Flexing Opportunistic Muscle

By
Friday, May 5th, 2006

In 1986 I bought my very first car for a whopping $500.00 - cold, hard cash! Actually, it was more like a stack of flimsy twenties, tens and fives I had been saving up from my dishwashing job at the local mall buffet. Nonetheless, bringing home my faded red Chevy Chevette for the first time was a highlight of my teenage years.

Like most 16-year-olds, this was my first taste of the kind of freedom that owning your own car can allow. I'm sure you remember that feeling as well. The first time you got behind the wheel and realized you could go anywhere, at anytime - for as long as you wanted.

Of course, this isn't 1986 - and $3.00 a gallon has put the kibosh on long road trips and relaxing night drives through the country while listening to the ball game on the last a.m. frequency still turning a mediocre profit.

Granted, we're still logging expensive miles on our daily commutes. And despite high gas prices, that's not going to change much. We still have to get to work everyday, right?

But we do have choices.

Let's face it. No one's forcing that jack ass with the 7 MPG Hummer to drive a half a mile to the grocery store everyday, and then bitch about the oil companies making record profits while he's filling up. Asking the suits at Exxon Mobil to explain themselves is an insult to the capitalist spirit and a convenient way to avoid personal responsibility.

Though for the most part, it does seem that more and more Americans are finally starting to get the bigger picture. The days of cheap fill-ups are gone, big oil isn't the culprit and if we have any intention of holding on to our money - we have to take responsibility for our actions and start reconsidering the way we get from point A to point B.

Fortunately, energy-efficient alternatives to our status quo of daily commutes are now starting to become more and more prevalent.

  • U.S. mass transit systems are significantly expanding their use of hybrid technology and renewable fuels. (Just last week, Maryland Governor, Robert Ehrlich announced that 10 new hybrid buses would begin operating in Baltimore this spring. And now there are plans for the state to purchase 300 more.)

  • An organization called Plug-In Partners is making great strides with its grassroots campaign to convince U.S. automakers to embrace Plug-In Hybrid Electric Technology. Based on the average of a 25-mile-per-day commute, these Plug-In Hybrids could get you to and from work everyday without using a single drop of gas...and without skimping on performance.

  • And one of the latest success stories spawned from high gas prices is a new trend called car sharing.

Car What???

If you live in the suburbs, what I'm about to tell you may seem irrelevant. But as investors, we have to think outside our own worlds.

You see, while those who live in the suburbs pretty much have to drive everywhere - those who live in the city often rely on public transportation, or, and hold on to your seats - walk!

I know it's crazy. Actually walking to the store instead of driving is incomprehensible to those who don't live within a mile of the local supermarket. But city-dwellers are different.

The advantage to living in the city is that everything you need is within close distance. In fact, driving anywhere in the city rarely makes sense, since drivers have to not only pay for gas - but also shell out small fortunes for parking.

Nonetheless, many who live in the city still need cars for those occasions when mass transit or a bike ride isn't an option. I live in the city, but my parents live about 40 miles north, in the suburbs of Harford County. I'm not about to hoof it up there every time I want to visit!

But this latest car sharing trend is offering up a solution for city dwellers that rarely drive...yet still need access to a car from time to time.

And this solution is providing massive savings for consumers!

Flexing Opportunistic Muscle

One of the most popular car-sharing companies in the U.S. is called Flexcar.

Here's how the company operates...

With Flexcar, you basically share access to hundreds of vehicles within Flexcar's fleet. These are often within a five-minute walk of your home or office. You reserve a car online or by phone, drive the car to a meeting, or to run errands or head outside the city for any reason, and return the car when you're done.

Now here's the reason so many city dwellers are cozying up to Flexcar.

Instead of having to buy a car, maintain a car and insure a car - you simply pay Flexcar an hourly rate that covers gas, insurance, parking and unlimited miles. All you end up paying for is the drive.

They can even break down the savings for you on their site.

Using a current Flexcar customer I know in D.C. as an example, here's what I found his savings to be...


Cost of Owning

How many miles do you drive per month?

1000

Estimate your average miles per gallon


32

Estimate your average cost per gallon


$3.10

Estimate your monthly parking costs


$140

Your Operating Costs

Cost of Gas per Mile

0.10

Cost of Gas per Month

100.00

Average maintenance & repair costs per mile*


0.059

Maintenance & repair costs per month

59.00

Average Monthly Ownership Costs*

Full-coverage insurance


107.33

License, registration, taxes


32.42

Depreciation


323.25

Finance Charge (10% down; loan @ 6%/5 yrs.)


61.58

Average Monthly Ownership Costs

524.58

Your total monthly cost of car ownership

823.58


Cost of Using Flexcar

 

Cost Per Month

Savings

5 hours per/month

45.00

778.58

10 hours per/month

85.00

738.58

25 hours per/month

200.00

623.58

50 hours per/month

375.00

448.58

For the same price as owning and driving your car, you can drive a Flexcar approximately 110 Hrs/Month or 4 Hrs/Day

* as calculated in AAA's "Your Driving Costs, 2005". Monthly ownership costs are those fixed costs which you incur regardless of whether or not you drive your vehicle. Your depreciation and finance charges will vary based on the value and age of your vehicle.

** calculated using Seattle rates. Rates may vary slightly by market

As you can see, his savings are astronomical. And for that reason alone, I see Flexcar and other car sharing services gaining serious momentum as gas prices continue to rise.

But I'm not the only one.

Last fall, Revolution LLC, the Washington-based investment firm owned by AOL co-founder, Steve Case, announced that it had acquired controlling interest in Flexcar.

Based on national surveys and Revolution's own analysis of the market, the investment firm believes that Flexcar can grow to serve 1 million members, sharing 20,000 cars in less than five years.

Flexcar currently operates car-sharing programs for more than 35,000 members in six metropolitan areas, covering 37 cities in 5 states and the District of Columbia.

Recent Flexcar research has also shown that roughly 60% of its members have either sold or decided not to purchase a vehicle because of the program. As an environmental bonus, this has removed thousands of vehicles and thousands of tons of emissions from circulation.

Two years ago, when I first heard about Flexcar, I was reluctant to believe Americans would part with their cars to utilize this kind of service. That's when gas was $2.00 a gallon.

Today, there's no doubt in my mind that Flexcar and similar car-sharing businesses are going to boom over the next three to five years. And I'm just waiting to pounce on the first one to go public!

For more on car-sharing, visit Green Chip Stocks today.

Jeff Siegel

**40 percent of Flexcar's national fleet is made up of hybrids.

***Flexcar reported that April 29, 2006 marked a single-day record for nationwide usage of its car-sharing service. This surpasses a previous single-day usage mark set only two weeks prior.


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