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        IMA

Vehicle sharing: an opportunistic ride for automotive makers

Also, download this story from the electronic issue here

With the rising popularity of car-sharing services, automotive makers are taking the cue in the shift from the tradition of owning cars to sharing cars, and more simply to boost their revenues in a global market with flagging car sales, says Angelica Buan.

Many of us consider our cars our second home, and especially our comfort zone when traffic becomes too distressing, also as a private space for those un-shareable thoughts. But what if we need to share this space with a couple more strangers? What if we also need to share our vehicle bought with our hard-earned money with a total stranger, for a fee? Whether it is acceptable or not, this scenario is no longer fiction. Car sharing is the epitome of urban mobility and, thus, becoming a viable option in some areas.

McKinsey & Company’s outlook for the automotive industry delves on the emergence of “diverse mobility, autonomous driving, electrification, and connectivity”, as game changing disruptive trends that the industry is headed towards.

cars

Connectivity and digitisation play vital roles in more consumers looking at shared mobility with a practical perspective, such as benefits of being able to take control of their time to engage in other personal activities, weighed against time spent behind the wheel.

Benefits of car sharing continue to unravel and consumers are noticing – from savings on petrol usage and car maintenance, as well as a solution to urban parking space and traffic to a reinforced sense of community and reduction of carbon emissions. Vehicle access has broadened its scope from autonomous ownership to vehicle-sharing models.

Shift with a positive impact

From a practical standpoint, car sharing could inevitably impact autonomous car ownership and sales, the latter growing at a modest pace globally.

The Smart Mobility report published by Deloitte US in 2015 explains that “car sharing services are leading more Americans to forgo vehicle purchases”. This is because more US car sharing users see this model as a viable option to owning a car. It cited a finding that ownership of 500,000 new or used cars between 2006 and the end of 2013 have been waived in favour of car sharing.

Meanwhile, Goldman Sachs in its Car 2025 forecast sees convenience as an important theme in shaping the automotive industry’s transformation. Citing data from the Organisation for Economic Development, Japan Ministry of Internal Affairs and Communications, the US financial company says that traffic could worsen in world’s growing cities against the backdrop of increasing ownership costs.

Boston Consulting Group (BCG) assesses that by 2021 some 35 million users will book 1.5 billion minutes of driving time monthly, translating to annual revenues of EUR4.7 billion. “Europe will be the biggest revenue-generating region, followed by Asia Pacific and North America,” the consulting firm said in its 2016 report titled The New Mobility and Its Impact on Vehicle Sales.

BCG further estimates a reduction in vehicle sales in lieu of car sharing. “(Car sharing) will reduce worldwide vehicle sales by approximately 550,000 units by 2021 and cause a net revenue loss to OEMs of EUR7.4 billion.” However, it says that some share of lost sales will be offset by sales of car-sharing fleets in large urban areas, since most drivers are not forgoing car ownership. After all, cars are still considered the most convenient mode for passengers to travel from point A to point B on schedule.

On the other hand, automotive makers are not worried with this incumbent disruption of car ownership. In fact, automotive makers are keeping track of the popularity of car-sharing schemes, especially in urban areas, and how it can open revenue opportunities via car-sharing subsidiaries.

Some major players in the industry have even moved to owning stakes and companies providing car-sharing services. These include Daimler that owns Cars2Go; BMW’s ReachNow, Ford Motor’s Zipcar, and General Motors’s US$500 million tieup with US transportation company Lyft for an on-demand fleet.

Cutting back on pollution

The global thrust on reducing pollution levels is a long-term advantage for car sharing. According to a three-year study conducted by the University of California, Berkeley’s Transportation Sustainability Research Centre (TSRC), one-way car-sharing services in the North America curb pollution levels and traffic volumes, even when measured across just the past three years.

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The study focused on German car maker Daimler-Benz’s car2go car-sharing service. Data was collected specifically from the service’s 95,000 members based in Canada (Calgary) and the US (San Diego, Seattle, Vancouver and Washington).

One outcome of the car-sharing scheme for members is the decision to forgo their personal vehicles that mostly are aged and are the most polluting and least economical vehicles plying the road.

One-way services also reduce the number of miles travelled per person per year by an estimated 11%, thus reducing personal greenhouse gas emissions by about 10%, the study said.

Investing in China’s mobility

The popularity of car sharing is further enhanced with the convenience provided by smart mobile phone apps.

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General Motors (GM), with global sales totalling 9.8 million vehicles in 2015 or up 0.2% for its third consecutive year of record sales, has partnered with China’s car-sharing technology solution provider, Yi Wei Xing (Beijing) Technology, to tap into China’s progressive car-sharing market. GM has 11 joint ventures in China and its passenger cars and commercial vehicles are sold under the Baojun, Buick, Cadillac, Chevrolet, Jiefang and Wuling brands. In 2015, GM delivered more than 3.6 million vehicles in China, it says.

Yi Wei Xing’s Feezu is based on mobile technology. It merges hardware and software to provide a convenient car-rental and car-sharing experience. It also offers car-rental companies a customised cloud-based car-sharing platform.

According to GM, the investment and strategic alliance will leverage Yi Wei Xing’s technical offering and will be in line with its drive to explore new car-sharing models. GM says it will also enable it to “gain insights into China’s rapidly changing car-sharing market and develop a deep understanding of Chinese consumers’ personal mobility needs”.

In the US, GM launched its car-sharing service brand known as Maven in January 2016. With Maven, consumers are able to access what is said to be highly personalised, on-demand mobility services. Less than four months after its launch, Maven has already expanded its services to five markets in the US, says GM.

Zero emission transport

Germany-headquartered BMW, which had sales of 165,431 vehicles globally in August this year – up 5.7% on the same month a year ago, says that among the several benefits of car-sharing is zero-emission road travel. The company has embarked on its car-sharing business with the ReachNow programme launched in the US (also called DriveNow, outside US). The company says it is aiming to penetrate ten US cities.

car-BMW’s

According to BMW, to date, about 13,000 commuters have already signed up for the ReachNow programme. The company says users can also register and download the ReachNow app from their smartphones and are charged US$0.41/minute.

BMW’s programme deploys its electric vehicle (EV) models, including the i3, 3 series and Mini Cooper.

More recently, BMW started offering longterm rates for Seattle customers that want to rent a free-floating vehicle for up to five days. Currently, BMWs Seattle car-sharing base has a fleet of 520 free-floating vehicles.

Tie up to boost market

Europe’s second largest automotive maker PSA Peugeot Citroën, which posted sales and revenue of EUR54 billion in 2014, has inked a partnership with Bolloré, a French investments and industrial conglomerate, to develop shared mobility solutions, including car-sharing schemes. Also under the agreement is the production of Bolloré EVs at PSA’s Rennes plant from September 2015, with installed capacity of 15 vehicles/day and a maximum of 3,500 vehicles/year.

IMG

Bolloré has several EVs under its wing, notably Bluecar, Bluesummer, Bluebus and Bluetram. It also operates an EV car-sharing network in several cities in France and overseas through subsidiaries.

“The partnership is aligned with our common goal of becoming a leading player in the carsharing market, which will account for a significant portion of the new mobility economy, alongside public transport solutions,” PSA says.

Thus, the two companies will cooperate in the area of car sharing – initially in Europe and later via the creation of a joint venture designed to deploy car-sharing solutions worldwide using EVs (passenger cars and commercial vehicles), as well as low-emission internal combustion vehicles.

Meanwhile, PSA has on its own set up various car-sharing operations since 2013, with an offer catered for businesses in France and, via its Citroën brand, in Germany. In addition, Peugeot launched a short-term rental offer in 2009.

Thus, besides lightweighting to reduce fuel consumption, automotive companies are committed to providing car-sharing services to ensure sustainability extends to the entire value chain.

(IMA)


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