Arthur D. Little on Carsharing 3.0

In a recent report issued by Author D Little under the title “The Future of Urban Mobility 2.0”, (freely ADLitle logoavailable at http://goo.gl/Jb6fX1), the authors provide two interesting graphics and thoughts about carsharing and where it might be going. What is interesting about their analysis is that they are looking at the sector from outside — that is, both as one part of the move  a broader New Mobility package,  and from a business perspective.  We have extracted here the two graphics illustrating their findings, along with their page of observations. At the end of the extracts we provide some contextual information and background references from our extensive carshare archives.

Let’s start with their Carsharing Innovation Curve based on well known information on the sector but illustrating it in a mindful way. (Note: The demand axis is strictly notional but still gives the reader a feel for the broad long term growth trends of the sector.)

Then like pret much everyone who is writing about carsharing trends these days, the authors identity what are now the classic four user groups, while giving them names which are evocative as can be seen below.

ADLitle Fig 13- csg

 The following is taken directly from their report:

Car sharing 3.0. – What is the next lever that will turn car sharing into a mass market?

There is a clear trend toward shared mobility: more cars and bikes are being shared in cities, both via peer-to-peer and business-to-consumer models.

Car sharing is one mobility mode set to become much more ubiquitous in the next few years. The strongest growth is expected to be seen in regions with mature urban mobility systems, such as Western Europe, North America and some Asian Pacific cities, because they are easier to target due to their existing infrastructure and an openness on the part of economically and environmentally conscious consumers to embrace options that are cheaper and more sustainable (see Figure 12).

Car sharing has evolved from a community-based, collaborational exercise between eco- and/or cost-oriented customers with an average age of 40 (car sharing 1.0), to a big business which has attracted some of the world’s major car manufacturers, and a younger customer base thanks, in part, to the need for them to be app-savvy (car sharing 2.0). Currently operators are looking for the next levers that will turn car sharing into a mass market 3.0 business model.

Depending on the type of operator, Arthur D. Little has identified four business model archetypes in the car sharing sector: Traditionalists, Citizen Networkers, Mobility Integrators and Innovative OEMs.

Traditionalists:

These service providers offer a broad range of unusually low-cost cars3 stationed in dedicated parking spaces around the city or region they serve. This type of operator may well be established on a not-for-profit or co-operative basis and thus offer comparatively low usage fees. Because the reservation of cars is usually possible without smartphone usage, the older generation find this type of car sharing user friendly.

The German car-sharing company Greenwheels/StattAuto is one of the pioneers in this. Its members can reserve a car at any time over the phone or online, with the driver accessing the car or key-deposit box with a chip card and pin code. At the end of a trip, the member returns the car to the distribution station and fills out a short driving report.

The disadvantages of such operations are that the cars can be found at defined stations only4 (and the network of such stations is sometimes insufficiently dense) and customer processes can be relatively complex. Other examples of operators in this area include Stadtmobil, Communauto, etc. (see Figure 13)

Citizen Networkers:

Unlike the Traditionalists, Citizen Networkers connect private car owners and people looking to rent their vehicles for short periods of time. P2P car sharing is a comparatively new business model, having emerged in 2001 in Germany with the establishment of the RentMyCar platform. In the US this business model was first piloted by RelayRides in 2010 in San Francisco. The advantages of this model is that it tends to offer cheaper rides than any other car-based system, insurance is built in and there is no need for anyone to invest in a fleet.

The down side is that it does not become an effective and reliable option until a critical mass of car owners has been established. They also tend to be neighbourhood schemes with limited geographic scope and sometimes car theft problems can arise. Examples include Tamyca, Jolly Wheels, Getaround, etc.

Mobility Integrators:

Entrepreneurial public transport operators have increasingly developed a clear vision of becoming integrated mobility providers. Thus they have started offering car sharing and other services in addition to their core business. These operators belong to the “Apple of Mobility” business model archetype.

These operators can leverage their existing customer base to reach the critical mass of users needed for a profitable car sharing business more quickly. Captive users of such PTOs can also use the same mobility cards to access shared cars and same smartphone apps designed to reserve and pay for shared cars.

There are no additional disadvantages for users if the car sharing service is being provided by a Mobility Integrator, rather than, for example, a Traditionalist. As station based car sharing is currently the only operating model being offered by Mobility Integrators, the disadvantages on this model apply. Examples include Deutsche Bahn’s Flinkster (countrywide in Germany plus in Austria’s capital Vienna), Transdev’s Autobleue (in Nice) and Keolis’ Autocool, Lilas, Auto’Tao, IDElib’ (in Bordeaux, Lille, Orléans and Pau respectively).

Innovative OEMs:

This model relies on providers offering middle segment or premium cars to user communities who typically identify available vehicles and their locations via a smartphone app.

The advantage this free-floating model has over other car sharing options is that users are not restricted to picking up cars from fixed points and can hire a car at a moment’s notice. Just intermodal apps are available and (same as in other archetypes) customers often have the choice of an electric car as well as a conventional petrol or diesel-powered.

Such services do, however, command higher usage fees, rely on smartphone skills and do not allow the reserving of a car in advance (orders tend to be taken only 15 or 30 minutes beforehand). Examples include BMW’s DriveNow, Daimler’s mass-market option. car2go, Volkswagen’s Quicar, Citroen’s Multicity, etc

While growth will be rapid in this sector, it is from a low base and providers are currently still assessing long term profitability of different business models. Very few examples boast a significant number of members or users and the challenge is to find a way to turn car sharing from the province of a relatively small number of early adopters into a mass market option.

Levers for potential growth exist in four main areas: geographical expansion, developing the sales platform, creating or extending a partner network and fostering loyalty by becoming more locally responsive.

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The you have it. real food for thought about the future of carsharing from this noted international business research group.  Again, the full report is freely available from them at http://goo.gl/Jb6fX1. Recommended reading.

For anyone searching for leads to the future of this important sector, their report makes interesting reading against the context of the more than one hundred articles and reports that you can find here at https://worldstreets.wordpress.com/category/carshare/.

Articles that come particularly to mind in this context to mind in the context of the ADL report include

Curious about how all this looked at the end of the last century, see Carsharing 2000: A Hammer for Sustainable Development at   http://worldstreets.files.wordpress.com/2014/02/carsharing-2000-8feb14.pdf . It was a vastly different world.

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Eric Britton
9, rue Gabillot, 69003 Lyon France

Bio: Trained as a development economist, Eric Britton is a public entrepreneur specializing in the field of sustainability and social justice. Professor of Sustainable Development, Economy and Democracy at the Institut Supérieur de Gestion (Paris), he is also MD of EcoPlan Association, an independent advisory network providing strategic counsel for government and business on policy and decision issues involving complex systems, social-technical change and sustainable development. Founding editor of World Streets, his latest work focuses on the subject of equity, economy and efficiency in city transport and public space, and helping governments to ask the right questions and in the process find practical solutions to urgent climate, mobility, life quality and job creation issues. More at: http://wp.me/PsKUY-2p7

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