Car Sharing in Europe Business Models, National Variations and Upcoming Disruptions
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 eer to peer car s aring u lic DriveNow and car2go are already estab- transport
lished, not only in major cities in Germany, i an e ra e e but all across Europe, the US, and Asia. tationar While smaller cities and regional areas car s aring 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 Bic cle car s aring a i worldwide decline by more than half a million cars by 2021, due to the strong o o ig presence of car sharing providers. This e i i i development is a global phenomenon that ource Monitor Deloitte anal sis and e pert inter ie s
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 u ine o e ea ure sharing has fixed stations and (usually) age area o ehi e ehi e pe ri ing ar ing o opera ion provides only round trips with the start 2 2 2 2 and end points being the same. The use City center Small/city cars By time Parking permits case is therefore more for longer trips and is likely to replace rental cars or (second) car ownership. What stationary Broader city area Compact cars By distance Commercial providers may lack in flexibility, they make up for in fleet variety in terms of brands and models, catering for every Regional SUVs & MPVs Fixed prices Private need. Stationary car sharing providers are located in small to medium-sized cities and rural regions. Utilization is higher due to longer drives and well-planned car FF = Free floating | S = Stationary | P2P = Peer-to-peer Applicable utilization, while turnover is lower than for Source: Monitor Deloitte analysis and expert interviews free-floating (45 users/car, Germany).
3 Car Sharing in Europe | Business Models, National Variations and Upcoming Disruptions
Stationary providers are often locally The P2P market is relatively dynamic, •• Insurance: good insurance policy for organized and do not operate on a large/ with new players emerging frequently car owners to answer concerns about global level - one exception is Flinkster and with respect to investment activities lending by Deutsche Bahn Rent. Many stationary by financial investors. For instance, drivy •• Community: establishment of trust providers are backed by public funding and Tamyca have been backed by venture between lender and driver or private investors, rather than OEMs capital funds over the course of various or car rental businesses. Success is financing rounds. While free-floating Specific car sharing characteristics for often attached to regional particularities and stationary car sharing can show individual European countries that are based on strong local market some global players, most P2P providers Car sharing is successful not only in knowledge and an understanding of operate in only one country, e.g. drivy in Germany, but also in other European customer needs. They often rely heavily France, Turo in the US and iCarsclub in countries, with different characteristics on cooperation with other providers to Singapore. in each one. Europe has seen a positive expand their network and for instance development of car sharing in terms of also extend their offerings to free-floating. In order to be successful, stationary number of cars and number of users in While most OEMs are invested in free- providers need to consider the following the past. At present, Europe accounts floating car sharing, Volkswagen invested success factors: for about 50% of the global car sharing in stationary car sharing by taking over market and is expected to grow further to 60% of Greenwheels. •• Technology: state-of-the-art platform 15m users by 2020 (Fig. 3). and telematics to ensure ease of use In order to be successful, stationary •• Availability: large and diverse network providers need to consider the following to ensure best fit for customers success factors: everywhere
•• Location: smaller and medium-sized cities, rural areas ig Car haring ar e e e op en or Europe •• Availability: large network of stations, including at central hubs (e.g. train cars in users in mn stations)
•• Pricing: based on distance, or hourly rates 5 6 •• Fleet: variety for different purposes
Peer-to-peer car sharing Initially only a niche market, P2P car sharing is on the rise. While vehicles for free-floating and stationary car sharing 5 are made available by providers, P2P car sharing offers vehicles belonging to private 2 2 individuals to a specific user community. 7 Players provide a platform to handle the 2 3 6 transaction, offer insurance, and equip the car with telematics devices to ensure e e e easy access. The car needs to be returned Users ars orecast to the pick-up area, and can thus only be used for round trips. Given the decentral- ountries in urope erman , U , rance, tal , it erland, ustria, Net erlands, eden, pain, Belgium, ized fleet, customers have more variety Nor a , Denmar , eden in terms of brands and models. Pricing ources Monitor Deloitte anal sis, ased on Bundes er and ar aring, ars aring ssociation , (e.g. drivy) is based on a daily tariff, and e uropean utomo ile Manu acturers ssociation , U Ber ele , rost ulli an provides a good alternative to stationary car sharing or rental cars.
4 Car Sharing in Europe | Business Models, National Variations and Upcoming Disruptions
The list of car sharing providers that are considered a global player, but is active active across Europe is long. While most mainly in the US. Flinkster is one of the few players operate in only one country, some stationary providers that can be found in car sharing providers are active in more a few other European countries besides than one place. Free-floating providers Germany. Inevitably, there are some signif- such as DriveNow and car2go are present icant differences and specifics between in various European countries, while the the individual countries – the most signif- latter, for instance, also has operations icant ones can be found in the following in the USA, Canada, and Asia. Zipcar is snapshots:
ig European ar haring an ape
S an ina ia regu a e no par ing in on on inno a or
London – UK’s center for car sharing, but focus n ironmental consciousness, inno ation, and started to s i t to ot er regions ondon ants openness to ne t ings are promising conditions ~0.6m car sharing users by 2020 to reduce traffic for car sharing. However, constraints stifle its and par ing pro lems success in candina ian countries
ar ing par ing permits in ondon are eograph free floating providers operate biggest obstacle for free floating providers. onl in ig cities Besides toc olm, ll oroug s need to e approac ed open agen, and slo, remaining popu indi iduall or permits lation is spread idel across t e countries
o u ion intended reduction in num er egu a ion ig sustaina ilit regulations o cars to limit estimated cost o ic also place importance on good pollution o n ear one o t e most lo ism e g eden plans to a e polluted cities in t e orld electric car s aring
o i i Uber or Gett, as well as P2P car Co pe i ion gas station pro iders s aring li e ipcar and carpooling li e (e.g. Statoil) offer short term rental at fair BlaBla ar, are ecoming more success ul prices. Also difficult for external providers outside o ondon to cater for specific needs
ran e oo in er an Europe igge ar e
Most success ul mar et or car s aring in it m users, pro iders and , cars urope comprises o car s aring it at t e eginning o , erman is ar t e m users uccess ul pro iders li e dri are iggest car s aring mar et in urope, and still e panding outside o rance e pected to gro a igopo an o a a o ia ion eograph mostl in ig cities Bollor eograph man ig cities t at are is mar et leader it autoli aris , enerall a a ora le mar et it m users suitable for free floating and densely Bluel on Bluecu Bordeau Both free floating and stationary models are populated medium si ed cities it good successful in different cities. Uncertain market conditions or stationar models gro t , gi en t e ig saturation egu a ion strict regulations all ree egu a ion aut orities open to colla floating vehicles must be electric or eograph Milan is center for free float- orations par ing permits or spaces rid en criteria are met, eas access ing it o t e mar et, e g ist and trict regulations in ta i industr ma e it to par ing spaces are n go ar go and n o also operate difficult for concepts like Uber in lorence, ome, and urin e or car s aring, especiall , Cu o er a erage car s aring user outside aris is mainl organi ed o ia ion stationar car s aring as wants flexibility and is willing to pay for it. seau citi consolidation o car pre iousl organi ed local associations eatures male, ears, ig income s aring pro iders in o er renc cities t e e isting pro iders, still and good education elong to a pu lic consortium
o i i bike sharing is profitable market especiall in Milan , i es it >280 pick-up stations. BikeMi offers tradi- tional and electric i es
ources Monitor Deloitte anal sis, mainl ased on e pert inter ie s and ars aring ssociation , rost ulli an, Bundes er and ar aring, Bi eMi
5 Car Sharing in Europe | Business Models, National Variations and Upcoming Disruptions
Technology will revolutionize and Paris are obliged to offer a fully electric Car sharing as an accelerator for disrupt the car sharing market or hybrid fleet. In order to make ‘zero automotive players Strong smartphone penetration has so emission’ a quintessential component Facing these trends, OEMs can use far been, and will continue to be, a key of the new mobility movement, some car sharing as an important strategic enabler for the growth of the car sharing hurdles certainly still need to be taken, investment opportunity, especially to market, but technological advances will for instance the installation of nationwide ensure sufficient customer touchpoints, unfold further. Electric cars, autonomous networks of charging stations and appro- but providers as well as investors need driving, route optimization technology, priate regulations. to be aware that the various car sharing and car-to-car communication will change business models are very distinctive with the way customers use cars, and how Autonomous driving specific success factors. Free-floating for OEMs choose their strategies and market Converging social and technological example requires a different approach their products and additional, supporting trends, from shifting consumer prefer- to stationary car sharing, and the same services. The future will further transform ences to the emergence of autonomous applies to P2P. Furthermore, success at from automobiles to automobility, which vehicles, will shape the way in which both the local and global level depends on will unleash new levels of convenience and people move from one place to the next. the extent to which country specifics such efficiency for all road users by promoting This future state of mobility is determined as regulations and customer preferences the relationship between cars, infrastruc- first of all by the extent to which cars are are taken into account. ture, and users. It will be those automotive personally owned or shared, and secondly trends and technological innovations, in by the extent to which autonomous OEMs have an opportunity to make particular electric cars and autonomous vehicle technologies become pervasive. car sharing an even more attractive driving, with OEMs at the center, which will Such a new era of accessible autonomy market and to be pioneers. Technolog- catapult the car sharing market from the would combine the car sharing movement ical advances for future mobility will current to the future state. with autonomous driving, two concepts further underpin the importance of car which impact each other. sharing as a new mobility concept. Car Electromobility sharing is predestined for the implemen- Electromobility is essential to future While traditional car sharing is mainly tation of trends such as e-mobility and energy concepts, and indispensable to present in urban areas, autonomous autonomous driving, and can therefore be emerging smart and resource-friendly shared vehicles could spread the offerings a key enabler to significantly increase the lifestyle seekers. Electric cars and car also to densely populated suburbs and acceptance of future mobility concepts sharing are considered a very suitable extend the potential customer base among the population. And although symbiosis. They enable OEMs not only to significantly. A study shows that 68% of car sharing may not provide the highest test and promote their own vehicles, but users would try autonomous driving when returns, the added value for OEMs is also to give their (potential) customers using car sharing. This poses a unique significant and should not be disregarded. an understanding of the particularities opportunity for OEMs to test this new of electric cars. Car sharing providers technology under market conditions and Car sharing provides OEMs with additional currently offer 1,750 electric cars in to penetrate the market. Existing (local) touchpoints with customers. Consumers Germany, which fulfill particular use cases car sharing providers have a competitive are open to new mobility concepts and - this number is expected to grow signifi- advantage over potential new entrants, as will strongly influence developments in cantly. Various car sharing providers, as they have local knowledge and networks the mobility and car sharing sectors. Car well as most of those backed by OEMs, – two factors that are indispensable when sharing allows OEMs to ensure direct are operating partially or fully electric it comes to operating shared mobility access to the end-customer and to fleets. Competition is growing, since systems. To counteract the strong financial provide a foothold in the new service- corporates outside of the automotive backing of new entrants or OEM-backed driven mobility area. In addition, OEMs sector have tried recently to seize a car sharing providers, established (local) can gain access to new customer groups share of the market and bring car sharing players need to secure financial investors who otherwise would not consider the to the next ‘zero emissions’ level, e.g. in good time. respective brand when purchasing a BeeZero by Linde Hydrogen Concepts. new vehicle. Private as well as corporate Similar developments can be observed in customers can get to know the partic- other European countries. For example, ularities of current as well as future Italy is strongly involved, with some car mobility. Looking ahead, for instance sharing fleets being completely electric, towards autonomous driving, this will and free-floating car sharing providers in change the exposure to car sharing.
6 Car Sharing in Europe | Business Models, National Variations and Upcoming Disruptions
Customers will experience a new level of Your Contacts customer involvement, by being able to call for and almost instantly be picked up by a car sharing vehicle. This in turn will ensure a much higher utilization rate for car sharing providers, as well as lower operating costs due to fewer required parking spaces. In exchange, OEMs have a representative platform to market and test their innovative vehicles and as above technology. Such ‘paid test drives’ are an additional channel for OEMs to use Dr Thomas Schiller Julia Scheidl customer insights for further research and Leader Automotive Germany Senior Consultant development. Tel: +49 (0)89 29036 7836 Monitor Deloitte [email protected] Tel: +49 (0)89 29036 8148 The vision of OEMs should be to position [email protected] themselves as preferred partners for existing as well as new mobility concepts. For additional information, please visit our Thus OEMs are well advised to rapidly website www.monitor-deloitte.de anticipate and cater for requirements in order to be competitive in offering ultimate mobility solutions, and should therefore actively respond to partner- ships with adjacent sectors. Cooperation determines the mobility sector to a great extent. Traditional mobility providers will Thomas Pottebaum experience a self-evident exposure of Senior Manager customers towards mobility, if they have Monitor Deloitte not already. Ease-of-use will be a key Tel: +49 (0)89 29036 7952 success factor for car sharing providers, [email protected] which will result in the development of intelligent mobility solutions. In this context, new market entrants will emerge and lay the path for cooperation. OEMs need to cooperate with other mobility stakeholders and form networks to ensure the development of innovative concepts and take car sharing to the next level. This also highlights the fact that future business models of OEMs will move from being solely hardware suppliers to becoming solution providers. Or bluntly speaking: Uber yourself before you get Kodak’ed!
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Issued 6/2017