Disruptive technologies have over the past decade fundamentally changed the products we buy and the services that we use. Ownership has become a curseword. Instead, subscriptions are hot. And not without reason as subscriptions enable consumers to change their mind about their spending every month. If I want to watch the grand tour on Amazon Prime I take a subscription for a month and unsubscribe from Netflix. I can get rid of even my leased dishwasher whenever I please.
The freedom we buy comes at a low monthly price. Yet, it can be lower. Fostered by a drive towards sustainability and enabled by IoT-technology the sharing economy is taking off. Swap your swapfiets for a Felyx e-scooter! Right there, in the business of mobility is a lot of money to save for consumers. The costs of car ownership and everything it takes to be able to drive the car start at about €200,- a month…petrol not included. So how to improve the status quo?
The conservative automotive industry seems to be the next industry to be disrupted. As stated, cars are expensive goods and they are currently idle for more than 90% of the time. Carsharing initiatives start to pop-up with the promise to provide you a car where you want it, when you want it and for a low hourly cost.
Sounds like a great plan! And it is a great plan, too. So great that automotive OEM’s are afraid that sharing will cause a decreasing demand for new cars. Daimler, BMW and Ford are already testing the water to not miss out on gaining insights in this disruptive car-as-a-service business model. However, the sharing economy is not something the automotive industry should be worried about.
Why? If there is the potential to replace 10 conventional cars by 1 they DO have a problem right?
No, they face an opportunity rather than a threat. In the Netherlands, 54% of workers travel to work by car (CBS, 2018). They travel in the same timeslot and to the same places: to work in cities in the morning and back to suburbs/villages in the late afternoon. In other countries this number is likely to be even higher. Because of the uneven and inflexible demand for personal transport it is impossible to facilitate the needs of this group with individual carsharing concepts with less vehicles.
Rather, carsharing will enable travel by car for a group that was until now unwilling or unable to pay a substantial amount for car ownership. The regular public transport-user that occasionally has to make an irregular visit to a rural place will benefit from the concept of carsharing and may have the willingness to pay for it. Or people living in urban apartment buildings with parking spots.
There is a group that sometimes want a car, but can’t buy one for various reasons. When carsharing operators manage to cover the ownership costs of their vehicles with this client base, they could create a new market for short-rent cars. And even the conservative manufacturers can benefit from that new market.
Even though we tend to have subscriptions to any product or service nowadays, car ownership will not await the fate of the DVD.
Do you think you will be owning a car in 5 years time? Let me know why (not)!
CBS. (2018). Regionale verschillen in thuiswerk en woon-werkverkeer. Retrieved September 21, 2020, from https://longreads.cbs.nl/regionale-economie-2018/regionale-verschillen-in-thuiswerk-en-woon-werkverkeer/
Great article and I honestly still think I will own a car in 5 years.
As I already own one I know that I already prefer driving over taking public transport, especially because the advantage of working in the train / bus / tram does not hold up. WIFI is not working, too busy during peak hours to sit, etc. Then I’d rather drive a little and listen to a podcast or the radio to relax while on the road and save on travel time.
I’d also agree with you that car sharing is gaining popularity but especially in densely populated areas there is not enough space to park the car sharing cars to meet demand for those, which is probably one of the reasons why generation Z will still own a car. Also, it is still popular to show off your car when you have the money to buy a BMW for example.
Dot not forget that driving an electric car also has increasing numbers. Purchasing an EV is definitely expensive, but driving one is defnitely cheaper and more sustainable, which is a value generation Z is putting as a priority more and more.
Very nice opinion piece and I agree with most of your points. I do however think that there is a market for a subscription-based car-sharing business. You based your opinion on the fact that the demand for cars is inflexible and that people use their cars at the same time. But in a Swapfiets manner, I think people would be interested in paying a monthly fee and getting their car repaired automatically, rather than buying an expensive car and pay extra for reparation. The business model would need to be very well though-out to be profitable, but I could see it being an option for customers. It doesn’t have to be universally adopted, and Swapfiets for sure is not, but convenience is key here.
Thanks for your comment Daniel! Yes, I do surely believe there is a market for subscription-based cars (private lease) and especially when shared. Note this new car manufacturer Link & co, which introduces a subscription plan that is going end business-as-usual for good. If you’re really interested i’d advise you to check them out.
However, I believe that even those kinds of concepts are going to increase the total car market as they would enable lower income market segments to start using a car.
Hi Matthijs, this is a really cool way to approach the topic of car sharing. I agree that car sharing will not be able to fulfil the demands of customers living in rural areas. However, I wonder if the current ongoing urbanisation and enhancement of public transport infrastructure will further decrease the demand for cars overall? To answer your question, I do not think I will own a car in 5 years time given that I plan on living in a city and using public transport.
Thanks for your response Nelly! There currently is a urbanisation trend that automatically leads to slightly reduced car demand, but urbanisation comes in waves. You are right as ‘owned’ car demand will decrease in major cities. In the Netherlands this is pushed by municipalities that restrict the number of parking places and parking licenses in new buildings. If that trend continues, we might not even able to own a car in the city center in five years time!
Dear Matthijs,
The question whether I’ll own a car in 5 years’ time is not unfamiliar to me. For me personally, I can’t answer it for sure. Right now, being a student in Rotterdam, I simply don’t need a car. But maybe my life circumstances will change, and I’ll get a car right away.
I agree with you on the point that you can’t cover the entire commuter traffic with individual carsharing concepts with less vehicles. But stating that this will cause generation Z to still own cars is based on the assumption that their way of working, their travel habits, and their spending habits will remain the same as for the previous generations.
As long members of gen Z can fulfill their need for mobility and flexibility using bikes, public transport, and various carsharing offerings, they won’t have the desire to own a car. For gen Z, access to mobility will be more important than ownership. And access to mobility does not necessarily require ownership of a car. Not owning a car is cheaper, more environmentally friendly, and more flexible – all characteristics gen Z cares about.
But of course, when using, for example, Daimler’s and BMW’s mobility service Share Now, you are essentially placed on the road to ownership. Engaging in carsharing is some kind of test driving, the first step in purchasing a car. By starting own carsharing platforms, established car manufacturer hope that the platform’s users may want to purchase a car in the future, even if it’s not their first priority now. If gen Z’s get married and have children, they may want to have a personal vehicle in the household. But for now, this is only a dream of the future for car manufacturers – and they hope it will come true.
Bettendorf, N. (2017). Generation Z May Not Want To Own Cars. Can Automakers Woo Them In Other Ways? Retrieved September 24, 2020, from
https://www.npr.org/2017/12/08/568362029/generation-z-may-not-want-to-own-cars-can-automakers-woo-them-in-other-ways?t=1600928821501
Hi Lenny, that’s an interesting thought on car ownership! Indeed, when our way of living changes this changes our mobility behavior too. My story obviously doens’t hold up if working from home really becomes the norm in the further future.
The surprising thing is that even though many people find the thought of carsharing appealing, the costs for use are contradictory with experiencing actual freedom to drive as you want. Because service areas are often rather small, the shared car is less attractive in most cities than for example shared scooters.
This is pretty much confirmed by the fact that ShareNow has recently decided to withdraw all activities in North America and also set investments in Europe to a halt. Namely, the revenues fell short of expectations, already pre-corona.
Who knows, we might switch to owning e-scooters and sharing cars within cities in the future. Thanks for your feedback and the article link.