In 2008, after I told a global leading car company that they are not in business of making cars, but in the industry of personal mobility, and that car sharing would be an important personal mobility business model of the future, I was almost thrown out of the factory gates. Six years later, the same car company now runs a car sharing business and is in the forefront of developing new mobility services around vehicle usage rather than car ownership.
In a very short period of time, between the years 2008 to 2014, we have seen a paradigm shift to car usership based models as opposed to an outright purchase. Mega trends like urbanisation and connectivity have had a profound impact on personal mobility and on the car of the future, and this is leading to new mobility business models. Concepts like bike and car sharing, integrated door-to-door transport solutions, inter-modality and smartphone-based urban mobility solutions all activated through a smart app will become commonplace in the urban world.
Car sharing is a self-service, on demand, pay-as-you-use usage model, allows one to rent cars by the hour, based on a membership model and has already taken off with membership of such clubs having risen from 1.3 million members in 2010 to 3.3 million in 2013, and Frost & Sullivan forecasts the membership to exponentially grow to around 26 million by 2020. Over 40 percent of Zipcar’s members, one of the world’s largest car sharing clubs, have given up ownership of their personal vehicles. In a study conducted by my team at Frost & Sullivan, we noticed that for every car that went into a car sharing club, about seven to nine cars were removed from the streets. Today the number of cars in the car sharing fleet is only around 90,000, so this does not carry a huge impact, but if the fleet size does grow to over 1 million cars, which we project will happen by 2025, this will have a significant impact to cars on the road and can help cut congestion in busy cities. One of the major benefits driving the car sharing market is a savings of around $3,000 per year over car ownership, which for a youngster today can be a significant cost savings.
Car manufacturers are bracing themselves for the inevitable threat presented by car sharing schemes by transforming themselves into service providers offering integrated mobility solutions. Major car companies like BMW and Mercedes are unveiling integrated mobility-on-demand solutions. Daimler through its car2go subsidiary today operates car sharing fleets in 26 cities using its Smart Cars. It plans to add between five to 10 new cities in the next 12 months and boost its membership to 1 million members. Even Mercedes went upmarket and luxury in its car sharing business with the launch of car2go black, which operates 200 Mercedes-Benz B-Class cars. Daimler expects to make €100 million (roughly $138.16 million USD) through its mobility services arm in 2014 and is targeting €1 billion in sales by 2020.
Markets like Italy, which have traditionally been car ownership driven saw the highest membership growth in 2013. Car sharing now operates in 11 cities across Italy and had 130,000 members in 2013 compared to only 19,000 members in 2011. Italy, interestingly, for the first time since WW2 also sold more push bikes than cars in 2012.
The business model driven by entrepreneurs and forward looking corporations is also showing some exciting innovations. Car2go was the first to launch the flexible pick up anywhere and drop off everywhere model, which was also soon followed by one-way models, which is the exact opposite to Zipcar ZIP NaN%’s fixed pick up and drop off model. Companies like Citeecar have developed a low-cost model where one can rent the car for one euro for an hour. Interestingly this company is founded by same people who set up Easyjet, the low-cost airline in Europe. To them, this is already a commodity business and consumers will choose on price. Zipcar is now launching a franchising car sharing business model within five to seven cities in 2014, leveraging its new parent’s (Avis) rental car franchising model. Then there is the peer-to-peer model (P2P) where one can rent out their personal car to others through dedicated platforms. Personally, I think there is a huge opportunity in the US to start a P2P model for pick-up trucks and one could do that through communities of trust, leveraging for example your local friends and family circle on Facebook.
Car sharing is now even picking up within the corporate segment. Corporate car sharing involves placing a dedicated fleet of vehicles at a company’s premises for the shared use amongst its employees. The vehicles are equipped with virtual access and telematics technology that enable remote booking of the vehicles, removing the need for manual company fleet administration and key transfer, and open access to employees who do not necessarily have the privilege of getting company cars as part of their employment package. There were 1,930 corporate car sharing vehicles identified across 10 European countries in 2013, but this market is expected to exceed 100,000 cars in Europe alone before the end of this decade.
Interestingly, the car sharing business model does have the rental companies thinking. No wonder Avis snapped up Zipcar for a neat $500 million in 2013 to leverage its fleet, which is relatively under utilised in the weekends. However, one of the key drivers for its purchase of Zipcar was to develop a virtual car rental model for the car rental industry, which still has brick and mortar stores and fixed parking to facilitate rentals. In the future, one will through an app rent cars stationed at convenient, urban places. The rental app will help you book a car with a click, store your driving license, so there’s no need to show it every time you rent a vehicle, run a quick security check on the car for any dents and liabilities through the camera, give you keyless access to the vehicle, and issue you at the end of the journey, a virtual invoice. Hertz CEO recently stated that they will enable 500,000 cars with car sharing technology. Imagine the impact if 40 percent of users swap ownership for user ship if he delivers on his commitment.
Car sharing is not the only game-changing urban mobility business model of the future, but rather an element of what will constitute the complete integrated door-to-door mobility platform of the future. The concept of a dynamic transport solution integrating different modes under a single entity will make inter-modal transportation easier for city dwellers in the large Mega-cities of the future.
So what is this integrated mobility? Imagine this scenario: you are travelling to Vienna for business. As you exit your home, your phone directs you to walk 500 metres to the nearest bus stop, take the bus to King’s Cross St. Pancras international train station. The phone informs you that your train to Brussels is running 10 minutes late and that your check-in has now started. Once in the train and on the other side of the pond, in Brussels, the phone directs you to the nearest car sharing parking spot, where you had booked your electric car to travel to your meeting. It even books your parking spot near the client’s office. The procedure is seamless and consists of one mobile ticket that connects international transport and all travel modalities. This is the future of mobility and the new battlefield for “mobility integrators”. Companies like Mercedes-Benz, Deutsche Bahn and NS Business have already tested this in pilots and will soon be going to mass market.
A scenario where we exclaim, “Beam me up, Scotty” might not happen soon in our lives, but we will certainly experience seamless travel using multiple modes in this new urban mobility business world, and the ownership of the car might not be an integral part of that model.
View source story at: http://goo.gl/CTq4qd