How carsharing affects your business? Is it a threat or an opportunity?
Carsharing is an emerging trend, heading to all major cities across developed countries. What does carsharing look like, what can we expect from it, and how will it change the car business?
What is carsharing?
Carsharing is a relatively new approach to car use based on the idea of sharing one car with multiple people. Standing behind the idea is the rather logical reasoning that suggests that for most of the time we own a car, it sits in the garage. Therefore, car ownership is relatively inefficient with high fixed costs – acquisition costs, road and environmental taxes, leading to a high cost per km driven. The idea of carsharing at the turn of the century aimed to reduce these costs.
However, other, newer factors are increasingly supporting the idea of carsharing. Firstly, cities are becoming more and more crowded and finding a parking place is becoming more difficult. Carsharing solves this problem because it reduces the number of cars per capita. Secondly, too many cars is unecological as each car produces a significant carbon footprint during production, transport, and disposal. The is doubly true for electric cars because the lithium ion batteries often need to be mined and manufactured in areas far away from vehicle production. Additionally, these batteries are difficult to dispose of in an environmentally friendly manner. It therefore makes sense to reduce the volume of cars produced. It therefore makes sense for governments to support carsharing among cars with minimal (e.g., CNG) or zero emissions. The bottom line is thanks to all these factors, carsharing is riding on a wave of popularity.
Carsharing is always different
There are several types of carsharing. They all build on the one main idea that you do not actually use or need a car most of the time. Depending on the type of carsharing, various other factors come into play. In particular, the following three carsharing models are most popular worldwide:
- Co-ownership – literally the joint purchase of a car by several households or a community, but with not for professional use.
- Professional carsharing (free-floating) – built on vehicles purchased by a carsharing operator (often associated with a car manufacturer, importer, or dealer). The goal is to profit from very short-term (often hours or even minutes) rentals inside large cities. Government support often plays a role in the form of free entry to the city center, free parking, or relief from road taxes and tolls. This usually comes with a requirement for low-emission and zero-emission cars.
- Carsharing built on a shared economy (peer-to-peer) – essentially an AirBnB for cars, where people or even companies share their privately owned cars with others. The carsharing provider merely provides a platform for carsharing.
In the last two types of carsharing usually work where those interested in taking part register on a carsharing platform, provide necessary documents, enter their payment card details, and if necessary, make a deposit or pay a recurring monthly fee for using the platform. They then access a mobile application that shows them available cars in their vicinity. Payment is made for the duration of the loan (usually in minutes), for kilometers travelled, or a combination of both. Many carsharing plaforms offer discount packages for a fixed amount of time – certain hours, days, weekends, weeks, etc.
Professional carsharing services offer the possibility of using a chip card or mobile phone instead of a key in modern cars. Carsharing users only need to walk up to the parked car on the street, activate the car via the mobile application, and then they can immediately unlock it and drive away. This solves the problem of securing and sharing car keys. Refueling is usually solved through refueling cards or access to charging points. The carsharing operator then continually maintains the entire fleet including service intervals, changing tires, and, if necessary, settling insurance claims or redistributing cars to different locations.
Autonomous cars will change the rules of the game
Another form of carsharing will appear very soon. General Motor’s subsidiary, Cruise, has been working on something new for several years in cooperation with Microsoft. Cruise is taking advantage of fully autonomous electric Chevrolet Bolt EV vehicles. The first active test took place in October 2020 in San Francisco. In reality, it was the result of five years of research and development, where electric Bolts had traveled autonomously for more than 2 million miles.
GM’s Cruise is more of competition to Uber, however. From the user’s point of view, it works identically. The user opens the Cruise application on their mobile phone, orders an autonomous Bolt EV to their address, enters the destination address, and that’s all there is to it. The Bolt EV, which can be followed in real time in the application, will come for the client, take them to a destination, and then automatically go pickup another client. The user is then charged for the driving duration, similar to many carsharing programs, and the same as with Uber. It is important to note that perhaps it is not an accident that the public test of Cruise took place during the coronavirus pandemic. COVID has significantly changed views about the possibility of driverless passenger car transport, and mass public transport has suddenly become dangerous.
What carsharing means for auto dealers
At first glance, it might seem like carsharing is something that is anti-sales. The goal is for one car to be shared among many people. But in the days of coronavirus, carsharing can be a way to attract more people to personal cars. Even a person without their own car can get to work for a few dollars or Euros, safely, and without being in contact with other people.
Apparently, car manufacturers also see an opportunity for growth in carsharing. And we don’t just mean GM and their future attempt at creating competition for Uber. Some car companies are working on their own carsharing programs. It is worth mentioning that Škoda Auto, part of the Volkswagen Group, has built its own carsharing program, HoppyGo, in several countries based on an open economy. It is used to share cars from any brand.
Professional carsharing services are actually a classic fleet customer, which, unlike large companies, has the potential to sell, for example, a pickup service, car cleaning, sales or rental of accessories, etc. Everything is about how dealers integrate carsharing, because stopping it is not an option.