Turo Hawaii has grown so rapidly that it has shaken up the entire Hawaii car rental market. But the tide is changing fast as Turo owners face many new issues. You can say it was inevitable. After all, buying and financing car fleets to build local car rental businesses has always been very risky and based on certain premises.
1) Turo owners hoped that car rental agency prices would remain so high that a Turo car owner would easily earn money on rentals.
Although this has been true for many months, the cost of car rentals and Turo rentals have dropped precipitously. It wasn’t too long ago that we were paying between $120 and then $200 a day for Turo rentals we needed during car repairs. We checked Turo prices today, and using Maui airport as an example, with dates from September 14-21, we found a plethora of Turo cars starting at $42 per day. There were 20 choices under $50 a day and dozens more under $60. The sheer volume of cars available makes us wonder if Turo owners can rent their vehicles to the degree they had anticipated.
For comparison, we found a new Hertz Ford Focus (compact) for $47 a day including taxes and fees on Kayak.
2) Turo owners thought that supply versus demand would keep cars on the road almost all the time.
This was the case for most of last year when it was difficult to find a Turo car in Hawaii or a rental car in Hawaii on many dates. But now that’s rotated almost 180 degrees and there’s no shortage of car rentals, except perhaps for the traditionally sold-out dates.
3) Turo owners expected to make enough money to profit from their business and pay off the creditor of the vehicle.
Turo Hawaii cottage industry.
What we’re talking about is something completely different from someone who has a car, or maybe even two cars, that they rent out when they’re not in use. This has become a major cottage industry spawned here in Hawaii and elsewhere.
Turo tenants should be careful.
The biggest problem a renter can face is that the car owner can cancel a Turo rental at any time before picking up the car. If this were to happen to you, you could find yourself without a rental and need to find a car rental at the last minute.
Turo Repossessions: There are two issues.
Problem 1: Upside down on car loans.
When the market was going high, there was no problem. Now, however, as Hawaii Turo owners’ monthly income declines, rental rates are dropping by more than 50% and continuing to drop.
It was easy to buy cars during Covid, and there were also stimulus, forbearance, unemployment and other benefits that helped create the money used in part to acquire Turo cars , even as car prices rose rapidly. But all that is over. Some Turo drivers will be forced to sell cars or risk repossessing them. Last month, the chief financial officer of Ford Motor Company said he saw delinquencies on auto loans increasing. Others are even more pessimistic.
Data from Edmunds showed that a whopping 13% of new car buyers are now facing payments over $1,000 a month.
Problem 2: Lenders can repossess vehicles when financing does not allow commercial use (Turo).
The second problem is that Turo car owners who have financed their vehicles can violate agreements that often do not allow for commercial use. It seems that when financing or leasing a car, commercial leasing the vehicle is a violation of the terms of many contracts. On Facebook, we found reports of cars repossessed by lenders specifically for this reason.
Cars that are fully owned by owners are the safest rental bet. But how can a Turo renter determine whether the car owner fully owns their vehicle or not?
Turo and Hawaii remain in conflict.
You may recall that a few months ago Turo owners received citations when they attempted to use Hawaii airport facilities to drop off cars for their tenants. And they risk being towed away when parking Turo cars in airport parking lots. This could eventually be fixed, but so far it hasn’t.
What recourse does a Turo renter have if something goes wrong?
If a Turo owner reneges, the host will be subject to a $50 fee if they cancel a trip less than 24 hours before the start of the trip.
But what about the tenant? Turo will refund the amount paid by the renter. But will they have another car? We cannot find such a provision.
Do you still use Turo Hawaii rentals or has that changed?