How big can car-sharing get? Huge, probably. That’s what the big car rental conglomerates think. Most missed the boat in the early days and are now rushing to catch up. So are the giant auto makers.
Enterprise – owner of the Enterprise, National and Alamo car rental businesses – just bought Chicago-based car-share IGO, which is the third regional car-sharing service it has acquired lately. Zipcar, a pioneer in the car-sharing business, sold out to Avis Budget Group this year. Hertz has been growing its car-sharing service since 2008.
Now Ford has become the latest auto maker to offer car-sharing in Europe. Peugeot-Citroen, Daimler, Toyota and Volkswagen are all in the market already. According to various studies, every shared car takes 12 to 15 autos out of traffic.
Ford got into the act when a survey it commissioned discovered that 56 per cent of Europeans are considering car-sharing. In another survey, market researchers Frost & Sullivan found that more than 40 per cent of car owners who are considering joining a car-sharing program would also consider selling their own cars.
It is especially worrying to auto makers that the ever-present opportunity to share a vehicle will dissuade people from purchasing one. Furthermore, surveys have shown that people who use car-share services drive about 30 per cent less than when they owned their own vehicle.
The attraction of car-sharing is that, instead of reserving a car in advance, a car-share subscriber can wander up to one of the company’s cars on the street or a parking lot, flash a chip card and drive away – for a day, a week or only a few minutes.
Car-sharing is also ideological – it’s for the car haters who want less pollution and congestion but still want private mobility convenience. In that way, it makes perfect sense. It turns out that the majority of car-sharing users are younger than 34, well-educated and do not own a car.
Auto makers haven’t quite figured out how to play the car-sharing phenomenon. Is car-sharing as an opportunity to demonstrate vehicles to potential future buyers? Or do they simply have to get into it for sales and profits?
Ford2Go is the first car-sharing program that incorporates dealerships by linking Ford of Germany with the German Ford dealers association. More than 500 cars are expected to be made available from 50 dealerships by the end of the year. Daimler’s Car2go service is operated in partnership with Europcar. Car2go now has more than 7,300 Smart fortwo vehicles in 19 cities.
Not surprisingly, the more congested the city, the greater the potential there is for car-sharing. A new car-share company targeting young professionals just sprang up in Mexico City financed by a venture capital firm. It has set the cost of car-sharing to be competitive with higher-end taxi services. It’s about convenience more than economy, especially when a lot of young people are choosing not to own a car.
Look at the canyons of condo towers in downtown Toronto. Already I’ve heard that people living in them, especially those near the Air Canada Centre on hockey nights, complain that they can’t get their cars in or out of underground garages because of the crowds. No such worry for Blue Jays games so far.
But as traffic congestion gets worse, you can see how the appeal of only having a car only when you actually need one becomes more attractive to city centre dwellers.
Auto makers and the rental car giants don’t want to be left behind and certainly size matters. Enterprise points out it has more than 5,500 rental offices in North America and the ability to bargain with car makers for bulk discounts on vehicles. If car dealers see sales volume go down wouldn’t they too want some of the car-share action?
The tipping point is fast approaching – car-sharing is becoming a mainstream, environmentally friendly, sustainable option.
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