Pooled Ownership Hinges on Fleets, Exec Says

The fleet membership model is set up to gain faster traction in auto finance than the shared-lease model, Toby Russell, president of Shift Finance, told AFN.

“The whole reason people buy cars and leave them idle so much is so that they can have the option to travel when they want and how they want,” he said. “They pay a lot for that option. So, if you’re actually going to be pooling the ownership, you almost want to pool it much more broadly, like with Zipcar or car2go, where you can always know that a car will be there for you.”

Ford Motor Credit Co. began piloting a shared lease product in January, which allows a group of three to eight people to share a lease, however as of June, there had yet to be any takers, according to a report at the time.

The shared model poses challenges on the risk side as well, Russell said, particularly in the U.S., where the credit model is built around an individual.

“If the car is wrecked and multiple people have leased it, whose credit gets hit, and who needs to take responsibility for fixing the car?” Russell said. “And what happenes when you’ve pooled a lease with five people, and two decide they’re just not going to pay for it anymore — how do you handle that? Do you repossess on that lease, or do the others have to make it up?”

The pooling of risk creates new interdependencies for consumers that are usually handled by a company or a value-added service, such as “the individual model, or the much broader pooling and membership model,” Russell said.