Interviews with Carsten Petersen & Markus Petersen,
founders of Europe's first and largest car-sharing firm,
By Danielle Janes & Greg Bryant
Thousands of carsharing members in Europe have opted out of the hassle and expense of private car ownership. Instead, they pay only for the time they actually drive. They use neighborhood-based carsharing vehicles when they need to drive. Ten to twenty members share each car. They end up driving less, thereby helping the environment. Parking demand is also reduced.
Interview with Carsten Petersen
DJ: Does car-sharing work in all situations?
DJ: At what point did you add bus passes?
"They are members because the just want the possibility of using cars."
DJ: Do you get the pass in the mail if you're a member?
DJ: So not all the members have the bus pass sticker?
DJ: Does that mean members get billed monthly for their taxi use? What can you do with the Mobile card?
DJ: Tell me about the requirement that members not own cars.
Our segment in the market really changed from the beginning when we had very ecologically advanced people, young, highly educated, who really thought about things. And now we are getting to the more normal people. We really have to do that, because ecological people usually don't have a car anyway. So we really want normal people. We just want to reduce the cars.
DJ: So if I were to become a member, what kind educational outreach do you do?
DJ: So, no education about bus or train schedules?
DJ: Tell us about your members' group.
DJ: Do you lose members every time you raise prices?
The new membership fee is 14DM per month. Last year, we raised kilometers fees. Then the people who drive long distances quit, because they can go to a normal car rental company. And the year before, we raised the time charges, and then the people going for short distances quit. So however you do it, you lose somebody.
DJ: You haven't found the best one to raise?
DJ: What is the joining fee?
"We are kind of a green bank."
In the beginning, we took out 11% loans from the banks. So 4.5% is a lot less and it is much better for us. And there is a political movement against banks in Germany because of their involvement in arms and war. We are kind of a green bank. People know it is better to give their money to STATTAUTO because of the members' association and because the financial books are very open.
DJ: How is STATTAUTO structured?
There is a contract between the corporation and the association and in this contract are 3 essentials:
Only about 1/4 of the participants are members of the association. Total association membership is 400. At the last annual meeting there were 80. At the monthly meeting, 10-12 really interested members attend: those that often work in transport or political, green party activity. So you see the interest is not too big. For the members it is important to have the security that they could look in the corporation's books. But they never do. This is a virtual thing. But they have more rights.
DJ: How quickly can I become a member?
DJ: Can I come to your office and join any day?
"For the insurance company it is ok because the accident rate is much lower with our people than with car rentals."
DJ: How did you first begin working with insurance companies to do this? What was the system before and what is it now?
CP: This is not very difficult. In the beginning, it was the same as a car rental so they knew that system. We had to pay the same fees. And after some years through the European CarSharing Association (ECS), we managed to deal with them, so that we can take over the private insurance contracts of the people (participants) which is much cheaper. So we pay very little now. For the insurance company it is ok because the accident rate is much lower with our people than with car rentals. Of course, the insurance is lower as well so you don't have to pay much. So it is not very complicated.
DJ: I know with Auto-com Quebec, they used a local insurer and got a per kilometer rate, so they only pay when the cars are being used.
DJ: We are creating a North American CarSharing Association [NACSA]... (GB:) So, what is European CarSharing organization's (ECS's) history?
Normally ISO is for products not services... now it is open for services, as well. We tried to come with ECS standards to the ISO. Now we are the most advanced car-sharing organization, so maybe we have the power to come in and really establish an ecological standard not just a financial standard, not just a service definition. Normally services are described by how you do them, but we want to describe the ecological or social issues.
"We have 31 stations now in Berlin, and at every station we have one participant who takes care of the cars."
DJ: We'd like to adopt your standards...
The ECS did other things: like make contracts with the insurance companies and make a contract with Opal-GM for buying cars at better rates. And ECS communicated with people like you in the US, Scandinavia, Japan and all over to spread the idea. The first aim of ECS is to spread car-sharing. And we had the contract with the railway system for an ACTION WEEK in Germany. This was a contact to other mobility systems... another important aim of the ECS. We want to do another ACTION WEEK in Autumn 1996 again with the railway system, but this time not only in Germany, but in Switzerland, Austria, and the Netherlands, all in one week. The railway companies are interested and they will finance it again.
Using cars from other city [car-sharing] groups was organized from the beginning. For every user it is important. We are not a big company all over Europe like Avis. We are local. It was not so easy because of insurance... so we built a special contract with a lawyer. Members do this very often. They call us and we make sure the car is waiting for them in the other city. The billing is done via the companies, not via the user. So if a Berlin user wants to drive in Cologne, he phones us and we fax to the Cologne people saying Mr. X is coming. He drives the Cologne car and the Cologne car-sharing group charges STATTAUTO Berlin, not him. Wecharge him, because we know him. If he doesn't want to pay, we can do something. Cologne doesn't know him and it would be very difficult for them to reach him and get the money. And for the consumer/user, it is better to pay it in the normal bill. He has one mobility bill with the railway tickets, taxi rides, and the use of the car in another city.
DJ: How do users pay?
DJ: If they don't pay, their membership gets cut off and you take it out of the deposit?
DJ: How do you take care of the cars?
DJ: How often are the cars stolen?
DJ: How often are there accidents?
DJ: Two accident per week, isn't that overwhelming?
DJ: What kinds of things are in the cars?
DJ: Do you have work bicycles? Do other cities?
DJ: Auto-com Quebec has 3 different types of membership... long distance and frequent users pay differently. What do you think of that?
DJ: Auto-com appears to be telling members, if you go over a certain amount, you should switch to another company. What do you do with everyone wanting the car on the weekends? How do you limit use?
So, you never start with one car: at least two. Because when you have 20 or 30 people you have a better chance that the people don't always want to go on Saturday and Sunday because you'll have a mix of students and seniors and so on. The bigger you are, the better chance you'll have.
In the beginning, to avoid the problem of everyone wanting the car on the weekend, of course you have to try to have contracts with companies, to balance. And so we have special offers: 20% cheaper than the normal price. These member companies can use the car from Monday morning to Friday noon, but not on weekends.
"These member companies can use the cars from Monday morning to Friday noon, but not on weekends."
DJ: What kind of companies join STATTAUTO?
DJ: How did you approach Opal/GM to get a discount?
GB: Can people outside Germany use the German network's relationship with Opal?
GB: When you help new groups start-up, what are the common problems, and solutions?
In the beginning, we couldn't offer a real schooling or teaching because we ourselves didn't know how it worked. So we just went there one afternoon and explained how to do this and that, and then they had to have their own experiences... so it took them 3 years to get running.
We had to invent everything ourselves. Two parts: 1. marketing, 2. Financial, inner workings, control. Car-sharing organizations must know that they have to reach car usage of 50%. If they don't, they can't do it. We have to teach controlling, how to make contracts with the insurance, how to buy the cars, how to affix the logo, how to speak with the station chief that looks after the car... And the other part is how to go the public: convincing people to sell their cars and join is a special mixture of political, ecological, and economical reasons. Tell them that they use the car only one hour per day and it's cheaper to have a collective car. It is important to do say this in the right way, with not too much political and ecological reasoning because people don't want to hear it. They are interested in money. So you have to tell them something about money.
In the beginning, we made this mistake because in our heads, ecological reasons were the most important. We weren't interested in money. Then we realized we could reduce traffic with this system. You need to have markets if you want thousands of car drivers reducing driving.
So we changed a bit, we reduced the number of ecological and political arguments. In the recent leaflet you can almost read very little about ecological reasons, just that STATTAUTO is convenient, STATTAUTO is cheap, STATTAUTO is better for everybody. In the older ones we said how pollution was killing people and forests, how many tons of pollution every year ...
I think it is very important to train a group to the right arguments because normally idealistic people start car-sharing. It is hard to get this into to their heads. Many did not want to surrender their ideas in favor of using the market to make it work. There are so many grassroots groups that hope to convince people by telling the truth. But truth is cheap ...
DJ: Is there a point when you have to tell eco-people that STATTAUTO is still eco? Are there environmental groups that don't think car-sharing is environmental?
There is a more realistic wing of the Greens in other parts of Germany. In Berlin, we have a more fundamentalist wing of the Greens. They say that with our system there are people who join who couldn't afford to drive a car before. But many scientific surveys really have proven that some people who couldn't afford a car join, but there are so many people that sell their cars that there is a benefit. One STATTAUTO car pushes 5 cars away.
"Collective car use is the modern form of car use, when there is good public transit."
GB: Now, when you campaign, how do you explain STATTAUTO?
The problem now is not that everyone wants to own a private car but that he wants to be able to use the car whenever he wants. So he owns the car to get the possibility of driving. If we guarantee the possibility of driving without the car-owning, then I think this is the key to reducing car traffic. Because this gets rid of the emotional contact of people to their cars. And I think this emotion is not strong enough to hold the private car owners to their cars. There have to be rational reasons for breaking the relationship, so we offer the same opportunities as private car ownership. With the emotional contact gone, the irrational use of cars will be weakened.
Well, we have the experience of more and more people really being interested in collective car use. Because there is no reason to own a car if you have the same service without, and it is cheaper, and it is ecologically conscious. People in Germany are becoming more ecologically aware and say "I'd rather do something for my kids than living in such luxury that I always must have my own car." I don't know if this is important in the US, but here it is. The Green Party is in third place here. In 3 years, when we have the next election, I'm convinced there will be a red-green coalition government. Then we will have laws supporting car-sharing and reducing car owning, or raising taxes for car owning. So I think this is the future.
Well, it has to be the future. If we organize our mobility for many more years in the way we do, we will really have tremendous damage, global-warming storms and acid rains. This year the Rhine flooded with billions in damages. It will be the same effect in the whole western world, I'm convinced. So, it is very good to reduce traffic by collective cars: otherwise, if you say we have to forbid car owning or things like that, the lobby is so strong against it that you can't win. But if you say we don't want to take your mobility, your car driving, but we only want to organize it better, then it is a real offer. You always win if you start with an offer.
Car owning is pretty expensive, is the point. Of course, millions of people would never break this strong contact with their car, and you can never reach them. But you can hope. Private cars are very neurotic things in our communities, and you can only hope neurotic behavior will weaken. You can't solve those problems, but you can tell people it is not so important and after awhile they say they don't really need one.
DJ: Is it true that there's a full-time car-sharing promoter in the Dutch government?
DJ: Would you prefer to not have a national German coordinator of car-sharing?
DJ: Bremen, Germany had a building development that doesn't require parking. They use a car-sharing car instead.
DJ: Is this available?
Interview with Markus Petersen,
GB: How do you calculate the number of cars that will meet the demand?
STATTAUTO's money comes from the spare time events, like barbecuing out of town. We know how holidays effect the firm, a very important thing. We learned the learning curve/function - the longer they are a member, the less they drive. You have a participant who had a private car, where driving more didn't cost much more. So they are not educated by money. So what happens is they get our first invoice, and it's very high. It depends on how much property they had in other cars before joining, whether they owned a private car, shared a car, rented cars or only used taxis. The higher the investment in car property, the more they drive. In the beginning with STATTAUTO cars there is more of a learning effect. Every drive or every ride is listed, so they begin to think, "this car trip was not necessary, we could have taken the train" and "this other trip was not necessary, we had a bicycle". So they begin to drive less. So this is very good for the environment, and not bad for STATTAUTO.
What we do is just run more people per car. So we began with 12 people per car. That was an average number for the first year. Today we have 25 people per car. This is why it is very important to know about the learning function. This function is not homogeneous, it is changes because participants learn a lot about preventing transport, preventing the buying of services that are far away, say 10 km. They don't do that anymore. They get another store. What they don't like to reduce is spare time rides, so there they learn less. This is bad for STATTAUTO because the business structure has to adjust. Our problem is that people drive only on the weekends, because they learn to prevent driving during the week. Therefore, we need other people ... so we give a discount to businesses on weekdays.
The Art of growing a car-sharing firm is to plan for:
GB: How do you structure prices?
The first problem: price structure. We propose to the STATTAUTO Verein [membership consumer union]. GMBH is the corporation... we are sitting in the GMBH's offices. The Verein doesn't have any money, it has some number of members. Participants can be a member in the union. When participants want to control the corporation, they can join the union, but they don't have to. As long as they think everything is wonderful, the prices are ok and the service is good, they don't have time to be a member of the union, don't have time to go to the general assembly meeting, and don't want to be a Verein member.
So now we have 500 members of the Verein and STATTAUTO has 2800 participants. So we propose new prices to the Verein. The Verein has a board and we have a contract with the Verein. The board controls the STATTAUTO corporation, that means that there are no secrets concerning the performance of the firm. The monthly statements that the computer gives are sent to them. They know as much as I know about financial stuff. They may not pay as much attention to it, but they watch over to make sure there is a balance. That the firm is stable. The Verein makes sure we don't lose the money that they gave us. With these numbers, we can always argue for price increases, like "the insurance has gone up", "we got more cars", "we have a new, more expensive office", "the salaries have gone up", etc.. They see the point. They don't want us bankrupt. So we don't have fights with them.
Now we come to the second part: how to finance the firm. In Germany, you can do it with the cooperative, but this is very slow. You have a general assembly which is very powerful, which is the capital. They are the capital and can kick management out. In our model, they can't.
A general assembly of 2,800 people would be a very slow body. If you want something new like a new product, or you want to save money, or you want to invest something, or have a new campaign, or you want to plan losses in the firm. You want to say next year we are going to lose money and it doesn't matter because after that improve because of this and that. To explain that to a risk-averse body is almost impossible. They are cautious, don't want to invest their money in something they don't understand because they don't know what is happening. They only meet with the general assembly one time a year. So, firms with this structure get very slow. We have colleagues that have this problem. They have management that always wants to do things, invent things and grow and get rid of private cars. And they can't do things because they don't have the power to do them.
So we say we have no information deficits because the Verein knows everything. They can ask as much as they want. Every day they can come and say lets have some control here and investigate some numbers. But they can't interfere with decisions. Therefore management is very strong in STATTAUTO, and the firm grows a lot. We are the fastest pace firm. So, information must be available, but the decision-making process should not be with the clients. The clients want to buy a certain service. They like the service. They like the idea that someone controls the management, that their money is safe and the profits allow us a little reserve for the years that we make mistakes and lose money. You don't want to go bankrupt because of a little mistake. They see that point.
Just two weeks ago, we had the annual meeting. So we increased the monthly membership fee and they didn't like that. Because they said we pay money monthly and we don't have any service for that as long as we don't book the cars. This isn't true, because they have the feeling that they can book the our cars at the next corner. It costs a lot of money to have this possibility. So they finally saw the point and our proposal passed. So that's a little of how it works.
Concerning finances we don't have a big problem because they give us 1000DM per person. So we don't have any finance problems. In fact, we could have less money because the bigger the firm the easier it is to lease cars instead of buying them so sometimes we have too much money. In the beginning, when you are very small, you have the problem that you have 20 people and $20,000 and you want to buy the next car. Well, where do you have the next $20,000. You have to lease it. Nobody leases the car to you because you are very small. But when you have 100 cars then you can lease them. I can say give me 40 cars for the summer season; afterwards I'll give them back. Then I don't have the selling problem ... I don't want to sell cars. I want to rent them and administer them. We are specialists in car-sharing, not dealing. I just sold some, but it is not our business in fact.
DJ: How were the tasks divided in the beginning?
Carsten, for example, this morning, first had the national TV here for three hours. Wonderful for STATTAUTO, but three hours? Don't forget that. Because the dailyprocess of the firm, he didn't do anything for it. He didn't get any members. Well, he gets members by TV but sometimes you have American or Finnish TV and you don't get any members. So the problem for STATTAUTO is always to develop things, and to present things, for such a small firm... The ratio of doing free work in relation to general revenues is very, very big ... We are much smaller or more famous than our revenues.
DJ: ... we've run into that problem in the US. The national media takes up too much of the firm's time in relation to the small return that generates for us locally.
MP: Yes, it takes too much energy. Yes, when it gets to this point we always say it is better to stop attending to the media. Because, for example, ADAC, the German equivalent of AAA, after a year, the media went to them and said why don't you do car-sharing, you are much bigger. ADAC said it doesn't work, it doesn't even exist! They are so powerful with the media that the media wrote, "STATTAUTO doesn't exist." This is obviously not the case. We had maybe 10 cars. We were a very smallfirm, but we existed...
So now, after 7 years, they say in Berlin, "STATTAUTO exists, but they are not professional, they are alternative, crazy guys..." So, in fact, it is very important to do media. If not, they will lose interest after a certain time and write you off as crazies. They will say that private cars are the only ones that work, it's been a hundred years and it works. So we always had these times when the media was pushing us, and sometimes we told the media to go away.
DJ: You need time to grow the business.
"So because the media power of Greenpeace is something, we had 750 new members within one month."
DJ: How do you handle this quick growth? Carsten said recently 430 people signed up at the Climate conference?
The infrastructure of the office handled it, some additional people, not a big problem. Everybody was a bit overworked, but then we said afterwards everything will be a bit better. We are going to have more money if we can administer these people. They will give us money because they'll rent cars. And now the service in the firm is much better because we are able to lease an extra 30 cars for those 450 people. So this season is going to be a perfect season for the clients. Much better than the last ones because the firm is so big that it can lease these cars. Last year it couldn't.
In the summer last year, they didn't get any cars. We said we're full - not very good service! This summer is much better because we got 450 people in one step, not gradually. So now we could buy or in this case lease cars. Normally you could rent, but in the summers we were overloaded. This year for summer it is not the case, we can for 10 weeks lease another 20 cars.
DJ: Is there minimum time that members must remain?
So like one guy would enter the first day, September 1, 1994, when the campaign began and he could test for 30 days. After that we would write him a letter that if he would like to stay, he would have to pay the entrance fee. If not, he would just call us and send back the Mobile Card and then we wouldn't take the amount from his account.
So after that good experience, Carsten and I changed the policy. We said, "Everybody who wants to come in can test it for 30 days. For 30 days, you don't pay an entrance fee. You don't pay a membership fee. If you like the firm, if you like the product: it worked, you got the car, the car was clean, it was ok, people were friendly and so on, then you stay obviously and then you pay the entrance fees. So after the Greenpeace campaign, we changed the policy last month (April 1995). That is very good, I recommend that.
DJ: Are a lot of people taking you up on that offer? Or are some people saying I don't want to test it, I just want to join?
MP: It is very new. It is only 30% or 20% of the people who are coming to the information evenings here that say ok I'll test it. Most of them, they have already decided. They say "we've waited 2 years, we now know because we have so many friends that are members that we go for it. We'll stay anyway, so here, you have the fees."
DJ: Who runs the informational meetings/evenings? Employees?
GB: You started with old cars? How did you manage to jump from old cars to new?
As first we thought old cars were right. We don't have any money, so we'll buy cheap stuff. It was funny, when I founded the firm, I bought a car. It cost 2,800DM. I bought a computer for 5,000DM then I bought an answering machine. In Germany, answering machines were very expensive and it cost 2,000DM because of the Tele-com monopoly. So I had 7,000DM in information systems and 2,800DM to make the money, which is a crazy relation.
Now I don't know, we have 2 million DM in cars and maybe 200,000DM in computers. That is a better relation. Then it was funny... Back then, one time the brakes didn't work, but luckily I was driving the car at the time. That was very bad service. We sold the car at a profit for 4,000DM. ... when the wall came down and all the prices went up all the East Germans wanted to buy wonderful western cars... the prices went crazy and we sold the car, and that saved the firm in fact. We sold all of our used cars because the prices were crazy in those days. They value just doubled. And so that saved STATTAUTO because we had so many losses and the firm was too small to take them. I was giving up because all of my private money into this stupid STATTAUTO. Anyway, we saved it with the wall coming down, so the communists they saved us, and afterwards we bought only new cars.
We then had this argument. We said, "There is a big difference between members and people who are not members." Important for you are obviously the people who aren't members because they are the majority. People who still drive private cars...
What you want is not the low-budget student, you want the people who have the private cars because they are the guys who produce the emissions. You don't want people who can't buy a car. So therefore, you have to have very good service -- 24 hour service with many stations. STATTAUTO is has many stations in Berlin now. We have a very good image. That means "it works", first of all. It is not a stupid idea, it works, that's the point. And we did that. That is the very good work of my brother that he pushed the point that STATTAUTO works. It's expensive, but it works. Cars are there. Cars are cleaned, new, safe. So people sell their cars, and they trust that STATTAUTO works.
You need all this to get people from the private car to STATTAUTO. With old, shitty cars you won't. Because people have enough money to buy nice private cars. They just don't like the idea of having to service a private car. Every 6 months they go to the emissions test or to the inspection at the garage, all this stuff. The gasoline price goes up, they get in a bad mood. With STATTAUTO, they just drive less. Insurance went up like hell in Germany, 50% in the last two years because of cars being stolen. So people don't worry anymore, and they just know they drive less with STATTAUTO.
What they like is the service. Some people say when you buy new cars that is bad because the production of new cars is greater. That is just wrong because it depends on how many cars you buy, what you do, and how long you keep them. We keep them two years. Normal car rental firms keep them 6 months. Why do they do that? Because they get a 30-40% discount on the new cars. Say the cars are very new, like if you keep them only one day theoretically: then you see it. You buy it with a 40% discount, you sell it with only a 30% discount, so you make 10%. That is how normal rental firms live. Normal rental firms are car dealers.
The production does not go up because somebody buys a new car. When you have a hundred Americans, and I think it is the case you have 100 cars. Well, everybody buys one car, obviously. Say person #1 buys all of these 100 cars because he has such a wonderful discount and sells them to the other 99, one day later. Car buyers will obviously buy it from the first person because they don't want to pay the full price from the manufacturer. They want the discount, so the production does not go up. But we take people away from the car market. If ten people use one car, you remove demand for 10 cars. You need new cars to attract more people to this system, then many less cars are made.
When car-sharing firms are big, they can say to the manufacturer, "well, we don't like," for example, "this metallic paint. It is an ecological waste." And also they will say we want cars that go 1 million kilometers instead of the current 100,000 kilometers until they break down. When you have market power, you will change the car. You will say we want a good car, not a throw-away car. We want cars to last for 50 years, saving resources. It is possible. No problem for engineers. It is just the market that wants every year a new model, and everything is thrown away. We should buy all cars and be the biggest car dealer, because then we can say which cars are on the market. That's how it works. Not people thinking, "we buy new cars and the production goes up." That is not true. VW or from Opal. They probably produce in one minute what we need in a year...
GB: How did you make the relationship for buying cars at a discount?
And so we did not have a liaison with GM. It just gave the best discount. So then with all the media coverage the cars were getting, we told Opal, you need to give us an extra discount, because we are improving you image. Because STATTAUTO is concerned with being an intelligent and ecological product, and it is connected to Opal only because you gave us this discount. Any day we could go to VW, no problem, so they gave us an extra press/media discount. And then it turned out that I should have done that in advance! But you never know. Now, we are serious so they talk to us. Five years ago, nobody talked to us.
Recently some people came that were part of a group of firms buying cars together. It's like a buying cooperative for cars. They get huge discounts. And they said when we become a member we can have them too. So I said, wonderful, no problem, because I don't have a problem with getting a discount from the manufacturer. The manufacturers didn't like that very much because now we can buy all cars with these wonderful discounts. So that shouldn't be a problem. I am sure that these buying cooperatives exist in the States. Because all firms that buy 50 cars a year, which is nothing for a big firm, they have that problem. They want to buy at a discount, so they have these groups.
Above: Carsten Peterson Below: A typical carsharing station's key access box mounted on the side of a building. A magnetic membership card and key allow access to a locked drawer that contains all the station's car keys. After a drive, you put your time/mileage logsheet in the STATTAUTO mailbox.
Below: This carsharing station of two cars is located near apartments, offices, grocery stores, a bus stop, and bike lanes. It is powered by a solar electric panel, and includes a rainwater collector for washing your hands, and a lock box with child car seats and roof racks.
Below: Berlin's large sidewalks contain clearly marked bike paths. Different colored pavements show bikes which space is theirs. Bikes often get their own traffic signal.