar for Business. “We introduced a specific B2B sales team as it’s a massive growth area for us. We wanted to make sure we had the right mix of members using the cars at all times, as the majority of residential use is at evenings and weekends.”

Bold targets

Streetcar hit profitability in May 2008 and has a current run rate of £18.5m for this financial year. An initial public offering (IPO) has been on the cards for some time, but the focus now, Akker says, is growth both at home and eventually overseas. “We’ll look at an IPO when it makes sense to,” he says. “It will largely be dictated by the market, so there’s no timescale set in stone.” He’s also confident the company can reach 250,000 members by 2012, which would more than treble current levels. Given that the service has appealed to people both on a financial and conceptual basis from the outset, it’s not unreasonable to assume that the business has a good chance of hitting its targets.

“When we started, we had members sign up that could have bought the company outright with their personal wealth, but they were just so taken by the idea,” says Akker. “People have sold their Ferraris and joined Streetcar.” Perhaps that has more to do with the supercars being notoriously prone to breaking down, or a growing distaste for overstated displays of wealth. Whatever the reason, Akker and Valentine seem to be enjoying Britain’s waning desire for owning their own wheels.

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