ONE of the four car-sharing companies here has decided to back out of the business.

A week ago, CitySpeed Car Sharing told its 2,500-plus members by mail that it will stop operating on July 31.

The company, which is owned by ComfortDelGro Rent-A-Car - the car rental unit of the land transport giant - got into the car-sharing business five years ago. It is thought to have a fleet of almost 100 cars in about 40 locations island-wide.

CitySpeed was launched when COE and car prices were at record highs, said ComfortDelGro's group corporate communications officer Tammy Tan. 'The situation has since changed. COE and car prices have been falling significantly, and as a result, many car sharing members have opted to buy new cars.'

With increased affordability, the number of weekend cars close to doubled from 12,947 in December 2005 to 24,413 in December 2006.

'Given the situation, ComfortDelGro Rent-A-Car has decided to discontinue its CitySpeed service,' said Ms Tan. 'It will redeploy some of its cars to corporate rental, which continues to enjoy strong demand, and scrap the older cars.'

The company will make pro-rated refunds, which members can opt to take as cash or car rental vouchers

The car-sharing business is not an easy one, observers say. Return on capital is low and administrative costs can be high. There are also problems like damage due to accidents or vandalism, non-payment of charges and even pilferage of petrol.

CitySpeed was formed in September 2002 after ComfortDelGro decided to approach car-sharing as an extension of its rental business.

The view then was that car-sharing would complement the rental business because car-sharing is like car rental but on an hourly basis.

Each member paid a one-time joining fee of $30, an annual membership fee of $100 and a refundable deposit of $100. Use of the cars starts from $9.90 per hour, including petrol and insurance.

With the closure of CitySpeed, there are three car-sharing companies left - NTUC Income Car Co-op, WhizzCar and Honda Diracc. Together, they have more than 420 cars.

NTUC Income Car Co-op is the biggest and was the first to start out in the car-sharing business 10 years ago. It has an estimated 5,500 members and about 230 cars in 78 locations.

WhizzCar is the smallest with 1,500 members and about 100 cars at 31 locations.

Honda Diracc has 93 vehicles and is the only one using sophisticated petrol-electric hybrid cars. Its Civic Hybrids are available through a network of 19 ports. It is understood that the company wants to expand the number of locations and cars.

It has about 2,100 members and membership continues to grow as it expands its locations.

Honda Diracc is managed by Honda ICVS Singapore, a fully owned subsidiary of Honda Motor Co of Japan (ICVS stands for Intelligent Community Vehicle Service). It was officially launched in March 2002 with a fleet of 15 Civic Hybrids.

Late last year the company spent almost $2 million increasing the number of cars and developing new technology with a Singapore company.

The new second-generation Civic Hybrids added to the fleet had onboard computers developed locally by Honda with NCS. The onboard units in earlier cars were developed by Honda with Hitachi in Japan.