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How the rising trend of car sharing impacts the automotive industry

How the rising trend of car sharing impacts the automotive industry

JOHANNESBURG – The shift towards vehicle sharing and away from the traditional car ownership model is driven largely by millennials and post-millennials, who demand products and services that are entirely different from those that were desired by previous generations.

The new generation’s push for comfort, flexibility and ease of use, coupled with a rejection of long-term financial commitment, means this is a demographic that does not need or want to own a car. Instead, they want to consume transportation as a service.

Frost & Sullivan notes that owning and driving a vehicle are no longer central themes in the mobility landscape, with the number of young adults (aged 17 to 20) in the UK with driving licences falling by 40 percent since the 1990s.

In a separate study, the same research firm notes that in 2017, the global car sharing market had about 10 million people using these services and predictions are that by 2025 this number will reach 36 million, which is a growth rate of 16.4 percent a year.

Uptake of services such as Uber, Lyft and Bolt (formerly known as Taxify) has been particularly strong in urban settings, where people live relatively close to their places of work, shopping malls and entertainment centres and only require transportation over short distances.

Naturally, this shift in consumer behaviour is having a profound impact on vehicle manufacturers, who will have to gear up and understand what this market will require, so that they can change the way they build vehicles.

Many of the Original Equipment Manufacturers (OEMs) will have to tailor their brands to niche markets and associate their products with a specific service to remain relevant in the vehicle manufacturing space. For example, Toyota Corollas have become almost synonymous with Uber, which has shown a strong preference for this particular type of car.

Furthermore, we can expect that the general shape and size of vehicles will change with an increased demand for smaller cars that are suitable for urban use. At the same time, there will most likely also be a demand for larger vehicles that can transport more people across greater distances. Manufacturers will have to have their fingers on the pulse to be able to respond to these requirements.

While car sharing will naturally dent vehicle sales, manufacturers will no doubt try to sell as many vehicles as possible. To do this, organisations will have to find a balance between the car sharing market and the private ownership market. These will be two separate markets that will have distinct requirements in terms of features, comfort and levels of luxury.

Technology will play a significant role in the car sharing model, as communication between users and service providers plays a pivotal role in this space. In turn, this means that investments will have to be made in networking and infrastructure by both manufacturers and car sharing service providers, which will require systems and devices that can collect, store and analyse big data.

Car sharing is far more than just a passing trend. It is a model that is rapidly changing the transportation landscape and brings with it many benefits, not least being a reduction in carbon emissions, less congestion in city centres and access to affordable and reliable transport for those who do not want the financial burden of owning a vehicle.

Kobus van Staden is New Business Sales Executive at T-Systems South Africa.

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