One of the first industries to be hit hard by the global pandemic and subsequent lockdown was mobility, says Mark Thomas, VP of marketing at Ridecell. Public transportation traffic plummeted 70-90% according to analysts McKinsey, airlines lost billions, ride-hailing services lost up to 70% of their business, and many micro-mobility and carpooling services suspended operations.
With lockdowns extending, many have speculated about how and when mobility, and in particular shared mobility, might recover.
Shared mobility can be divided into two subsets. Ridesharing, or sharing a vehicle at the same time as another person; and carsharing, where the vehicle itself is shared between people, but not at the same time. It’s clear that ridesharing has taken a dramatic downturn during COVID, but we’re seeing something much more interesting when it comes to carsharing. While initially, carsharing experienced a similar dip, it has now surpassed pre-pandemic volumes.
This is true in Europe and North America alike. Companies like GIG in the US expanded to Seattle during the height of COVID, as part of broader growth and expansion. Toyota has been steadily growing its Kinto Share programme, launching a new service in Sweden during the pandemic. Renault, known for its ZITY carshare service, also experienced growth mid-pandemic, expanding operations in Madrid and launching a new service in Paris.
Carsharing is clearly on the rise, but it’s how it’s being used that has changed. Across fleets, vehicles are being driven more and customers are keeping their cars for longer. Customers are increasingly wanting access to shared vehicles as a means for avoiding public transport.
An IBM study showed 20% of public transit users won’t use transit again until after the pandemic is over, and another 20% will use it significantly less. Some of these people will opt to use their own cars more, but others without cars will need short term access to a vehicle.
A new kind of demand
If COVID has taught us anything, it is how quickly demand and use cases can change. Before the pandemic, ridesharing growth was limited by the number of drivers with vehicles, so the hot market for OEMs and dealers was in providing vehicle rentals to Uber and Lyft drivers.
Today, the focus has shifted to moving goods and groceries rather than people. Meeting the needs of Instacart or providing vehicles to Amazon Flex drivers has become the hot new trends driving the market. These shifts have required technology with the flexibility to meet rapidly changing use cases and the ability to reach new customer segments.
The good news is that for original equipment manufacturers (OEMs) and dealers alike, the same technology used for carsharing fleets can be used to solve problems they are facing today with selling and servicing cars. In the age of the pandemic, no-touch services are now expected, but the old test drive processes don’t work like that.
With modern sharing technology, however, customers who want a test drive can download the dealer app, validate their driver’s licence and credit card, and then schedule the test drive. When they get to the car, they unlock it using the app on their phone and take it for a drive, without needing to talk to a salesperson or share the vehicle with someone. Dealers can offer creative solutions, such as configuring the service for 20 minute free rides or for paid longer test drives and apply the cost of the trip to the purchase price should the customer decide to buy the vehicle.
OEMs are also seeing more demand from a new customer category the short-term vehicle customer. New use cases have OEMs considering how they simplify the process to get customers into vehicles on a subscription basis or in month-to-month, all-inclusive lease plans.
There is an increasing number of people who want dedicated access to a vehicle right now but aren’t sure how that might change when things return to a more normal state. Buying a vehicle or even a lease implies a commitment for years. This new class of prospective customers want a vehicle for months and is intrigued by the simplicity of not needing to acquire insurance, manage maintenance, or subscribe to an emergency services club separately.
Challenges to overcome
While technology exists to support this new focus on shared mobility, some obstacles remain. Regulation is the biggest hurdle. Cities, especially in the US, have been reluctant to advance shared mobility by being slow to make changes everything from providing more parking for shared vehicles, to removing street parking for more loading and unloading zones for ridesharing or making permits available for bike and scooter docks.
Consumer preference can sometimes prove to be an obstacle as well. Interestingly, car owners have traditionally been the most vocal opponents to anything that would cause them inconvenience, especially anything that would prevent them from having easy access to parking.
COVID has opened up new ways of thinking as cities have been forced to make transportation changes. Streets have been closed to make way for more pedestrian and non-vehicle traffic. Street parking has been removed for restaurants to open outdoors.
These shifts have been well received, and the tide may just be turning away from holding private driving and parking as the birthright of all citizens. As new behaviours become acceptable and transportation changes become the status quo, we’ll start to see cities increasingly embrace the proliferation of shared mobility services as safe and clean alternatives to driving.
The path to profitability
The early days of shared mobility, where it was enough to just get a fleet of vehicles, bikes, scooters and show service usage, have long past. Now it’s about establishing a shared mobility service that has profitability baked in. We call this high yield mobility. The hallmark of high yield mobility is not just about creating a compelling service but also building operational efficiency and multiple uses for the fleet from the beginning.
To keep operational costs down, companies need a platform to manage when and how the vehicles are moved, where they are parked, and how efficiently they are cleaned. For example, rather than spend $20 (€16) to have the vehicle moved to avoid a street cleaning fee, a company can use dynamic pricing to offer that vehicle on sale and encourage customers to choose that particular vehicle for their next ride.
Fleets today need to have the flexibility to power multiple different kinds of businesses. Each business has a peak demand curve. If you can stack the demand curves, you get a business that has far more usage, revenue, and, eventually, profit.
Electric fleets are a long-term option to driving costs down in mobility services. ZITY, for example, is an all-electric fleet in Europe. Fleet owners have reported the cost of operating an electric vehicle to be half or even more of the cost of an internal combustion engine (ICE) vehicle. Fleet providers can take responsibility to charge vehicles in centralised charging depots, and also clean and inspect the vehicles while they are there.
For shared mobility, the path to profitability, sustainability, and long-term growth may feel a bit winding. If the pandemic has taught us anything, it is that alternatives to transportation are in high demand and customers still want but are dictating a new kind of shared experience. Companies who work now to address these shifting trends will find they are primed to lead a new era for mobility.
The author is Mark Thomas, VP of marketing at Ridecell.
About the author
The author, Mark Thomas is the VP of Marketing at Ridecell, a platform for launching, operating and scaling new car and ride-sharing mobility services. Prior to joining Ridecell, Mark headed the connected car marketing team at Cisco Jasper, where he developed the product and go-to-market strategies for automotive OEMs. Prior to Cisco, Mark led product marketing at HERE, an automotive maps company. In addition, Mark has served in marketing, strategy, and business development roles at Apple and Nokia.