Car Sharing in Europe Business Models, National Variations and Upcoming Disruptions Dawn of a new era market is committed to offering personal Uber, DriveNow and car2go have experi- Future mobility is a pervasive theme – a convenience and social improvement. enced, and are still experiencing, significant development which is still in its fledgling growth and are unquestionably among stage and has not yet reached its peak by Deloitte’s recent Global Automotive the defining phenomena of our future a long way. Mega-trends, technology-led Consumer study highlighted the fact that mobility as well as the digital era. These innovation, and regulatory conditions Gen Y (those born between 1977 and 1994) providers are changing the way individuals are changing the nature of mobility and desires connectivity and convenience move, by seamlessly connecting either bringing strategic and operational oppor- and can choose from an ever-increasing drivers to passengers (taxi, car pooling) tunities as well as challenges for the range of transportation types, alongside or passengers to cars (car sharing). The various automotive players. The sharing vehicle ownership, for getting from A to B. latter is enabled by technology and covers economy is approaching, while disruptive This 2bn strong consumer segment is the specific segments in the overall mobility technologies inspire the emergence of most influential since the Baby Boomers. market by offering a range of transport new business models and set the course The emerging mobility patterns of (young) modes, from flexible one-way journeys to for a new era of (future) mobility. Car adults are shaping an industry in which planned weekend round-trips. Car sharing sharing is a key aspect of this, and the on-demand service providers such as extends the benefits of automobility to Car Sharing in Europe | Business Models, National Variations and Upcoming Disruptions individuals without them having to bear the varies between individual countries. For variation in usage areas from urban to cost and effort of car ownership. instance, Germany is by far the biggest car regional (Fig. 1). They can be categorized sharing market in Europe, where growth as follows: free-floating and stationary While the sharing economy provides has accelerated since 2012 (0.26m users), B2C and B2B car sharing can be seen as favorable conditions for start-ups and and is expected to keep momentum, the two traditional car sharing models attracts venture capital investors, estab- reaching 3.1m users by 2020. Despite and cater for specific needs. While free- lished players in the automotive industry, this development, some experts do not floating models provide higher flexibility, both OEMs and car rental businesses, predict a decline in car ownership, yet and compete with taxis and new mobility have shown strong interest in gaining a there are differences between urban and providers such as Uber or mytaxi, foothold, particularly in the car sharing regional areas, and Germans in particular stationary models are used for longer sector. The automotive industry has are emotionally connected to their own drives and tend to substitute rental cars gained momentum to become one of the vehicles, and young drivers value powerful or car ownership. Moreover, corporate forerunners by incorporating consumer cars from well-known brands. car sharing users are becoming an trends with technology, while still giving inevitable source of additional business users the unique feeling of driving a The prominent position of car sharing for stationary car sharing providers. B2B car. It is therefore no surprise that the compared to other mobility services car sharing is managed as a closed system automotive industry is closely interlinked can be explained by the broad range of in which employees can access vehicles with future mobility concepts such as car individual car sharing business models on a sharing basis, and is a strong alter- sharing, car pooling, mobility services, and that have emerged over time. These native for corporates to operating their electromobility, as well as other high- cater for a diverse range of customer own fleet. These conventional free-floating quality innovations around digitalization experience, at differentiated price points. and stationary approaches are well estab- and autonomous driving that are on the Apart from price, mobility concepts can lished in countries such as Germany and horizon. be classified by the flexibility offered Italy, while for example in France another to customers as well as the distance model is very prominent: peer-to-peer Car sharing has continuously seen double- travelled, which takes into account the (P2P). This is a model where individuals digit growth over the last few years, especially in bigger cities where more and Fig. 1 – Classification of car sharing among existing mobility concepts more people are passing on the costs of car ownership. Positive knock-on effects include reduced traffic congestion and ig environmental benefits. While some of the most visible car sharing providers began in the United States, the sector ar pooling has become a global phenomenon, and Europe now represents over 50% of the global car sharing market with 5.8m ental car users and 68,000 cars in 2016 (forecast). A global compound annual growth rate of 32% for market revenue is expected by 2020. Well-known providers such as eertopeer car saring ulic DriveNow and car2go are already estab- transport lished, not only in major cities in Germany, iane raee but all across Europe, the US, and Asia. tationar While smaller cities and regional areas car saring are being catered for by more regional providers, there is still considerable room for growth in this market; meanwhile, Free-floating some experts predict a potential Biccle car saring ai worldwide decline by more than half a million cars by 2021, due to the strong o o ig presence of car sharing providers. This eiii development is a global phenomenon that ource Monitor Deloitte analsis and epert interies 2 Car Sharing in Europe | Business Models, National Variations and Upcoming Disruptions provide their own car for rental by private positive prospects for success by meeting for users. The flexible parking policies users via a platform. P2P provides a general success factors, e.g. high avail- require providers to cooperate with local transportation mode for longer distances ability and network coverage, transparent authorities to avoid parking limitations. as compared to traditional car sharing and flexible pricing, as well as fleet In 2014, car2go stopped operations in and corresponds more to an alternative to variety to cater for individual use cases. London after only 18 months, as they were short-term car rental or car pooling. In addition, providers as well as investors not able to secure parking permits in all of need to be aware of the unique success London’s individual boroughs. Distinct car sharing business models factors of each business model (Fig. 2). Car sharing is a very broad term and Many free-floating providers are owned a differentiation with reference to the Free-floating car sharing by OEMs (car2go by Daimler) and/or rental distinct business models is necessary. The fact that most free-floating providers companies (DriveNow, a joint venture They range from free-floating to stationary have been in the market for less than five between BMW and Sixt), who view their and P2P car sharing. Some providers years highlights that this approach is still investment in car sharing as being purely (e.g. stadtmobil in Germany) offer both new; nevertheless, this market is booming. strategic and not for financial reasons. free-floating and stationary models, Free-floating allows customers to pick up They can use this channel to promote their thereby offering the best of both worlds and return the vehicle anywhere within cars and have direct access to customer to their customers. Generally, these three a certain area and demonstrates this insights. business models (free-floating, stationary, model’s main advantage: flexibility. Free- combination) can cater to either B2C or floating cars are mainly used for short In order to be successful, free-floating B2B. In addition, another development can one-way (shopping or other leisure) trips providers need to consider the following be observed in the car sharing market, but in city areas, as an alternative to a taxi. success factors: will not be the focus of this Point of View: German providers have a high turnover O2O platforms consolidate offerings by rate of 125 users/car, so that they can • Location: high population density to providing a link between online and offline, show profitable operations despite low attract sufficient customers per car which enhances convenience and compa- utilization. Compared to stationary car • Pricing: based on time (mostly per rability for users. sharing, free-floating has higher prices minute), not distance that are often based on time only, and Each approach displays particular char- in particular become more expensive in • Cooperation: local authorities have to acteristics when it comes to product case of traffic jams in city areas. Given that grant parking spaces / permits offering, pricing, pick-up and return, coop- operating areas are mainly in city centers, • Convenience: constant availability of eration, as well as ownership structure. most free-floating providers offer small (small) cars that fit needs in city areas While business model features may vary, to medium-sized cars (e.g. Smart, Mini), car sharing providers can guarantee which also ensures relatively easy parking Stationary car sharing Stationary car sharing on the other hand Fig. 2 – High-level classification of distinct business model features can look back on a longer history (>20 years). While free-floating emphasizes flexible one-way trips, stationary car uine oe eaure sharing has fixed stations and (usually) age area o ehie ehie pe riing aring ooperaion provides only round trips with the start FF S 2 FF S 2 FF S 2 FF S 2 and end points being the same.