By Alysha Webb, Editor and Publisher
One of the “Top Ten Automotive Startups” at Connected Car Expo, held just before the Los Angeles Auto Show, was GetAround, a company that creates software that allows shared car “renters” to use their mobile phone to find and unlock any shared car. The company claims to have tens of millions of dollar in revenue, and says it is expanding into new markets.
Car sharing, usually referring to a group of people subscribing to a service that allows them to use a car when needed, is growing. Dealers at the NADA/JDPA AutoConference LA don’t see it taking a large piece of their business any time soon, but automakers are already dabbling in the space.
“That is not keeping me awake at night,” James Auffenberg, owner of the Auffenberg Dealer Group of Illinois told Automotive Buy Sell Report when asked about car sharing.
Auffenberg’s group, based in the St. Louis, Ill. Area, includes Ford, Nissan, Mazda, Kia, Volkswagen and Hyundai franchises.
Though their dealers may not be losing sleep over the threat of car-sharing, automakers are clearly taking notice of the trend. In June, Ford Motor Co. announced its Smart Mobility plan. One aspect of the plan is a peer-to-peer car sharing program that allows owners of Ford vehicles who finance through Ford Credit to rent their vehicles to pre-screened clients. GetAround, the start-up recognized at the Connected Car Expo, provides software for the Ford car sharing program.
General Motors in October announced plans for two new car-sharing programs, one in New York City and another in a yet-to-be-named U.S. city. In the GM’s “Let’s Drive NYC” car sharing program, residents of The Ritz Plaza luxury apartment building at Times Square can use a GM-developed mobile app to reserve a vehicle and access a parking space in one of 200 garages through Manhattan. The automaker tested car-sharing hardware and software systems in 2014 in a project with Google.
General Motors declines to comment on the impact of its car-sharing programs on its dealerships. “We look forward to the future and will work with our dealer partners to determine the best way to take care of our mutual customers as personal mobility evolves in the future,” says a GM spokesperson via email.
Says McKinsey & Co. in its Mobility of the Future report. “Car sharing has the potential to become a winning game for automotive OEMs.” But that will depend on the automakers monetizing online media content and figuring out a pathway into the “new form of mobility” by understanding where and how it is growing.
Personal freedom trumps shared ownership
Car-sharing is more convenient than taking a taxi but less convenient than owning a car, muses John Humphrey, senior vice president global automotive practice at J.D. Power. There is “a lot of hype” that people will postpone their vehicle purchase (in favor of car-sharing), but for consumers in cities such as Los Angeles, who have long-distance commutes, owning a car will still win, he figures.
“I don’t think auto retailers are going to be threatened any time soon,” says Humphrey.
Still, car sharing is growing. In 2014, 1.3 million people in the North America and Europe used car-sharing, according to Frost & Sullivan. By 2025 that will grow to 9.8 million, a compounded annual growth rate of 19.9 percent.
Richard Stevens owns Ford, Chrysler, Jeep, Ram, and Dodge franchises in rural Danville, West Virginia. Stevens doesn’t see car-sharing as a viable option for his customers, who mainly buy pick-ups and SUVs. “The coal miner has to have his car,” says Stevens. He is “kind of doubtful” that car-sharing will ever become the dominant form of vehicle usage.
John Symes, owner of Symes Automotive Group in Los Angeles, tells a story. In the 1970s, on the first day he started selling cars, says Symes, one of his colleagues told him the Sears and Roebuck catalogue would be the main retailer of cars one day. “One hundred different ideas have come and gone” in the car retailing industry, says Symes.
As for car sharing, “people like their freedom of mobility,” he says. “They aren’t going to give it up.”
Nonetheless, dealers should not be too quick to dismiss the potential future impact of car-sharing on retail vehicle sales.
Consulting firm Deloitte recently issued a report on “The Future of Mobility.” Among the report’s conclusions: Autonomous vehicles and “shared mobility” will become more mainstream in the future automotive landscape, with shared mobility growing more quickly, in turn hastening the move to autonomous vehicles.
“Competing effectively in the future mobility ecosystem requires building new and different capabilities,” Deloitte says. “Everyone in today’s extended automotive sector needs to reassess how they will operate and create value.”
Photo credit: https://www.flickr.com/photos/twicepix/5364196841/
