What’s Ahead for Car Sharing?

What’s Ahead for Car Sharing?

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What’s Ahead for Car Sharing?

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  • Vehicle Sales, Autonomous Vehicles, and Ride Sharing

    So what will be the overall impact of car sharing on vehicle sales? And how will the advent of autonomous vehicles and ride-sharing services such as Uber affect the car-sharing market?

    Vehicle Sales. We assessed the number of vehicles that will be purchased for car-sharing fleets in 2021 and the share of forgone private purchases those sales will offset. Our estimate is that fleet sales will equal about one-third of forgone car sales. By region, that works out to 96,000 fleet sales and 278,000 forgone private sales in Europe, 44,000 fleet sales and 52,000 forgone private sales in North America, and 106,000 fleet sales and 462,000 forgone private sales in Asia-Pacific. In sum, car sharing will cost OEMs approximately 550,000 units in worldwide vehicle sales. In revenue terms, that works out to €7.4 billion in net lost revenues, once the impact of forgone purchases, increased car sharing, and car-sharing fleet sales is taken into account. (See Exhibit 5.)


    AVs. In the long run, autonomous vehicles will have a much greater impact on new-car sales than car sharing will. AVs are not expected to arrive until 2021 though, and even then their use will be limited. Therefore, they are not likely to affect large-scale mobility patterns until 2027. (See Revolution in the Driver’s Seat: The Road to Autonomous Vehicles, BCG report, April 2015, and Revolution Versus Regulation: The Make-or-Break Questions About Autonomous Vehicles, BCG report, September 2015.) But when that day comes, car-sharing services will gain a powerful new enabler thanks to AVs’ low operating costs, maneuverability, and ability to be exactly where users need them exactly when they want to drive. At that point, ride sharing and car sharing will converge. AVs’ low operating costs will enable operators of mobility services to provide adequate coverage in smaller cities, resulting in an upsurge of registered users, an influx of car-sharing fleets into smaller cities, and increasing forgone car sales.

    Because AVs can offer greater convenience, AV car-sharing services will likely attract new registered users and may be able to charge higher prices than conventional car-sharing services. At the same time, the extremely high utilization rates of AVs will likely limit sales into car-sharing fleets.

    That day is still far off, however. AVs will probably be used first as so-called robo-taxis, which will initially operate only in highly regulated and protected environments, driving in designated lanes on dedicated routes. Moreover, autonomous features will by that time represent a large percentage of the total cost of typical urban cars, such as city cars and compacts. And the economics of shared AV fleets will remain very challenging for some time to come, despite the vehicles’ high utilization rates.

    Ride Sharing. Uber and other ride-sharing services, such as Lyft, pose a serious threat to car sharing—now and in the long term. Both ride sharing and car sharing compete for the same set of users, who are drawn to the ease and convenience of summoning a ride or accessing a nearby car for temporary use with a few taps on a smartphone. Both are well-suited to spontaneous one-way trips of less than 15 minutes. But in cities with serious parking constraints—which is to say, nearly every large, dense city on Earth—ride sharing offers tangible benefits, although cost-conscious consumers might opt for car sharing, which is cheaper. Nonetheless, the continued growth and reach of ride sharing will act as a brake on car sharing’s growth.

    With ample financial backing, Uber is pressing ahead with expansion plans into new territories and across the regions it already serves. Its ambitions may be somewhat constrained by regulation, despite the laissez-aller tenor of most enabling legislation in Japan and the US. In several European countries, however, especially those in the western part of the continent, popular resistance to ride sharing is likely to gain some legislative support.

    Car sharing will certainly bring about changes in urban driving, driver behavior, and the business models of OEMs and new entrants. It will expose new revenue pools and become increasingly relevant to a cohort of mostly younger drivers. It is not, however, a true game changer. It will not do to the automotive business what iTunes did to music: it will not redirect a stream of revenues to a disruptive upstart, and it will not spark a widespread change in consumption. AVs, however, will change the game, erasing the distinction between car sharing and ride sharing and offering users a significant edge in the total cost of ownership. But since AVs will not arrive on the market in force until 2027, there is still ample time for the car-sharing market to evolve and for players to prepare for a period of accelerating change.