Car-sharing won’t solve Auto Companies’ Uber problem
GM, Daimler, BMW, Volkswagen, Fiat and Ford have all entered the car-sharing business. It’s a good move to expand their mobility offerings and compete with Zipcar and the rental car companies. But they are focused on the wrong opponent. Zipcar won’t kill the auto companies. Uber will.
Car-sharing isn’t ridesharing. The two seem to be getting mixed up by auto companies — and by the press. Car-sharing and ridesharing have in common that they use smartphones and result in less dependence on the automobile. But that’s about it.
Ridesharing is 10x the size of car-sharing and it’s growing much faster. This year ridesharing will do more revenue than the leading car-sharing company, Zipcar, plus the revenue of its rental car parent, Avis-Budget. Car-sharing launched more than 15 years ago in the U.S. The first instant ridesharing company, Sidecar, was launched three years ago. Uber, which had launched the UberBlack service the prior year, quickly copied and scaled instant ridesharing with UberX. By virtue of growth and consumer adoption, ridesharing, not car-sharing, is what auto companies should watch. Ridesharing is how consumers are adopting mobility services.
Car-sharing and ridesharing are used differently. The reasons people use ridesharing are different from why they use car-sharing. Ridesharing shines when you don’t want to drive like when you are out drinking with friends or heading to a ball game and don’t want to hassle with parking. Car-sharing, meanwhile, shines when you don’t have a car for cargo trips like grocery and Ikea runs, or weekend getaways. In cities, like San Francisco, people rideshare to augment their car ownership, but car-share in place of car ownership. 60% of people who try car-sharing don’t own a car. A car-sharing service doesn’t compete with ridesharing. They are complementary.
Car-sharing and ridesharing are fundamentally different business models. The expertise of car-sharing is not the same as ridesharing. Car-sharing is all about managing assets that must be parked, charged, and moved to where there is demand. It’s a capital utilization game that is about positioning supply near demand. The ridesharing business is about managing a driver base who owns the mobile asset, making sure he or she makes enough money, and gets to the right spot at the right time to satisfy demand. It’s a labor utilization game that depends on highly dynamic balancing of supply and demand.
The auto companies are focused on car-sharing and they should. It is a piece of the mobility puzzle that will help them prepare for an autonomous car future. But if auto companies think it’s just about car-sharing, they’re going to miss the biggest change in transportation since … well, the car.
About me: I was an early pioneer in both car-sharing and ridesharing. I started the first instant ridesharing company, Sidecar, in 2011, and serve as its CEO. I was a board member to one of the first carsharing organizations started in 2001, was faculty advisor to the team that created Getaround in 2007, and sponsored the first peer-to-peer carsharing law in California in 2010.
