Shared Mobility: In its Infancy for 15 Years – What Does it Need to Grow up?

Timm Kellermann, Managing Director of Consulting4Drive, on the Shared Mobility Business Model

In essence, the automotive industry’s business model (still) concentrates on developing and producing vehicles to earn money from selling and servicing or repairing them. By comparison, the business model behind shared mobility focuses on developing transport solutions to earn money from the drivers or passengers transported. When we place both business model approaches side by side, one thing is evident: the first business model describes a product company, the second one a service provider.

The facts and figures (see panel) could suggest that car sharing has become established as a second, nice little business model in the mobility industry and is successfully growing. Do you believe that? Have you tried it out? Do you notice car sharing in your life? “We see the vehicles (standing) in a few urban centers but so far only making personal mobility easier for a few individuals. Why is that so?

Let’s take a look at what customers see first: the cost. For a calculation example, we will assume a “regular low-mileage urban driver” covering an average of 7,200 kilometers a year. In the vehicle ownership model with a used compact-size vehicle, a customer can do this today for costs totaling approx. € 180 to 220, including running costs, servicing and depreciation. Let’s now imagine that this person changes over to using nothing else but one of today’s car-sharing services. At a cost of € 4.50 for a 20-minute 15-kilometer journey, this, in the best-case scenario, incurs monthly costs of € 180. Calculating any configuration of this parameter set always results in the same finding: in quantitative terms, today’s carsharing offers cost the user a monthly budget similar to that of the ownership model.

On the car-sharing “benefits” side, we have: no capital commitment, usability perhaps in other cities, easy, cost-free payment, no effort involved for refueling, cleaning or servicing and, in some cases, easier parking. On the “drawbacks” side are: non-digitalized processes involving a lot of effort, searching for and reserving a vehicle for every journey, walking distance to a vehicle and the time spent waiting for it, and above all limited use radius. Today’s car-sharing services give the driver no significantly greater convenience or cost benefit over the vehicle ownership model.

Car sharing is an attractive option for people who have never owned a car and experience car sharing as a premium-grade extension to local public transport (sporadic users). To date, vehicle owners in many cases perceive the move from ownership to sharing cars as a deliberate “downgrading” that makes common sense for environmental reasons. Based on this finding, it is hard to credit today’s carsharing concepts with an ability to show rapid or exponential growth.

What needs to happen to make shared mobility the large-scale success we have spoken about for over ten years?

In our society, convenience and cost benefits have long been key disruptive levers. Halving or quartering the cost of car sharing is a goal we feel is ambitious but one that is feasible in the medium to long term. For frequent urban drivers, say, this would be a flat rate of about € 80 a month, in other words, the equivalent of a monthly pass for local, inner city public transport. Before we slip into any self-imposed mental block (“This is far from what the local authorities want”), let us consider how many vehicles this would actually take off the road and out of car parks to make room for alternative mobility.

This must be accompanied by maximizing convenience benefits and simple processes for registering, better assistance in trip planning, picking up and dropping off vehicles as well as improved handling transparency. Plus even closer and broader cooperation with the local authorities in the context of driving-lane access, parking and charging/refueling.

This is the conclusion we come to: in a significantly more advanced format, car sharing does in fact have disruption potential. But it will probably neither completely substitute the ownership of vehicles in the urban environment nor will it inhibit the success of Uber-type ride-hailing / ride-sharing services. We live in an “either/or” economy that rewards services which meet the very different needs of city people in a way that is particularly consumeroriented, permits simple, multimodal use and comes at optimum cost.

As a consequence, we believe that manufacturers are well advised to advance fleet operation and their car-sharing business model with greater commitment and self-initiative. Why? In order to develop vehicles that are specifically designed for phlegmatized, highly automated continuous use within city limits and which, throughout their entire life cycle, require hardly any servicing with the exception of an occasional interior renewal. For car sharing today, we use our vehicles that have been developed for car ownership.

Manufacturers are vehicle developers, but without insider fleet operator knowledge, it will be hard for them to develop a portfolio of carsharing vehicles. Particularly because in volume terms only about a tenth of vehicles will be needed, and because performance indicators will be “contribution margin per customer kilometer traveled” as well as “total customer value in the life cycle”. As soon as an independent fleet operator arrives at a detailed understanding of how it wants dedicated car-sharing vehicles to be designed, a serviceoriented contract manufacturer will be a more attractive partner than an established largescale producer.

In our opinion, car sharing will reach the next degree of business model maturity as soon as vehicle engineering expertise and fleet operator know-how are paired with the resolve to negotiate driving-lane, parking and recharging privileges with the conurbations of this world on a much broader scale. Then, car sharing will become an attractive and serious business model for providers because the added values outlined above will benefit almost every individual in terms of his or her need for personal mobility.

Facts and figures on the car-sharing situation today:

In Germany, some 150 companies offered approx. 17,000 vehicles for car sharing in 2016. At the beginning of 2017, 1.7 million people were registered for car-sharing services, 36 percent up on the year before (Source: Orange by Handelsblatt magazine 2017). For North America, the figures (2015) are similar: 1.5 million users, 22,000 vehicles. Worldwide, the carsharing vehicle population is estimated at approx. 105,000. By comparison: at the end of 2015, 947 million vehicles were registered in the passenger car class and 335 million in the commercial-vehicle class (Source: Statista 2017).

The biggest providers are car2go (14,000 worldwide, 3,700 vehicles in Germany), Sixt (5,700 vehicles), Flinkster (4,000 vehicles), stadtmobil (3,800) and Cambio (2,500).

The cost of a 20-minute journey of approx. 15 kilometers from the abovementioned providers is between € 4.50 and just under € 7. According to unofficial information, the current average period for which a vehicle is used is under 2.7 hours a day (three to seven customers) and focuses heavily on the morning and late-afternoon rush hour as well as at mid-day, albeit far less. Some of the above companies say they work on a profitable basis but provide no detailed figures.

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