Anthony Rodio talks about the auto industry and how it has adapted to the sharing economy.
The sharing economy has already had an enormous impact on the automotive industry, but the biggest seismic shift is still on the horizon.
The most evident impact on the auto industry is manifesting in the move away from the traditional model of car ownership. In the 1900s, car ownership became an ubiquitous goal for people in most of the industrialised world. But over the past two decades, the motivation to own a car has started to give way to creative leasing models, fractional ownership, and other forms of on-demand transportation.
The US Census Bureau’s American Community Survey published data that showed for the first time since 1960, the percentage of US no-car households increased slightly in 2015. By 2030, private car ownership in the US is predicted to drop by 80%, according to an article published by Business Insider in 2017, and the annual growth in new car sales is expected to drop from 3.6% to 2%, according to a Mckinsey report. In the same article in 2017, Business Insider also reported that the number of passenger vehicles on American roads will decrease from 247 million in 2020 to 44 million in 2030.
These changes in consumer behaviour may sound ominous for the auto industry, but they actually represent one of the biggest business opportunities on the short-term horizon for disruptive services and technologies.
‘By 2030, private car ownership in the US is predicted to drop by 80%’
Uber, Lyft and ZipCar are three of the most successful companies to have already emerged from the sharing economy. Ride-sharing, in which car owners drive passengers around in exchange for a fare, has already become the norm in most major cities across the US. In a recent survey published on Statista, a website that publishes statistics and studies, almost 7,000 people in the US indicated that 53% of people used ride sharing services in 2017, an increase from 38% in 2016.
In addition to ride sharing, we’ve seen a rise in car sharing, where commuters either share the rental fee for a vehicle to drive to and from work, or rent out their cars for others to use and drive (much like a private rental car service.) Globally, Mckinsey reported, in 2016 ,that one out of 10 cars sold in 2030 will potentially be used as a shared vehicle.
As millennials become the dominant force in the consumer market, we will undoubtedly see a demand for more creative approaches to transportation. The percentage of young people (16-to-24 years old) who hold a driver’s licence dropped from 76% in 2000 to 71% in 2013, according to a study published by Transportation Nation.
Consequently, we’ve seen a rise in micro-transit. One example of this is Sacramento Regional Transit’s SmaRT Ride, an on-demand approach to public transportation. SmaRT Ride is similar to other ride-share services where customers can use a smartphone app to request a ride that will pick up and drop off passengers wherever they wish to travel within the service boundaries. Following a SmaRT Ride request, the Microtransit app will provide passengers with an estimated pick-up time, track their bus in real-time, and be alerted when their ride is about to arrive. Passengers will also be alerted when their ride is about to reach their desired destination. Groups of five or more passengers ride for free, provide they get picked up and dropped off at the same location.
Another creative approach to fractional ownership is car subscription services, in which customers can have access to entire fleet of cars for a monthly fee.
‘As millennials become the dominant force in the consumer market, we will undoubtedly see a demand for more creative approaches to transportation’
With the trend toward ride sharing and fractional car ownership, fleet management will become even more complicated, especially when it comes to inspection, maintenance and repair. Data on Statista shows that experts predict that by 2019, approximately 17.3 million light vehicles will be sold to customers in the US. Globally, this figure is expected to come to around 103.5 million units. Fleet management is already a complex business and there are very real safety issues and costs associated with deferred maintenance, repairs, and out-of-service vehicles. The growth in car and ride-sharing services has already inspired a host of new solutions that use artificial intelligence and predictive analytics designed to proactively diagnose potential issues.
But regardless of how issues are diagnosed, cars will still need to be serviced. As the auto and fleet category continues to evolve, more vehicles will be used for business-related purposes. Keeping those cars operational and on the road will become even more crucial. When fleet vehicles need to be taken out of service for maintenance and repair, it results in unforeseen costs, lost productivity and other suboptimal results in terms of brand perception and customer satisfaction. This has created a booming market for mobile car repair, in which car owners can access affordable and convenient car repair on site from a vetted network of mobile mechanics.
Let’s face it, change is inevitable. As with all major disruptions, opportunities abound in the sharing economy for disruptors that can move quickly enough to offer solutions to the new problems that change creates for consumers and businesses.
‘With the trend toward ride sharing and fractional car ownership, fleet management will become even more complicated’