An Era Of Disruption

The auto industry has experienced a significant amount of disruption in the past decade. From self-driving cars to direct-to-consumer models, it sometimes feels as if the industry and the players within it have had to create answers to new developments consistently. Ridesharing, an arrangement where an individual can ride or share another vehicle for a fee, has taken off in recent years. When people think of ridesharing, many probably immediately envision those Uber logos. However, there are other forms of ridesharing that are a part of the conversation. Carpooling, van sharing, peer-to-peer, and real-time rideshare are all components of the larger topic. On the contrary, a dialogue about this subject cannot be had without mentioning two of the largest and most well known behemoths in the space: Uber and Lyft.

No One Can Deny The Impact Of Uber And Lyft

Uber and Lyft have two things going for it: brand recognition and the ability for the public to participate as independent contractors. Both are gradually outpacing the taxi industry with more active drivers. In the ridesharing market, Uber holds approximately 74.3 percent, Lyft has 23.4 percent, and other participants share 2.2 percent. No one can deny the impact of companies like Uber and Lyft, but are there other players that are causing manufacturers to change their product offerings for consumers?

Carsharing: Use A Vehicle Without The Obligation Of Ownership

Carsharing is another form of ridesharing that has made a splash in the auto industry over the past 16 years. Companies that participate in carsharing allow customers to join a monthly subscription service where they rent vehicles by the day, hour, or even minute. Many times, the prices are meant to be more affordable than larger rental companies like Enterprise or Avis. Zipcar was one of the first companies to enter this market in 2000. Zipcar allows customers to pick up parked cars from neighborhoods and urban areas in city centers in the United States and beyond. Memberships are as low as $7.00, and the company now boasts one million members. In 2013, Avis Budget purchased the company for $500 million, one of the first mainstream rental companies to jump into the ridesharing business. Cars2go is one of Zipcar’s primary competitors; they have 2 million members in 30 cities, and also allow consumers to pay by the minute. Instead of offering a full range of vehicles (sedans, hybrids, and vans), Cars2go normally offers two-seat cars, but has recently expanded to Mercedes sports-utility vehicles. They are the fastest growing carsharing company in the world and have a fleet of 14,000 vehicles worldwide.

The popularity of carsharing has not gone unnoticed by manufacturers or traditional car rental companies. In 2016, General Motors launched Maven, a carsharing program that allows customers to pay for vehicles by the hour. Customers can reserve, locate, and access vehicles with their smartphones. They can also take their Apple Carplay, OnStar, and Sirius services with them. The goal is to make customers feel the ownership experience without having to purchase the car. Hertz, Enterprise, and U-Haul have also begun to offer affordable carsharing services to capture some of the 10 million consumers that are estimated to participate in the carsharing market.

Does Ridesharing Reduce Auto Sales?

The million-dollar question for car industry analyst is “What effect will car-sharing have on auto sales?” Its popularity has manufacturers nervous about the long-term impact and changing views concerning vehicle ownership. However, the results are not as groundbreaking as many think. A 1000-person study by Technalysis Research found that 80 percent of respondents either had no experience with ridesharing or had only used it once or twice. Also, 75 percent looked at it as a supplement to a primary vehicle. According to The Center of Automotive Research, carsharing services combined will only account for a little more than 15,000 cars off the road. While, services like Uber, Lyft, Zipcar have a “coolness” factor, their impact on sales is not as remarkable as once believed.

A Future Of Further Disruption

Any disruption or shake-up to the status quo takes awhile to take hold in the mainstream. The same could be true with ridesharing. Juniper Research, a market intelligence firm, projected that the ridesharing market would go from generating $3.3 billion in 2015 to $6.5 billion in 2020 if trends stay the same. Another reason the car industry could see an increase in ridesharing is that manufacturers will continue to create programs that mirror GM’s Maven or purchase independent companies to compete. Ironically, another industry disruption may undercut the impact of ridesharing; self-driving cars will likely decrease the need for a driver’s license and will reduce the need for consumers to know how to drive. Autonomous vehicles could also lessen the need for services like Uber. One thing is for sure; the car industry will experience more change in the next five years than in the last thirty.

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