On average, a single automobile in Europe is used at around 1.5 to 2 percent of its capacity. Car sharing is one way of utilising automobiles better and interest in renting private vehicles is large. Nevertheless, car sharing has yet to really take off in Sweden compared to other markets. RISE has collaborated with industry and various government authorities in a study of how we might simplify and make it more advantageous for private individuals to rent out their own cars.
One way of reducing climate impact is better utilisation of our resources. On average, the typical privately owned car remains parked and unused 95 percent of the time. And, of the five seats available in a typical car, only 1.5 are used on average. It means that a typical automobile in Europe is only being used at around 1.5 to 2 percent of its capacity.
Sweden worst in the Nordic region
Many Swedes say that they would consider renting out their own car. Together, the two largest digital platforms for private car sharing, GoMore and SnappCar have around 125,000 registered members. But, there are only around 6,000 privately owned cars registered and available for others to rent out in the entire country. It puts Sweden last among the Nordic countries.
When Hertz car rental company wanted to test a new business model of incorporating privately owned vehicles into its fleet, RISE initiated a study to investigate ways of simplifying and making it more advantageous for private individuals to rent out their cars. The study was done in the form of a policy lab based on creative problem-solving methods and participants included various car rental companies, the Swedish Transport Authority and the Swedish Tax Agency. Among other things, the study showed that there are two main reasons why so few Swedes are willing to rent out their own vehicle in a car sharing system.
– “Income from renting out your own vehicle is taxed as income derived from capital, at 30 per cent. And, because private car rental is relatively new, it was, up until now, very difficult to find information on how that income would be taxed,” explains Maria Schnurr, Senior Researcher at RISE.
It needs to be easier for private individuals to rent out their own cars
Information now clear, but obstacles still exist
The study conducted by RISE has clarified information on tax reporting for individuals interested in renting out their privately owned vehicle. That information has now been published on the Swedish Tax Agency’s website. There are also instructions on how the surplus (rental income less deductions) from car rental must be reported in the tax return, along with how to make deductions for mileage. Before the study was conducted, it wasn’t even possible to make a deduction for mileage when renting out one’s own car.
– “Although clearer information is now available, there are still obstacles that lower the incentive. Furthermore, the net gain from renting out your private vehicle is still too low. In other countries, the income from renting out a privately owned vehicle is taxfree up to a certain limit. It raises the incentive, making it easier and more advantageous,” says Maria Schnurr.
Renting to a car rental company, not a solution either
There is still no good solution in place for people renting out their own cars to a car rental company, which, in turn, rents them out to private individuals or companies.
– “Car rental legislation stipulates that cars used for commercial car rental purposes must have a special registration. This also applies to privately owned automobiles. Quite simply, the legislation hasn’t kept pace with developments in society, which is a shame,” says Maria Schnurr.
New technology for transfer of car keys
The digital platforms for car sharing make it easy for members to see if there are any privately owned automobiles available to rent nearby. The apps are easy to use and they also cover insurance for the rental. Furthermore, new solutions have been developed for the transfer of car keys between the car owner and person renting the car.
– “Before, it typically required making arrangements for the two to meet. Now, however, keyless access solutions have been developed to make it all much easier. Still though, there is no standard solution in place, so the various players involved have had to develop their own solutions,” says Maria Schnurr.
Many of the prerequisites are already in place for making car sharing a way of better utilising our resources, but more is needed.
– “First and foremost, it needs to be easier for private individuals to rent out their own cars. It should be possible to integrate all parts in the digital platforms. Renting out one’s own car must also become more advantageous by, for example, making it tax-free up to a certain limit. And lastly, car rental legislation (e.g. having to do with special registration) should not apply to private individuals who occasionally rent out their own cars to car rental companies,” concludes Maria Schnurr.