Sharing is the new buying. Increasing costs (maintenance, insurances) of owning expensive goods might push consumers towards choosing to share these items and participate in the emerging sharing economy (The Economist, 2013). This shift in consumer behaviour is especially seen in the car industry. In 2006 the number of vehicles in the global car sharing market was 11,500. In 8 years, this amount grew with about 800% to a total number of 92,200 (Statista, 2016). Ever since the emerge of car sharing, many companies were found and saw big opportunities.
One of the most popular and largest car sharing companies worldwide is Car2Go, with over one million customers (PR Newswire, 2014). They are currently operating in nine countries. Their business model is quite simple. As a consumer, you have to register at their website and visit one of their offices once to validate your driver license. Afterwards you download the app, which allows you to see and book all available cars in the city (Car2Go, 2016). With a card you will receive at the office, you can open the cars and start the engine. When the customer arrives at his destination, the car can be parked at any public parking lot and you stop the use of it by using your card again. You pay a fixed price per minute, which remains the same, regardless the time.
In my opinion, the biggest advantage of companies like Car2Go, is the fact you don’t have to own a car by yourself anymore. Particularly for people that don’t often use a car, it’s a much cheaper solution. Another advantage is the expected decrease in carbon dioxide emission. People that exchange their own car for a car sharing solution, are likely to have a lower emission (The Financialist, 2015). In the long-term, in my opinion it might even result in a lower car production rate, although no clear statistics and facts are published about this statement.
Although car sharing could save people money, the reason of availability might withhold them of doing it. Common complaint is a shortage of available cars nearby (Autoweek, 2014). To solve this problem, the number of cars should be increased. Matter of course, this can only be done when the number of paying customers also increases. The causality between these two is a hard one.
I would recommend Car2Go to raise brand awareness and demonstrate consumers the possibilities with car sharing. Before they invest in new cars, they should make sure these cars will be used enough to make it profitable.
I am interested in your opinions in the opportunities for Car2Go and other car sharing companies. What do you think is the best way for these companies to grow? Should their (information) strategy be improved?
AutoWeek. (2014). Car Sharing nog niet echt populair. Retrieved 2016, from http://www.autoweek.nl/nieuws/car-sharing-nog-niet-erg-populair/
Car2Go. (2016). Hop in and Drive. Retrieved 2016, from https://www.car2go.com/NL/en/#82523
PR Newswire. (2014). Car2go Reaches 1,000,000 Members, Marking Its Spot As The Largest Carsharing Company In The World. Retrieved 2016, from http://www.prnewswire.com/news-releases/car2go-reaches-1000000-members-marking-its-spot-as-the-largest-carsharing-company-in-the-world-300007578.html
Statista. (2016). Car sharing: Number of vehicles worldwide 2006-2014. Retrieved 2016, from https://www.statista.com/statistics/415322/car-sharing-number-of-vehicles-worlwide/
The Economist. (2013). The Rise of the Sharing Economy. Retrieved 2016, from http://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy
The Financialist. (2015). Sharing is the new Buying. Retrieved 2016, from https://www.thefinancialist.com/sharing-is-the-new-buying/
Definitely an interesting topic you address in your blog. I do share the view that sharing becomes increasingly important into today’s society. Of course, the rise of IT is facilitating this, but also changing consumer behavior is an important hub in this. As you mentioned yourself, sharing becomes the new norm when dealing with expensive goods that require a certain capital to obtain. Carsharing is one, but other large, well-knowns platforms as AirBnB and Uber prove to be examples of this trend as well.
I think it is important to draw a clear line between the goods that are suitable for sharing and goods that are not. The upmost crucial aspect in this is the acquisition costs of the good. If this amount is too low, people do not have an incentive to share these goods since they can easily be obtained by everyone. Roughly said, goods need to be expensive in order to be appropriate for sharing. So until now, I totally agree with you.
There is only one aspect that I found interesting to share with you; the element that draw my attention to your blog. That is regarding the seemingly logical perception that car sharing positively affects the decline of CO2 emissions. Although one may think, and this is definitely backed up by data and other findings, that the car sharing industry is green and has an positive effect on consumer behavior. However, this is not always the case. I read an article regarding the ripple effect related to the sharing industry and in particular the car sharing industry. The ripple effect means that a single action has an effect over several different entities. You mentioned yourself that carsharing is also cost-effective; you save money since you don’t need the capital to buy a car yourself. The ripple effect of this is, however, that an user of the carsharing service could use the saved money to buy a ticket and fly to Spain to enjoy a holiday. By doing so, he or she would have an higher CO2 emission that he or she would when not using the carsharing service, but instead, used the train for traveling.
Interesting to look at it this way, don’t you think?
Enjoy your weekend,
Michiel Steendam
That’s an interesting post, thank you!
I agree with you that one of the toughest parts about making Carsharing widely used has to two with the network effects. As you said, if the number of available cars can be increased, this will likely also increase the number of customers using those cars, because a higher density of cars will improve convenience and therfore the value of the service. One could also say that a certain “critical mass” is necessary for the system to work.
What I would like to point out is the following fundamental problem that evolves from this necessity: increasing the number of cars constitutes an enormous investment for the service provider (in this case car2go). Setting up a sufficiently large fleet in many major cities already required lots of capital – further increasing the number of cars can in the longterm only be possible if the service becomes profitable.
The company Uber, although operating with a different business model, faces a very similar challenge: for their system to work, a sufficiently large number of drivers must be willing to work for Uber before the system is of any use for the customer. To tackle the issue, Uber invested immense amounts of money in acquiring drivers “to get the system started”.
I’m really curious how companies like car2go and Uber will handle this problem and how it will affect their future development.
Hello Michael, thank you for posting this blog.
First of all, I have always been very interested in this topic. I believe that in the coming decades ownership of most items will evade. In the future there will be less work and this means that there will be less money to spend as well. That is when the real sharing economy starts. A car for example is a very expensive product and could be easily shared with others. If there are enough cars to be shared of course. As you described in your blog more and more cars are being rented the last few years. I believe this will increase much more. I also believe that when self driving cars reach the mainstream market, sharing cars will even become more popular. If all cars can bring you anywhere without even having to drive them yourself, there is no need to buy one if you could just order one and select a pick up time.
Another advantage of sharing cars is that when everybody shares cars, there will be less cars totally. This means that there is no need to produce a car for one person, if they can share it with for example 5 persons. This will result in using less material and will help with making the world a better place. Also if you think about self riding cars and ordering these cars. If uber or car2go would develop a smart system, they could probably could also think of ways of lowering CO2 emission. Problem with electric cars nowadays is that they run out of battery quick. If one central system knows the ‘car-reservations’, they could charge the cars before and this would result in an even cleaner world. I believe that sharing and self-driving cars are the future, and will really help us.