Forget fleet leasing costs, insurance, servicing and crash management: the future is here now with car sharing.
CityHop was the first to introduce this new model of vehicle use to New Zealand. For a low annual subscription and $15/hour, anyone can access and use a late-model car as and when needed.
Smart Mobility Management just reported that the carsharing market globally continued to grow at a rapid pace 2013, so much so that 2013 is being referred to amongst the industry and associations as the year that carsharing and shared mobility went mainstream globally. With global membership rising 52% year on year, considerable investment from vehicle manufacturers and rental car companies in particular, and diversification of the business model (e.g. Low cost carsharing and corporate carsharing), we are seeing carsharing as an Urban Mobility solution become commonplace.
Also referred to as car clubs, or temporary rental of vehicles usually by the minute or hour, we saw carsharing membership grow from 2.3m to 3.5m between 2012-2013. Frost & Sullivan had forecast in our last detailed carsharing research report in 2011 that there would be 3.3m members by 2013, so whilst broadly in line, it is encouraging to see the customer adoption accelerating even quicker than we predicted, owing to higher than anticipated growth in Asia in particular.
The corresponding vehicles rose from 55,000 to 69,000, indicating a global member to vehicle ratio of over 50, which is generally regarded as a sustainable and potentially profitable level depending on the vehicle utilisation. As such, our forecast of 26m members and 500k carsharing vehicles by 2020 is a small step closer to reality, although several conditions and policies are likely to be required to see this level of adoption.
Significant investment and merger/acquisition activity was seen in 2013, with Avis acquisition of Zipcar being the most high profile deal, worth a reported $500m.
Both parties report that it’s the combination of cost/operational efficiencies that could be achieved (such as zipcar benefiting from vast fleet purchasing economies of scale & franchise expansion opportunities), and Avis benefiting from moving towards virtual rentals and the technology Zipcar has developed over the years to facilitate this.
Furthermore, Enterprise continue to quietly acquire and integrate independent carsharing brands as part of Enterprise Carshare, with Phillycarshare, iGo and Autoshare all becoming Enterprise companies.
With Hertz continuing to expand their Hertz 24/7 carsharing brand, reportedly looking to equip up to 500k of their cars to enable Carsharing rentals by 2016, it’s clear the lines between carsharing and “traditional car rental” are already becoming very blurred, something that is set to continue and begin to merge with more longer term rental/leasing business models.
However, it’s not just rental firms entering or acquiring the key companies in the market; 2013 also saw the continued growth of a new and unique low cost carsharing model, pioneered by Citeecar in Germany. Their continued growth to 4 German cities in 2013 with a reported 5,000 members by the end of the year is set to expand across Europe in 2014-2015, with a further €8m investment from their venture capital partners set to facilitate this.
It’s unique in developing a “host” based model that is somewhat a hybrid of traditional and peer to peer carsharing, with individuals offering their own parking facilities and light maintenance of the vehicles (known as “citee angels”), enabling a lower operational cost to the business, which in turn is passed to customers with a market leading price point of €1 per hour.
Besides acquisitions, 2013 also saw the rapid expansion and investment from a few incumbent operators. Zipcar remain the world’s largest carsharing operator in terms of members, with over 850,000 members globally, up from 770,000 in 2012.
However car2go realised a more rapid proportionate growth, increasing their footprint from 18 to 25 cities, and raising membership from 320,000 to over 600,000 in the process; indeed 2014 has already begun with their entrance into a 26th city (Rome) and the initiation of car2go black in Hamburg and Berlin, their new premium station based service using Mercedes (B class) vehicles – the first time car2go has used anything but Smart cars in their offering.
Both firms will be looking to grow significantly again in 2014, zipcar targeting 15 new cities through a mixture of managed and franchised growth, the first step towards leveraging significant operational synergies through their new parent company Avis.
Car2go on the other hand are looking to add 5-10 new cities to cross the 1 million member mark in 2014. BMW’s DriveNow have also committed to increase their footprint by over 15 new cities in 2014, and Paris Autolib operator Bollore group are looking to bring similar services to Indianapolis, London, and an Asian city in the next year.
The question on Crash Management’s mind is: When car accidents happen (and they will) with these self-service cars, when and how is accident damage quantified in order to identify liability and how will claims be facilitated after the driver is long gone?!