Why Carsharing Will Make a Comeback

Carsharing, whether in the form of free floating or station-based, has been introduced to most urban cores around the world. When carsharing was first introduced, it was positioned as a convenient way to meet up with friends, run errands, and even replace a second household vehicle. With other modes like ride-hailing and scooter sharing entering the scene, the competition to meet transportation needs increased. With more options, people were able to choose the mode that best suit their needs at any given time.

As a result, carsharing started getting a smaller piece of the mobility pie. Even though this may have hampered the growth trajectory of major carsharing services, the fact remains that more options are better. Maybe not for individual operators, but as an industry trying to get people out of their privately-owned vehicles, it is better.

Pam Cooley, Executive Director of the Carsharing Association, adds, “People have to be mobile and they will pay for each trip, (unless they walk) and they start considering options for that trip. Public transit is absolutely crucial to this conversation. So are the other modes such as riding bikes, taxis or ride hailing and scooter sharing. All of these supplement mass transit and carsharing and makes for a well-rounded shared mobility ecosystem.”

Throughout the shared mobility space, there are a multitude of changes that are reshaping how people move around. When it comes to carsharing, there are signs pointing to the resurgence of carsharing in cities. Carsharing will evolve and be better equipped to meet people’s needs.

Shift in Cities’ Temperament

One reason that is often cited in the demise of carsharing companies is the difficulty of securing the parking and permits it needs to provide widespread availability. This may be due to prohibitive costs and fees, political obstacles, and general NIMBYism from local residents. With the recent closure of ShareNow, cities like Toronto and Calgary are re-evaluating their rules and regulations around carsharing to encourage a return of such services. Insurance regulators are also changing their policies to enable individuals to share their own cars to a network of users, also known as peer-to-peer carsharing.

Cities are also experiencing the impact carsharing can have on familiarizing people with electric vehicles. In Europe, 25% of carsharing providers offer completely electric fleets. This gives consumers the opportunity to experience how EVs drive and hopefully overcome preconceived notions they have about them. This is also an opportunity for cities to set incentives for incoming carsharing operators to adopt EV vehicles while building up EV infrastructure in parallel.

Most recently, the pandemic has forced cities to rethink how people need space to move around. On many blocks, physical distancing is impossible with the current sidewalk widths. Roads take up a large portion of street space, even though it does not have a high carrying capacity of vehicles. Combined with the right incentives, cities can encourage better transportation choices.

Pam Cooley of the Carsharing Association adds, “The key for operators is to build a good working relationship with the city, to become a resource, and be part of the mobility infrastructure. This is the time to highlight the benefits of carsharing, especially in the creative response to COVID-19. Carsharing organizations have been innovative and flexible with technology and created an environment where carsharing can do more.

The reality is that many people will be facing more financial hardships due to COVID-19 and if there is a carsharing organization in the city, the costs of owning a car does not need to be a necessary part of household spending and yet, they can still have car mobility.”

Carsharing gives users access to a vehicle without having to own one. If driving daily becomes a hassle or if people choose to work from home more, the cost of owning a car will start to outweigh the benefits.

More Niche Applications

Research has shown that carsharing was not adopted by the masses because of a “lack of compatibility with their own concrete consumption situation” (Hahn et al, 2019). This means the services were not specific enough to meet consumer needs. While this is addressed better with more mobility options, carsharing services need to nail down the value they bring to address specific mobility needs.

Erin Sullivan, ShareNow’s former Regional Director of Sales – North America, shares some insights. She says, “The recent closures highlight carsharing’s financial complexities. We have learned that successful sharing ventures underscore value on local knowledge to make the best operational decisions and are more content to grow slowly. Organizations who are not OEMs may be best equipped to operate car sharing services. In addition, citizens of dense urban areas also have a thirst for mobility options and a great tolerance for start-ups.”

Is it possible to understand and tailor your service to the local mobility culture at a global scale? The need for having a focused service offer is a stark contrast to the desire of ambitious operators to expand globally. According to Susan Shaheen, “What you see with the companies that have been at this for a longer time is maybe a little bit less experimentation, and being a little bit more cautious about investments into new marketplaces, kind of a slow and steady growth model.” This underscores a more strategic, selective approach that can be seen in long standing carsharing services.

cambio, for example, has been providing shared cars to users in Germany and Belgium for over 20 years. Communauto has been around since the 1990s and has expanded throughout the years from Canada to France. Neither of these operations are the largest on a global scale, but they have been able to provide reliable, consistent service to their loyal membership base. Similarly, companies like Envoy that focus on operating carsharing for apartments, hotels, and workplaces could emerge with more targeted applications.

More Pilots and Market Entry from Large Players

In the University of California Berkeley’s latest carsharing report, 34.1% of carsharing fleets deployed are run by automakers like Daimler. In addition, 44.9% of carsharing fleets are run by car rental companies like Avis. Note: these numbers do not reflect changes that have happened since 2018, such as General Motors’ shutting down Maven and ShareNow exiting North America and focusing just on Europe.

Nonetheless, it is not too late for big companies to innovate from their traditional space. However, it is not enough for large corporations to just invest in mobility start-ups. Economies are changing, and while pilots can be a risky investment, it is necessary to plan for the future of mobility, not just the current state. For example, Renault continues to expand their carsharing service and Volvo is growing their carsharing presence with M, a smart carsharing service.

According to Pam Cooley of the Carsharing Association, “There is an opportunity in carsharing for cities and the residents from every aspect. Carsharing has been proven to reduce vehicle ownership, vehicle miles travelled, and greenhouse gas emissions. Carsharing also increases equity and decreases congestion, all of which are critical as cities continue to grow and meet their mobility goals.”

Erin Sullivan from ShareNow adds, “The last ten years of experience in North America’s largest cities has taught us that, like all positive change, the sharing economy will face setbacks while it finds its footing and gains momentum.

After ShareNow’s exodus from the North American market, I’ve been frequently asked what the closures mean for a long-term mobility strategy in North America. My answer has always been that, as a society we may have forgotten that real change and disruption take time and investment, trial and error. I am confident that the future will see fleets of autonomous vehicles enter the mobility landscape, it’s just a matter of when and by whom. And until then, cities will welcome carshare operators with open and more educated arms.”

What’s Next in Carsharing?

Undeniably, there is a gap left with carsharing, either with underserved areas, lack of availability, or being absent from urban cities entirely. The question remains as to how it will be filled, by who, and when. Think it’s you? Learn more about our carsharing solution.