Emerging trends in mobility technology, such as the rise of ridehailing and carsharing services, have led many industry analysts to offer their views on how these trends will affect the automotive industry. This study from the US based CAR (center for automobile research), written in August 2016, compares the New Mobility services between continent, their impact on the society and also their evolution during the past few years and the further evolution.
We have written below a resume of this 50 pages study picking out topics that are the most relevant or us.
I – Key factors affecting travel
behaviour
The introduction and adoption of new mobility services is related to several broad trends, such as rapid
urbanization, economic growth, increasing road congestion, increasing pollution from the transportation sector, and changing mobility preferences.
- Population, growth and density
NMS are being increasingly used in the largest and densest cities, as well as, to a lesser extent, smaller urban areas and inner suburbs. New mobility services are far less adapted to sprawling and sparsely populated areas. Worldwide, the most important demographic trends include rapid urbanization, the expansion of megacities, and densification. The U.S. situation, however, is different, because low-density development and urban sprawl is dominant. The growing preference for urban living, biking and walking can contribute to a decrease in personal vehicle use. Residential choice can be used to understand travel preferences. There is an increasing demand to live and work in urban walkable areas. The choice to live in a downtown area or a suburban subdivision includes some consideration of the transportation options available in those areas. Accordingly, people move into the city partly because they want to walk, bike, or use transit more than they want to drive.
- Age of the population
Millennials are less car-focused than previous generations, more likely to use public transit, bike or walk, and have led a broader shift in transportation behaviours. Millennials are the early-adopters of most of the new mobility services, from carsharing, ridesharing, bikesharing. They also are more open to connected and automated vehicles, as well as less polluting vehicles. The preference Millennials appear to have for the urban living, will reinforce the spread of these services, which are particularly suited for dense urban areas. In the United States, in 2014, a typical Millennial was about 30% less likely to buy a car than someone from older generations. In addition, today’s younger generation buys fewer cars than young people did ten years ago. For example, in 2003, 25 out of 100 persons in their mid-thirties took auto loans. In 2015, only about 17 out of 100 people in the same age group did so. The only age group that was more likely to take an auto loan in 2015 that in 2003 were people over 65 or older. Factors that can help explain why: gasoline prices, student debt, credit history, interest rates, and travel preferences. For the last 30 years, the percentage of licensed drivers has been dropping in all age groups, though the United States maintains one of the highest rates in the world. The decline is steeper for the younger population, but it is present even among the older age groups.
- Transportation options and costs
Changing preferences and macro-factors are not enough to change travel behaviour, because behavior strongly depends on available options. Only 55 percent of American households reported that they have access to public transportation service. Europe is a different situation, where a growing number of municipalities implement policies that discourage driving in city-centers to curb pollution and congestion. Also, a bigger share of the European population lives in areas covered by a public transit network. Another important element is the cost of transportation. The costs of owning and using a vehicle are relatively lower in the United States than in other countries, which is an important factor in the preference for a private vehicle. However, in recent years, there has been an increase in the number of
new transit projects across the United States for bus rapid transit, street cars, and busses. There has also been a strong effort to move towards smart transit solutions for traffic management, real-time location of transit assets, and new ticketing solutions integrating smartphones and credit cards, smart cards, etc.
II – State of new mobility industry
In the last decade, new mobility services have seen a substantial growth and expansion throughout the world. Their growth prospects are positive, because societal attitudes and public policy have become more supportive of new mobility services in the past years and this trend will likely continue. New mobility services have a bigger market share potential in areas where public transit is present and more used, such as in Europe and Asia. Thus, there is a bigger growth potential for NMS in Europe and Asia than in North America. Even in urban areas, NMS, like public transit, will not be suitable replacements for private vehicles for certain use cases: drivers that take pride in their vehicles or value extra comfort or privacy, parents transporting young children, and drivers who require special accessories in their vehicles.
- Ridehailing
Since the beginning of these services in the late 2000s, they have extended very quickly in the US and to all continents. Uber is the most known and international. The growth of ridehailing firms can be
explained by the ability of other transportation modes to meet the needs. Thanks to their high growth potential, ridehailing firms have attracted investors and have received $9 billion investment in 2016, which is almost twice more than any other startup segment in 2015. However, regulations across the world have
forced Ridehailing to obey similar rules as conventional taxis.
- Ridesharing
Blablacar’s expansion in Europe and South America points mainly two factors of its services success. The first is building a community of members built on trust, which takes an important initial investment from community managers when the firm expands to a new country, as well as a substantial effort in maintaining that trust through peer reviews between the members of the service. The second factor is the building of a critical mass of community members, and focusing on serving key travel corridors.
The American market is less attractive for this means of transportation mainly because of the lack of good urban public transit essential for the first-and-last miles of a travel involving ridesharing. European cities on the other hand are ideal for this model, because passengers can easily use public transit to get to the pick-up point and then from the drop-off to their final destination. Despite the of US public policies and market forces as well as technological progress that allowed carpooling to become a real-time on-demand ridesharing, these services will have a limited growth in the medium term in the US.
- Carsharing
Europe is the biggest carsharing market, with about 2,206,000 members, 58,000 vehicles, and a members-per-vehicle ratio of 38 in 2014, with the largest submarket being Germany. However, in terms of geographic expansion, China holds the greatest growth potential for carsharing. On the one hand, new-car demand is very strong in China, the biggest market for several years. On the other hand, high and increasing air pollution and congestion are triggering tight policies on traffic. Eight Chinese cities have already imposed restrictions on new-car registrations. For this reason, carsharing is increasingly seen as a solution to provide personal mobility in cities where vehicle ownership represents a challenge. Carsharing programs are already experiencing rapid growth in the biggest Chinese cities. Based on the current market potential, travel behavior trends, and historic growth patterns of existing operators, CAR estimates that carsharing programs will reach almost 3 million members and amount to 39,100 vehicles in
the United States by 2021. At this level, U.S. carsharing membership will represent less than two percent of the population of the 50 biggest cities in the United States in terms of public transit ridership. The biggest drivers of the carsharing growth are the increase in population density, the slight decline in vehicle ownership, the improvement of public transit networks, and policies aimed at multimodal transportation. Some of the biggest challenges for carsharing are parking permits, high initial expenses (acquiring vehicle fleet), insurance, and adapting to the differences between cities (density, transportation networks), and brand recognition.
III – Implication for the automotive
industry
- New customer relationship and services
The most important impact that new mobility services will have on the automotive industry will not be on
the volume of vehicle sales, but rather it will be on how customers interact with vehicles, their expectations for vehicles, and their uses of these vehicles. New mobility services are changing the way people use, value, and relate to personal vehicles. They are changing people’s expectations about vehicles, and that is more important in the long term than the net loss in vehicle sales. New mobility services will likely contribute to a change in preferences, away from vehicle ownership and towards “vehicle usership,” exploring new business models. Vehicle manufacturers, such as Ford and Volkswagen, have announced their intention to become mobility companies that offer new services alongside the established core business of manufacturing vehicles. The success of NMS is encouraging automakers to create mobility services of their own, and those can become new revenue sources. Importantly, these on-demand mobility services are a way to generate ongoing income and to engage more with customers more frequently than just through a vehicle sale every five to ten years. To appeal to customers seeking alternatives to vehicle ownership, some manufacturers have started offering fractional ownership,
allowing several persons to lease or buy one vehicle together. Several automakers are also developing mobility apps or platforms that offer travel planners (similar to mobility-as-a-service), parking reservation, and concierge services, among other features.
- New partnership : Investitions and acquisitions
In the last several years, automakers have started investing in, partnering with, or acquiring new mobility companies. Building relationships with NMS is an opportunity for vehicle manufacturers to diversify
their activities and, especially, to strengthen their market share in urban areas and with the younger generations. Partnerships with NMS companies give automakers increased visibility to mobility users (who might one day become car buyers), as well as access to valuable consumer data and analysis. New mobility companies also have an interest in these deals that come with an access to auto industry engineers or discounts on vehicles. Manufacturers also choose to acquire mobility companies, in order to leverage their innovations into their own products and services.
- Fleet sales
Automakers see the opportunity to turn ridehailing and carsharing companies into reliable customers for their vehicles. Selling to fleet managers represents not only a steady revenue stream from sales, but also
an advertisement for their brand directed to carsharing or ridehailing users that may be tempted to buy a car one day. Given the intensive use of vehicles used for carsharing and ridehailing, vehicle lifespan will be shortened and turnover rate increased. That could contribute, at least marginally, to making the automotive industry less cyclical. Factors like the general state of the economy or credit conditions will have less influence of sales volumes. Carsharing will have a relatively small impact on new and used vehicle sales. CAR estimates that between 2010 and 2021, more than 137,500 sales will be lost in the Unites States because carsharing members no longer need to buy their own vehicle. By comparison, 55 million new and used vehicles were sold annually in the United States on average in the 2010 – 2015
period.For the whole of North America, that number reaches about 164,600 units. The amount of lost sales is projected to be bigger in Europe (about 267,500 units) and especially Asia – Oceania (just over 398,700 units).
IV – Cost comparisons between new
mobility services and private cars
Owning a car involves car payments (loan, lease, etc.), taxes, registration fees, depreciation, cost of fuel, repairs, maintenance, tolls, and parking. New mobility services, and especially carsharing, change the perception of the costs and benefits of owning and using a car. A private car involves high fixed costs, whereas NMS costs, just as public transit costs, are mostly variable from the point of view of the customer and based on actual use (pay-per-ride systems). In contrast with countries in Europe and Asia, in the US private vehicules have a far larger modal share than other options and retain a dominant place in the transportation system. The costs of owning and using a car are much lower than they are in other parts of the world. This explains why a similar cost comparison for Europe estimated that city car users
would pay less to share than to own if they drive less than 4,660 miles a year (8,200 miles a year in the U.S). However, not all the people for who it is cheaper to forego ownership and become carsharing users will actually do so. Many will prefer owning a car as a status symbol, because of lifestyle choices, or the need to drive routes that do not make carsharing possible or convenient.
Source : http://www.cargroup.org/wp-content/uploads/2017/02/The-Impact-of-New-Mobility-Services-on-the-Automotive-Industry.pdf