Driven mad? It's time to join the club

Richard Lofthouse looks at a new way to reduce the cost and hassle of using a car in big cities

"We are fill ing a gap between those who need a car all the time and those who use one occasionally," says Andrew Valentine, 30, the co-founder of Streetcaralong with Brett Akker, 29. So that'll be a car-rental company, then? No, it's actually called a car club.

Car clubs have so far been mostly of the luxury kind, like Damon Hill's P1, where for an annual subscription of several thousand pounds, you get to drive lovely classic cars that you couldn't possibly own.

The real future of the car club lies in basic Vauxhalls, VWs and Fords parked in various corners of Islington - or any big city - and driven to Tesco by people fed up with the endless hassle of car ownership in crowded cities. There are now 25 car clubs in the UK, and although the idea is still in its infancy, the concept is growing in popularity.

Although you have to "join" the club, typically paying a one-off fee, the purpose of membership is mainly to confirm that the member is not a criminal about to run off with a club car. Thereafter, it's more or less a "pay as you go" system with few obligations.

Unlike the Avis routine, which can mean a 30-minute wait at a desk, multiple forms of identity and an expensive cab ride to get there, car club members typically use the internet to make a booking, and can do so at the last minute, as long as a car is available. Having done so, you typically receive a text message to your mobile phone confirming the booking and car registration.

You leave your house, walk to the designated car park, find the new silver VW Golf, hold a smart card near the windscreen to unlock it, get it, punch in a PIN number and drive off. When you're done, you return it, "log off" and go home. You'll receive a monthly bill in the mail listing your exact usage and itemising the congestion charges you incurred.

Streetcar membership costs a one-off fee of £25, and then £4.95 per hour, £35 for a 24-hour weekday booking, £150 for a Monday to Friday booking, £195 for seven days, or £595 per month. Thirty miles of free petrol comes with the day fee, and extra miles cost 19p.

According to Valentine, Londoners typically use their car three times a week for an hour or two. Full ownership is ruinously expensive for such a usage pattern, costing about £2,500 a year taking into account depreciation and interest payments on a £10,000 car. With Streetcar, the same use costs just £700, working out to be a total saving of around £1,800.

There are drawbacks, of course. The "typical Londoner" is also likely to drive to France once a year on holiday, visit relatives on bank holidays and take weekend breaks in the UK. At a certain point, the premium you'll pay for the club car, based on a per hour tariff, makes full ownership cheaper, especially if you typically pay cash for a cheaper, used car.

And do you really get the full convenience of a private car? Estimating how long you'll need the car for is always difficult. If you deliver it back late, Streetcar deducts a £25 late fee that is handed to the next user. Equally, however, you always have a designated, reserved parking space.

There have been plenty of two-car families who have sacrificed one car but not both, often using the club car for the school run. Other members tend to be rational lawyers and accountants who are not obsessed with owning a Porsche or BMW.

That's not to say the cars are hopelessly unfashionable. Streetcar offers just one model targeted at its core audience, a VW Golf, guaranteed to be less than six months old.

Demand for car clubs is growing on the back of spiralling fuel, parking and insurance costs. Streetcar, based in Wimbledon, has grown its fleet from eight to 75 cars in two years, has recently launched services in Brighton and plans to extend this to Bristol and Oxford by the end of the year. Smart Moves, which began life in Edinburgh and trades under the name CityCarClub, has a fleet of 100 cars spread over five cities.

How big the concept will grow rests partly on the attitude of authorities. The slogan of Carplus, a charity set up to promote car clubs, is "using cars to reduce car use", but its members are not exempt from the London congestion charge.

Probably the oldest car club in the UK is Leicester-based Rusty Car Pool, which began as an informal sharing system between neighbours in 1976. By using older vehicles, they kept costs to a minimum. Another experiment is WhizzGo, launched in July 2004 in Leeds, with eight cars at four locations around the city. They plan to have 90 cars available for 2,500 members next year.

Until now, the clubs have had limited impact because a small fleet means that members struggle to reach the car. Research suggests that to beat the inconvenience and cost of private ownership, car club cars have to be less than 10 minutes from the front door.