WORLD WRI ROSS CENTER FOR RESOURCES SUSTAINABLE INSTITUTE CITIES CARSHARING A Vehicle for Sustainable Mobility in Emerging Markets? WRICITIES.ORG Carsharing: A Vehicle For Sustainable Mobility In Emerging Markets? i CLAYTON LANE HESHUANG ZENG CHHAVI DHINGRA AILEEN CARRIGAN This report was made possible through funding from Shell Foundation, Stephen M. Ross Philanthropies, and Volkswagen Group Research. Design and layout by: Julie Moretti [email protected] TABLE OF CONTENTS 1 Foreword 3 Executive Summary 7 Introduction 13 Methodology 21 Current Status of Carsharing in Emerging Markets 35 Social and Environmental Impact 41 Barriers and Opportunities 47 Potential Markets 51 Operational Models 59 Conclusion 63 References 67 Endnotes 69 Acknowledgments iv WRICities.org FOREWORD Cities have the potential to become powerful engines Carsharing has the potential to increase carless of social and environmental progress, lifting households’ mobility and access to goods, services, hundreds of millions of people out of poverty and and opportunities and, in some markets, it might ensuring the sustainability of our planet. But rapid even delay the decision to purchase a car. If urbanization also poses substantial challenges. carsharing takes root in emerging markets before Poorly planned, sprawling cities can threaten car ownership becomes ubiquitous, households quality of life, worsen pollution and public health, might opt to share a car instead of owning one. and undermine efforts to sustain economic growth. Their need for occasional auto use will be satisfied Perhaps no trend accelerates these challenges while they primarily rely on walking, biking, more than rapid motorization—advancing personal and public transit for day-to-day mobility. In this mobility, but threatening virtually every measure of way, carsharing could be an effective element of sustainability, from road safety to climate stability. a sustainable transportation system in emerging markets. Carsharing can provide a powerful mobility alternative for emerging markets, where the pace However, the success of carsharing in emerging of urbanization and motorization is highest. markets faces serious obstacles. Many people in The carsharing concept is simple: individuals the growing middle class aspire to own a car, while gain the benefits of car use without the costs cities are plagued by acute congestion and lack of and responsibilities of ownership. Carsharing available or adequately regulated parking. And cities can increase mobility and access, even while are increasingly imposing restrictions and economic reducing vehicle-kilometers traveled and negative disincentives on the purchase and use of vehicles, environmental impacts of driving. including shared vehicles, to address growing congestion, pollution, and accidents. While well established in developed countries, carsharing is nascent in emerging markets. The Despite these obstacles, recent growth of potential of carsharing here could be very large, but carsharing in India and China has far outpaced little is known about its markets, viability, or social their predecessors in established markets of the and environmental impacts. United States and Europe. This suggests that there are carsharing markets ripe for development if WRI seeks to fill this knowledge gap. We have stakeholders can minimize barriers. completed the first comprehensive study of carsharing in emerging markets. To develop an Sustainable cities are fundamentally dependent on initial understanding of the feasibility of carsharing sustainable transportation. Innovative businesses, in these cities, we reviewed existing literature governments, and academics could use WRI’s findings and interviewed mobility experts and carsharing to further support and cultivate carsharing, ensuring operators. Focus groups with targeted communities it becomes an important part of urban transport in Hangzhou, China and Bangalore, India revealed systems in rapidly urbanizing emerging markets. perceptions of carsharing. And a global scan of the industry inventoried carsharing operations in emerging markets over time. The carsharing industry in emerging markets is expanding quickly. In the past year, carsharing was introduced in 19 cities. This year nearly 898,000 Andrew Steer members will share more than 9,200 vehicles across President and CEO 41 cities in emerging markets. World Resources Institute Carsharing: A Vehicle For Sustainable Mobility In Emerging Markets? 1 2 WRICities.org EXECUTIVE SUMMARY Modern carsharing has experienced rapid growth since it was introduced in Switzerland in 1987 (Millard-Ball et al. 2005). Today, over 4.8 million members share more than 104,000 vehicles worldwide (Shaheen 2015). With large corporations entering the industry during the last decade, the scale and variety of carsharing programs/services have grown exponentially.1 Despite global growth of the industry, only a small number of carsharing services operate in emerging markets.2 About 78 percent of the world’s urban population lives in Africa, Asia, and Latin America and the Caribbean, but these regions accounted for only 20 percent of global carsharing membership in 2014 (UN 2015; Shaheen 2015). Because of the limited history of carsharing in less developed countries, little is known about this transport mode’s business viability or social and environmental impacts. Carsharing: A Vehicle For Sustainable Mobility In Emerging Markets? 3 Carsharing might catalyze auto driving in coun- bers sharing more than 3,400 vehicles. Recent tries with very low car ownership, by lowering the start-ups show rapid growth, faster than their barrier to access; or it might decrease future auto predecessors in established markets, suggesting driving by providing an effective alternative to car the existence of a ready market if operational ownership before motorization has run its course. barriers can be tackled. This research develops an initial under- Carsharing has the potential to increase ▪ standing of the feasibility of carsharing as mobility and access to goods, a sustainable mobility option in emerging services, and opportunities for carless markets.3 The research develops this understand- households, (Shaheen and Cohen 2007; ing through literature reviews; interviews with Cervero 2003, 2007; Lane 2005). It also has mobility experts and carsharing operators (CSOs); the potential to delay or replace car purchase longitudinal industry scans of where carsharing is plans in Hangzhou and to a lesser extent in active in emerging markets; and focus-group dis- Bangalore. In the focus groups conducted cussions with targeted communities in Hangzhou, by WRI in October 2012, about 48 percent China and Bangalore, India. This research seeks to of participants in Hangzhou said they would gain initial insights into the following questions: consider delaying or forgoing car purchase plans if carsharing were conveniently available. 1. What is the current status of the industry in In Bangalore, the level was around 30 percent. emerging markets? The authors hypothesize that carsharing might increase auto driving when first introduced, 2. What are the main barriers to and because predominantly carless households gain opportunities for implementation? affordable access to cars; but decrease auto driving in the long term because a significant 3. What are the potential markets? portion of members stay with the service and delay or eliminate car purchase plans. 4. How should carsharing systems be designed in these markets? The target demographic in emerging ▪ 5. What might be the societal and markets seems to be similar to environmental impacts? demographics in mature markets: well-educated, mostly carless, middle- income, young to middle-aged, urban By developing preliminary insights about these residents. However, differences in market important aspects of carsharing, WRI aims to interest between Hangzhou (high interest) inform academics, entrepreneurs, operators, and, and Bangalore (medium interest) suggest to a lesser extent, policymakers, about the percep- that market readiness varies widely, possibly tions, opportunities, challenges, and potential in relation to income and the availability impact of carsharing in emerging markets. of attractive transport alternatives such as chauffeur-driven cars, motorized two-wheelers, Key research findings yield initial insights that auto-rickshaws, and taxis. include: Carsharing as a form of shared mobility ▪ faces major barriers in some emerging The carsharing industry in emerging ▪ markets is small but expanding quickly markets—such as aspiration to personal in 2015, with at least 22 start-ups operat- car ownership; severe road congestion and associated driving stresses; insufficient ing more than 9,200 vehicles in Brazil, China, complementary walk, bike, and transit India, Malaysia, Mexico, South Africa, and Tur- systems; easily available, affordable labor to key, serving nearly 898,000 members.4 These act as personal chauffeurs (India); potential figures are up dramatically from mid-2014, competition from well-established informal when the authors estimated 141,200 mem- 4 WRICities.org and intermediate public transport modes like ing in emerging markets might also be keys to auto-rickshaws and taxis;5 limited available the success of carsharing programs. In focus and adequately regulated on-street parking; groups, prospective members express interest vehicle registration or use restrictions that limit in one-way service, vehicles with drivers, con- expansion (China); and