Future Of Mobility | EPM Report

As society continues to struggle to break free from the restrictions of a pandemic world, we are seeing the impact in a variety of industries, some good and others detrimental to businesses. The telecommunications industry has boomed as consumers have been forced to work from home where many leverage their own connectivity with upgraded plans and increased usage. Education has quickly adjusted to distance learning out of a short-term necessity, but longer-term plans are varying by institution for in-classroom participation and contact tracing. Healthcare has moved to telemedicine which was previously being very slowly adapted but now amid a boom.

It’s time to ask ourselves how the pandemic is impacting the automotive and mobility industry? As we have seen new vehicle sales plummet, dealers have enabled alternate sales models to survive. Purchasing a vehicle online and having it delivered to your home once seemed an impossible request. But, today it is a possibility through companies like Deliver My Ride and even directly through the OEM according to an article in Road Show recently.

Ridesharing has drastically declined due to the uncertain prospect of contaminated surfaces in heavily used vehicles and the halt of business travel. Consumers and drivers have accelerated a shift to food delivery services and Uber recently launched a new Work Hub to help its drivers find other types of work such as logistics and customer service, while the market is down.

In terms of carsharing services, trip volume in the U.S. declined by almost 50% since states began shutting down in mid-March according to Getaround, in a recent article published by Automotive News. Carsharing service providers are struggling to survive. In addition, several carsharing services offered by automotive OEMs have ceased operations.

The segment’s solution is to provide fully sanitized vehicles and by emphasizing its value proposition–a cheaper model than car ownership. How do they sanitize vehicles? They have partnered with third-party cleaning services to offer discounts to owners to have their vehicles professionally cleaned after each use. As another alternative, they are providing customers with cleaning kits. They are also offering a flexible cancellation model when users are concerned about sanitation.

So, will car sharing survive long-term or will this no longer be an option for consumers in the future? The jury may be out but there are still many reasons why we feel it will survive and even potentially thrive.

Earlier this year, the Experiences Per Mile Advisory Council reported in the EPM 2030 report that of all mobility profits derived from new sources (e.g. on-demand mobility) today alternative transportation models create 1% of the profit. This was expected to grow to 26% by 2030 (according to SBD Automotive. This is a lucrative new profit generator in the mobility sector.

Reasons for Survival

1. Personal Freedom for all Income Levels

Outside of the recent changes in lifestyle, we are a very mobile society. Carsharing allows individuals the personal freedom they desire, when they want it and without the often at times prohibitive cost associated with vehicle ownership. It allows a consumer to choose a vehicle to fit the journey. They may want a compact vehicle to drive across town alone, a large minivan for a family road trip, or even a pickup truck to haul a new piece of furniture home. The need for personal freedom will not disappear.

2. To Avoid the High Cost of Ownership

According to the American Automobile Association (AAA), the average annual cost of vehicle ownership in the US has hit $9,282 yearly (or $773.50 a month). Carsharing users can avoid the staggering costs of owning a vehicle by accessing one on a pay-per-use or as-needed basis. Car ownership will continue to become less affordable as we move toward total autonomy where the price is expected to increase due to the innovative technology built into each vehicle.

3. An Environment Concern

A fundamental environmental benefit of carsharing is the use of modern, cleaner, quieter, fuel-efficient vehicles which can help improve local air quality. This is true particularly in densely populated areas. The continued need for a cleaner environment forms the basis of the war on global warming.

4. Use in Densely Populated Cities

The carsharing model tends to thrive in cities where the population is large and the age demographic skews on the younger side. The traveling distance required in small towns and rural areas is far too great and there aren’t enough users to successfully make the carsharing business model work. A lack of space for parking in these densely populated areas also make car ownership even more costly. These reasons all contribute to carsharing’s continued momentum build in densely populated cities.

5. The Frequent Sanitization of Carsharing Vehicles

Due to the pandemic and concern for clean surfaces, the sanitization in carsharing is by far superior to using your own personal car. In fact, according to a study conducted by Car Rentals LLC., the typical car interior is 2,144 times dirtier than your average smartphone, which are widely known to be crawling with bacteria. Carsharing is more sanitary than public transit, ride sharing or ride hailing services as well with the new sanitization processes in place today. To learn more, see blog post by Lea Malloy, Cox Automotive: The New Meaning of Clean in the Experiences Per Mile Advisory Council website.

As temporary stay-at-home orders lift, people will begin to travel again. We are already seeing good indications of that resurgence of travel with the gradual restrictions being lifted. As this occurs, the carsharing market will rebound and most likely continue with the growth path projected earlier this year.

So, what was holding back even higher demand before the pandemic occurred? According to a recent SBD Automotive consumer survey, price was the #1 reason holding back demand. Other reasons for not using carsharing services more frequently included:

  • Don’t like to share cars with others
  • Not available near me
  • Not convenient enough
  • Don’t trust others driving me
  • Don’t like to give credit card details
  • Not worth the effort
  • Don’t understand how they work
  • Don’t have a smartphone

So, the answer to the question: “Will Carsharing Survive or Die?” is in our view likely to be: SURVIVE. It is a new transportation model particularly appealing to younger age groups and this is not likely to change as we move forward in a post-pandemic world. However, carsharing providers will need to respond to some of the reasons demand is being held back to insure a more prosperous future.

To learn more about carsharing, download the HARMAN whitepaper today: Carsharing is Driving Shared Mobility

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Karen Piurkowski

Karen Piurkowski

HARMAN International