What’s Ahead for Car Sharing? The New Mobility and Its Impact on Vehicle Sales

Car Sharing Will Keep Growing, but It Will Not Disrupt the Automotive Industry

While the Growth of Car Sharing Will Create New Opportunities for Incumbents and New Players, It Will Reduce New-Vehicle Sales by Only 1%, Says a New Report from BCG

Boston--Car sharing is taking hold in large urban areas in both mature and emerging markets, growing rapidly in areas that clear certain social, economic, and demographic thresholds. In Germany, for example, some 140 different car-sharing services are in operation, controlling a car-sharing fleet that has grown from about 1,000 vehicles in 2001 to more than 15,400 today—about 50% of the total European fleet—with most of the growth coming since 2011. The customer base has grown from a handful of early adopters in 2001 to more than 1 million, again with a sharp increase since 2011, according to a new report from The Boston Consulting Group (BCG). The report, titled What’s Ahead for Car Sharing? The New Mobility and Its Impact on Vehicle Sales, is being released today.

Today, the largest market is the Asia-Pacific region, with 2.3 million users and 33,000 vehicles, although Europe boasts the largest service per capita, with 2.1 million users and 31,000 vehicles. North America follows, with 1.5 million users sharing 22,000 vehicles. Together the three regions account for 2.5 billion booked minutes per year and €650 million in revenues.

Principles of the Sharing Economy

Car sharing works along the principles of the overall sharing economy, addressing the needs of both buyers and sellers by providing value, coverage, and trust. Value in car sharing means enabling users to bypass the up-front investment in a car as well as the greater costs that come with ownership. Coverage refers to the geographical reach of a sharing service, its availability at a given time, and the ease of user access. Availability requires that car-sharing services have relatively large fleets on the road to handle times of peak demand. Participants in car sharing must quickly build the trust necessary for transactions to move forward. In the B2C car-sharing environment, trust is usually established by the brand and reputation of the service provider.

How the Market Will Evolve

Car-sharing services require a critical, concentrated population mass in order to be profitable and practical. BCG has found that in Europe and North America, that means a population of at least 500,000. In Asia-Pacific, by contrast, where per capita incomes are generally lower and the transportation infrastructure is less developed, car sharing will be economically viable in cities with populations of 5 million or more. “Asia-Pacific will nonetheless be the largest market in absolute terms, because of its large and growing population,” said Gang Xu, a BCG partner and a coauthor of the report.

In Europe, about 14 million people will be registered with a car-sharing service by 2021, along with 6 million North Americans and roughly 15 million residents of Asia-Pacific. “These patrons of car-sharing services will generate global revenues of €4.7 billion in 2021, with the bulk of revenues—€3.2 billion—coming from light users who need a car only for occasional trips,” said Marco Gerrits, a BCG partner and another report coauthor. “Europe will be the biggest revenue-generating region, throwing off €2.1 billion, followed by Asia-Pacific, which will account for €1.5 billion, and North America, with €1.1 billion.”

Private Car Ownership Will Remain the Norm

Although BCG’s baseline model suggests that car sharing usage will significantly increase, most consumers will not forgo car ownership.

BCG’s simulation of the impact of car sharing on new-car sales in Asia-Pacific, Europe, and the US suggests that car sharing will decrease purchases by 792,000 vehicles worldwide in 2021—the equivalent of slightly more than 1% of projected unit sales of 78.4 million new cars in markets where sharing is available.

Car-sharing providers will expose new revenue pools and become increasingly relevant to a cohort of mostly younger drivers. But they will not change the overall mobility market. Nonetheless, they will change the mobility business to a significant degree. Now is the time for players in the car-sharing market to prepare for a period of accelerating change.

Center for Digital in Automotive

The publication of What’s Ahead for Car Sharing? The New Mobility and Its Impact on Vehicle Sales marks the launch of the Center for Digital in Automotive (CDA), a collaboration between The Boston Consulting Group and BCG Digital Ventures. The CDA combines BCG's experience in digital strategy, operations, and the automotive and mobility industry with BCG Digital Ventures’ expertise in corporate venturing and digital business building. It partners with companies from the automotive and automotive-related industries around the globe to identify and build new digital business opportunities and address critical challenges of digital innovation across all functions, whether internal or customer facing.

Working with the CDA, companies explore what it means to take a customer-centric approach to design in the digital age. The CDA provides its partners with tangible implementable results and helps them experience, explore, build, and anchor digital strategies and solutions. Its mission is to help its partners achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. To learn more, please visit centerfordigitalinautomotive.com.

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About Boston Consulting Group

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