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What’s next for carsharing?

Carsharing and the sharing economy make regular appearances here on the Alphabet blog. Frankly, it is a topic we at Alphabet never tire of, especially when it involves keeping people moving. Today I am back with a fresh new perspective that looks at where things stand – and where it all might be heading.

In 2016, global management consulting firm the Boston Consulting Group (BCG) released a study entitled ‘What’s Ahead for Car Sharing?: The New Mobility and Its Impact on Vehicle Sales’. The piece investigates the effects of carsharing on international markets and the global mobility industry. Its objective: predict carsharing’s growth and the effects it may have on automotive OEMs.

Sharing economy: the basics

According to the study, the sharing economy works because the participants, buyers and sellers, agree that goods or services can be shared for a price. It’s a win-win situation because the needs of both parties are met. What are these needs? Buyers, or users, want access to mobility when required, without a big upfront investment. Sellers look to maximise utilisation and generate revenue. These needs give way to three core principles of the sharing model,value, coverage and trust, which we can apply to carsharing. For a critical mass of consumers to forego car ownership in favour of carsharing, the conditions must be as follows:

1 Value – A carsharing service offers value to users by providing the right vehicles at the right time for the right price.

2 Coverage – Carsharing vehicles are readily available and easy to access to ensure maximum convenience.

3 Trust – Users are confident in the quality of cars provided by the carsharing service.

In a nutshell, if the above are fulfilled, we believe some current car owners would switch to carsharing or sometimes use a service instead of their personal vehicle.

Growth ahead

According to current predictions, there will be 46 million Europeans with a valid driving license living in large urban areas in 2021. 14 million thereof will belong to a carsharing service, up from 2.1 million in 2015. That’s a significant increase. Furthermore, many disadvantages of private car ownership in cities – high costs, parking, traffic, pollution, restricted roads, etc. – will likely be catalysts for carsharing. And we shouldn’t ignore the fact that the car isn’t a status symbol to Millennials like it is for the generations before.

With all this in mind, it’s only logical to wonder how OEM manufacturers and new-car sales will be affected. The study predicts that, under the conditions outlined above, sales of cars in Europe would fall by around 278,000 cars in 2021 (1.3%).

Estimates for Europe indicate that one carsharing vehicle will replace around three cars previously sold to private owners. OEMs can stay in the game by expanding their business to include a carsharing scheme, as DriveNow from BMW and Car2Go from Daimler have already done. North American and Asian markets will follow a similar trend and globally OEM sales are predicted to decrease by 550,000 units in 2021.

The real game changer

It’s impossible to speak about future mobility and not mention self-driving cars. Looking at least 10 years into the future to 2027 and beyond, it’s likely for carsharing and autonomous vehicles (AVs) to converge. As we speak, Uber is already experimenting with self-driving shared cars in California. Ultimately, carsharing service providers and their users stand to gain a lot from equipping their fleet with AVs because self-driving cars offer:

  • Lower operating costs
  • Added convenience
  • Manoeuvrability
  • Flexibility

In fact, the study concludes that not carsharing but AVs will disrupt the automotive industry. AVs are what will really change the game and redefine the automotive world in the long run. If current predictions are correct, AVs are likely to roll out on a large scale post 2027. At this point car sales will probably decline overall. Primarily, this will happen because autonomous driving technology will be able to optimise a few key factors. Firstly, AVs’ will enable very high utilisation rates in comparison to conventional vehicles. Secondly, AVs will have a low operating costs and high coverage. In the end, combining AVs and carsharing will make carsharing much more appealing to a larger slice of the population.

Until then conventional carsharing will continue to evolve and will still have profound effects on how we get from here to there – especially in urban areas.

Do you think that carsharing concepts will influence new cars sales? Do you agree that AVs will boost carsharing even further?

Share your thoughts in the comments!