Alternative transportation methods are growing in popularity across the world. Instead of owning or leasing vehicles, people are increasingly looking for ride-sharing and hailing services which can reduce the cost and responsibility associated with travel. These new trends have been gaining momentum for years, but have recently become common in urban areas with higher population densities.
One of the main reasons for this trend becoming more popular is that it helps to avoid the excessive cost of vehicle ownership. Especially among young people, it can be difficult to pay for insurance, fuel, and repair/maintenance fees; shared mobility helps to overcome some or all these factors. Compared to car ownership, shared mobility services can be significantly less expensive depending on required mileage.
As shared mobility options gain popularity and cost-effectiveness, automotive manufacturers will be pressured to respond. In some cases, like General Motor’s Maven service, automotive manufacturers plan to go head-to-head with startups and tech-based companies. As new opportunities arise to lead within the space, tech companies and OEMs alike will need to invest in shared mobility technologies so that they do not get displaced. After all, one day, it’s possible nobody will own personal vehicles.
Trends Driving Shared Mobility: Car Sharing and Ride Hailing
Shared mobility is a growing trend, especially among young people. Before it was shut down by Toyota, an executive behind the youth-targeted Scion vehicle brand told Reuters that “young buyers are less interested in owning cars… they either don’t have the financial leeway or they’re substituting car ownership with ride-sharing or car-hailing services like Uber.”
This has been a long-term trend; in 1983, 87% of 19 year-olds had a driver’s license, compared to 69% in 2013.
Services such as car sharing and e-hailing have displaced traditional mobility services such as taxis, because of the technological edge held by a few leaders in the space, such as Uber and Lyft. In New York City, Uber now operates over 14,000 vehicles, compared to 13,587 yellow medallion cabs. Across the U.S. market, 239,900 taxi drivers compete with 160,000 Uber drivers, and over 1 million Lyft drivers.
Car Sharing: Your Vehicle, My Driving
Car sharing services provide the opportunity to rent vehicles, often for short periods of time. By renting cars only for a few hours to a day in duration, customers can avoid the costs of ownership and have convenient pick-up and drop-off access points. Car sharing services are increasing in size, meaning that, although fewer vehicles are sold to customers, more vehicles are being sold in the form of fleets, allowing companies like Zipcar to purchase large-quantities of vehicles at a single time.
The technologies that are used for these vehicles often exceeds the technologies that would be placed into average cars too, since many car sharing services purchase plugin electric vehicles (PEVs) where customers return their rental and begin to recharge it to make it available for the next customer.
OEMs and automotive suppliers can benefit from the car sharing trend by developing technologies to be used by fleet providers. Vehicle monitoring technologies will help these companies control their fleets and make more informed decisions when it comes to purchasing new vehicles. Building a relationship with these players could lead to consistently higher sales.
Related Article: Will Electric Vehicle Technology Replace Combustion Soon?
Ride Hailing Services: Your Vehicle, Your Driving
Ride hailing services provide customers with the opportunity to call drivers to a specific location for a timely and convenient pickup. Whereas taxi services have previously dominated this space, a new breed of ride hailing services have been created and supported through technological innovations.
Uber and Lyft are two of the largest ride hailing services available to North American customers. Their platforms enable customers to use smartphones to hail a vehicle at the push of a button, handling navigation, payment, and driver-passenger agreements. Upon being connected to a local driver, customers can view the driver’s location and estimated time of arrival on an interactive map. The service places additional information in the hands of the customer, who can use details on the arrival time and driver’s vehicle to receive a better, less stressful experience.
Automotive companies can use this trend to develop better vehicle signaling and tracking technologies; this will empower ride hailing companies to accurately assign incoming requests to the right drivers and timeliness standards are met or exceeded.
Shared Mobility’s Impact on Technology
While some automotive manufacturers may see shared mobility as a threat, it can also be viewed as an incredible opportunity to develop new technologies. Some ride hailing services are entirely built off superior technology; this should be a sign to all automotive and technology businesses to invest in product/service research and development.
Mobile applications are a huge driving force in the shared mobility trend. For one, mobile applications help provide the service (tracking and calling vehicles to a user’s location, allowing drivers to be monitored and compensated). They also allow users to interact with the service and call for a new vehicle within a few seconds. Mobile applications are always within reach for the majority of shared mobility users, therefore, companies with the best application will have a competitive edge.
This isn’t to say that technology developers need to develop smartphone applications to service a portion of the shared mobility market. Automotive manufacturers should build vehicle technology that enables better fleet management, helps passengers spot their vehicle, or otherwise improves the passenger experience.
Maven: General Motors’ Response to Shared Mobility
General Motors is an early leader in automotive OEMs looking to capitalize on demand for car sharing services. Their Maven service requires a mobile application to sign up for the service and locate vehicles, then offers vehicle usage from $8/hr. Maven is undertaking a large-scale pilot project in New York City currently, with 80 vehicles available for hourly and daily reservation via the Maven app.
Since its launch in January 2016, Maven has grown to service 17 North American cities, with 39,000 registered members of the service, and over 50,000 vehicle reservations as of May 2017. GM is also expanding into the rideshare market through Maven, through the launch of Maven Gig, offering ridesharing, grocery delivery, food delivery, and package delivery services to compete directly with Uber and Lyft in these areas.
Other OEMs active in the space include Car2Go (a subsidiary of Daimler Benz) offering service in European and North American cities, and BMW’s Reach Now service, available in Seattle, Portland, and Brooklyn.
Top 4 Trends in The Canadian Automotive Sector
Shared mobility is just one of the major trends impacting the Canadian automotive sector. Automotive manufacturers can learn more about the emergence of shared mobility, in addition to three other trends, by downloading Mentor Works’ Top 4 Trends in The Canadian Automotive Sector white paper.