Crain's Cleveland Business
Local car-sharing company keeps clients on the road
August 28, 2006

By TIM TIBBITTS

Michael Bennett walks to his job as a patient advocate with Recovery Resources in Ohio City. His bicycle and the bus get him almost everywhere else he needs to go in the city.

Yet, it took Mr. Bennett a long time to be willing to dump his own vehicle and go "car free." Even for those who live and work near good public transit, the trip to stock up on household supplies or the occasional work or social function in the distant suburbs makes Cleveland a tough place to live without a car.

"It was a slow process, because I felt like I needed a car for backup in a pinch," Mr. Bennett said. "It 

was not until CityWheels started that I finally decided to go carless."

'This is the missing link'

CityWheels, a for-profit corporation launched in February 2006, provides its members with round-the-clock access to a car for $8 an hour. The hourly cost includes gas and insurance.

After paying a one-time $50 membership fee, a CityWheels member can go online to reserve a car in his or her neighborhood.

An electronic key card provides access to the vehicle during the reserved time, and the key, which is kept inside the vehicle, only works if the electronic key card has been used to gain entry.

Unlike a traditional car rental, the car-sharing model puts cars in neighborhoods, and members only pay for the car when using it. Members also save money by not having to pay for insurance and year-round parking.

Although CityWheels is Cleveland's first car-sharing operation, the trend has taken hold elsewhere, with 60,000 enrolled in car-sharing programs nationwide, according to CarSharing.net, a nonprofit web site devoted to educating consumers about car sharing.

Two companies, Boston-based Zipcar and Seattle-based Flexcar, compete in major U.S. cities, and more than a dozen smaller companies provide car-sharing services in single markets, ranging from City CarShare in Oakland, Calif., to the Dancing Rabbit Vehicle Cooperative in Rutledge, Mo.

CityWheels founder Ryan McKenzie, who led an effort in 2000 to create the guidebook Car-Free in Cleveland, started the company because he was growing impatient waiting for the car-sharing trend to come to Cleveland.

"I've been watching this business model growing in the U.S. for ten years, and I've wanted it here for five. I became convinced that if I didn't do it, then no one else was going to do it for many years to come," Mr. McKenzie said. "This is the missing link in helping to meet the transportation needs of many neighborhoods."

CityWheels represents a first-time venture into the for-profit world for Mr. McKenzie, who is transitioning out of his position as transportation program manager for EcoCity Cleveland. EcoCity Cleveland is a nonprofit that advocates sustainable development, especially through transit.

Driving force

CityWheels has four cars in its fleet — one downtown, one in Ohio City and two in Oberlin.

Two of the cars are Scion xBs, and two are Toyota Priuses, which are gas-electric hybrids that average 55 miles per gallon.

Mr. McKenzie received help from the Civic Innovation Lab, which is funded by The Cleveland Foundation. The Civic Innovation Lab provided mentoring and $30,000 in startup funds. The CityWheels office has been housed at EcoCity Cleveland, which is on Lorain Avenue in Cleveland.

While early growth has been slower than Mr. McKenzie had hoped, he plans to grow the fleet to 50 cars in two years or less.

Phil Bessler, associate professor of business and director of the business plan clinic at Baldwin-Wallace College, believes the car-sharing business model works.

"There are a number of very specific locations in Northeast Ohio that would be right for this type of business," Mr. Bessler said. "CityWheels just needs to be very careful about picking locations with the right demographic and psycho-graphic conditions."

Those factors include adequate population density, a high percentage of young adults and a commitment to environmentally sound living. Potential customers may also be those looking for access to a second car, not old enough to rent, or where daily rentals are just too expensive, according to Mr. Bessler.

CityWheels, which is seeking federal transportation funding through the Northeast Ohio Area Coordinating Agency as well as from angel investors, is partnering with University Circle Inc. to place two cars in that area.

"They'll finance a minimum revenue for six months, so we'll be in the black from day one," Mr. McKenzie said. "We don't think it will take that long to establish a market (in that neighborhood)."

In addition to individual, environmentally minded consumers, Mr. McKenzie sees potential for expansion in providing fleet-management services for large institutions, such as hospitals and universities.

CityWheels can offer institutional clients maintenance, parking, cleaning and new, environmentally friendly vehicles for less than it would cost a company to have its own fleet of cars, according to Mr. McKenzie. CityWheels would rent the vehicles to other members on evenings and weekends.

Mr. Bennett, who is delighted both by the financial savings and the environmentally sound lifestyle of being car free, has only used the CityWheels vehicle a few times in the four months since he became a member.

"Making the commitment to be basically carless has made me think in new ways — more creatively — about how to get around," he said. "That's a change in thinking that's well overdue not only in Cleveland but in the U.S. in general — being more conscious of the energy it actually takes to get around."

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