by James A. Bacon
The spread of car sharing could erode automobile sales and automobile ownership in the years ahead, according to a new study by AlixPartners, a business advisory firm. The study, which surveyed 1,000 licensed drivers in 10 developed car-sharing markets and 1,000 drivers nationally as a control group, found that car sharing appears to be displacing vehicle purchases at a rate of 32 to 1 (one car-sharing vehicle displaces 32 vehicles purchases) — more than double the rate suggested by previous studies.
So far, car-sharing services such as ZipCar, FlexCar, RelayRides and Hubber have eroded automobile sales by approximately 500,000 vehicles. As the business model spreads to other markets, it could reduce automobile purchases by an additional 1.2 million cars through 2020, the study concludes. “While the approximately 500,000 vehicle purchases avoided to date is itself a large number,” said Mark Wakefield, leader of AlixPartners’ North American automotive practice, “this study suggests that car sharing nationally could scale up as these 10 markets have, and if that happens, the impact on the traditional automotive market could be explosive.”
The merger of Zipcar and Flexcar in 2007 is thought by many to have ratcheted up the commercialization of car sharing in North America. The recent advance by larger corporations — including Avis (which bought Zipcar), Daimler, BMW and Enterprise — into car sharing suggests that the industry is accelerating up an adoption S-curve, according to the study.
According to Wakefield, while smartphones and increasing urban density have driven adoption thus far, automated and driverless cars could be key enabling technologies for car sharing to grow well beyond the current early-adopters.
“Car sharing could really get traction as smartphone and automated-vehicle technologies pave the way for new mobility systems throughout America and much of the world,” said Wakefield. “In the future, automated and, especially, driverless cars could be the killer apps for car sharing.”
Bacon’s bottom line:
Insofar as Americans voluntarily embrace car sharing because they find it provides more affordable transportation value, it’s a good thing. Taking cars off the road ameliorates congestion and reduces the demand for parking spaces, which consume valuable urban space that could be dedicated to higher and better uses. Local governments can encourage the spread of car sharing by leasing on-street parking spaces to car-share companies like Zipcar at a reasonable price.
Realistically speaking, car sharing is unlikely to amount to anything more than a niche market for several years. If AlixPartners is right, car sharing will reduce car sales by 200,000 vehicles per year on average over the next six years — a rounding error in a U.S. auto market that generated 15.6 million in sales last year. But imagine the impact that driverless cars would have on the market. Instead of hoofing it to a location blocks away where the cars are parked, you could summon a car by smart phone and it would drive to you. That would make the value proposition significantly more attractive. Smart growthers are salivating at the prospect that the economics of urban transportation will be transformed, making urban lifestyles more attractive by comparison. They may be right.