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In some ways, Orto is the worst car business in the world. It has sold only half a BMW.
But then again, it could be just the ticket for a world approaching “peak car” and rapidly realising what everyone in the motor industry has known for some time (they just have not been telling you): a car is used for only about 3 per cent of its lifetime.
Orto’s model is simple: the company buys a car, and as many as four customers pay a deposit and 24 monthly payments to drive it for up to 170 days over two years. The vehicles are typically something choice, such as a Jaguar F-Type. “Owners” can have the vehicle for up to two weeks at a time, and Orto takes care of the rest.
The company, launched by petrolheads Josh Darling and Jules Copeland in December, might be on to something. The principle of shared ownership is starting to change sectors from taxis to tourism, and some think it might overhaul the car industry.
A recent survey of 16,000 consumers by the IBM Institute for Business Value said a quarter of respondents would be interested in fractional vehicle ownership. Navigant Research says revenues from the car-sharing market will grow from $1.1bn last year to $6.4bn in 2024.
Ford, the second-biggest US manufacturer, is eyeing an even bigger prize. Mark Fields, chief executive of Ford, recently said the market for personal transportation, including car-sharing services was worth $5.4tn.
At the Detroit motor show, Mr Fields announced Credit Link, a trial that will allow up to six owners in Austin, Texas, to share Fords, including its popular F150 pickup trucks.
Audi’s Unite scheme in Stockholm allows groups of friends equipped with Bluetooth key fobs to share anything from an A1 city car to an R8 supercar. Similarly, in October Daimler launched the Legends classic car club for Mercedes-Benz fans.
“We’re undergoing a complete rethink of the way we think about cars in our culture,” says Orto’s Mr Darling, a former management consultant.
Orto is unlike similar businesses offering access to fast cars. Supercar clubs, for instance, tend to cater to people who want to try many cars for a short time, while enjoying luxury events and experiences.
“They tend to be all about the high-end lifestyle. We’re just not into that,” says Mr Darling.
Orto allows customers to book some of their dates for the 24-month contract before confirming their purchase, and accidents are dealt with on the assumption, “you broke it, you pay for it”. Because the contracts have named drivers, Orto says it can offer its drivers comprehensive insurance far more cheaply than rental companies.
A sports-edition Jaguar F-Type for “sale” on the site carries an upfront cost of £2,499 with 24 monthly payments of £379. That compares with a Volkswagen Golf S diesel, which costs around £2,250 for the first month followed by 23 instalments at £381.
Orto has yet to sell a car. It has yet to prove it can convince people to share an emotional purchase. And it has to show it can beat the manufacturers in the fractional ownership game.
Besides, motor industry executives have expressed serious doubts about whether car-sharing can ever prove as profitable as selling vehicles.
But Orto is receiving expressions of interest and says it will gradually add more models in its price bracket of between £40,000 and £100,000. It might even start to tackle that peak-car phenomenon.
“It’s going to be start-ups like us who are ready sooner to challenge this,” Mr Darling says. “We, and hopefully others like us, will start to change hearts and minds and increase participation in the sharing economy.”
[“Source-ft”]
