Pulse: Chatter: Business: Baby, You Can Drive My Car. Please.

Is PhillyCarShare running out of gas?

The problem at PhillyCarShare isn’t that the pioneering outfit in May abruptly forced its members to pay a monthly fee (though that inspired complaints). The problem isn’t even the clumsy manner in which PCS introduced the $15 charge as a customer benefit and simply billed people who didn’t opt out in time (drawing more howls). The real problem is why PhillyCarShare instituted the fee. Insiders say the company needed the cash flow to survive another month, and that the whole enterprise may be on the verge of collapse. Now do you feel rotten for complaining?

PCS has always been a cool shade of green, helping save the planet by letting you borrow a Prius or Mini Cooper when you need to get to Ikea or Aunt Stephanie’s. Since its inception in 2002, CarShare’s signature signs marking its “pods” — car pickup stations in public and private lots — have spread like weeds in Center City and beyond, making life more convenient for urbanites and signaling trendier neighborhoods. But things haven’t gone so well since 2007, when Philadelphia named the nonprofit one of its “Best Places to Work” and profiled then-bosses Tanya Seaman and Clayton Lane, who left amid ongoing deficits last summer. And then there’s Zipcar. In 2007, the national rival acquired competitor Flexcar and later won a fleet contract with the City of Philadelphia that PCS previously held. These days, Zipcar’s presence in the city is getting bigger fast.

So what went wrong? PCS has always lost money (Zipcar’s not profitable, either), but insiders say the company’s debt has ballooned, insurance premiums have doubled, and few options exist for raising enough cash to cover ongoing operations. PCS’s do-goody nonprofit setup has been a double-edged sword: There have been some grants (already spent) and tax breaks, but a nonprofit has no equity to sell to investors. Now, the company has pared back from 400 cars to 300, cut staff, and seen membership fall from 50,000 (that included anyone who’d ever signed up on the website) to fewer than 15,000 paying members. One answer may be a takeover by Zipcar, or by one of the old-school rent-a-car companies like Hertz or Enterprise, which have begun testing the car-share model.

Zipcar CEO Scott Griffith claims no plans to do anything but compete, but observes: “I think they got out over their skis for sure. They put way too many cars in way too fast.” Eli Massar, PhillyCarShare’s acting executive director, admits the sledding’s been tough but insists everything is okay — that cutbacks, new revenue from fees, and summer marketing will turn things around. “Before and after our competitor is gone,” Massar insists, “we will remain the best value in car-sharing in the nation.”

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