Car sharing will not hit sales

Car sharing will keeping growing in popularity, but is not set to disrupt the automotive industry according to research from the Boston Consulting Group (BCG), which says the trend will see new car sales drop by just 1%.

BCG’s report, “What’s Ahead for Car Sharing? The New Mobility and Its Impact on Vehicle Sales”, reckons auto manufacturers in North America will lose about 52,000 sales a year to car-sharing customers in 2021. However, this will be offset by sales of 44,000 vehicles a year to car-sharing fleets, for a net loss of only 8,000 vehicles at a cost of just over $500 million.

The research found car sharing is taking hold in large urban areas in both mature and emerging markets. Today, the largest market is the Asia-Pacific region, with 2.3 million users and 33,000 vehicles, although Europe boasts the largest service per capita, with 2.1 million users and 31,000 vehicles.

North America follows, with 1.5 million users sharing 22,000 vehicles. Together the three regions account for 2.5 billion booked minutes per year and €650 million in revenues.

Evolving market

Car-sharing services require a critical, concentrated population mass in order to be profitable and practical. BCG has found that in Europe and North America that means a population of at least 500,000.

In Europe, about 14 million people will be registered with a car-sharing service by 2021, along with six million North Americans and roughly 15 million residents of Asia-Pacific.

“These patrons of car-sharing services will generate global revenues of €4.7 billion in 2021, with the bulk of revenues—€3.2 billion—coming from light users who need a car only for occasional trips,” said Marco Gerrits, a BCG partner and another report co-author. “Europe will be the biggest revenue-generating region, throwing off €2.1 billion, followed by Asia-Pacific, which will account for €1.5 billion, and North America, with €1.1 billion.”

Private cars the norm

Although BCG’s baseline model suggests that car sharing usage will significantly increase, most consumers will not forgo car ownership.

BCG’s simulation of the impact of car sharing on new-car sales in Asia-Pacific, Europe, and the US suggests that car sharing will decrease purchases by 792,000 vehicles worldwide in 2021—the equivalent of slightly more than 1% of projected unit sales of 78.4 million new cars in markets where sharing is available.

BCG says that US manufacturers including Ford and General are investing in car-sharing services in several markets to supplement individual vehicle ownership, and are well placed to grab market share as brand recognition and service reliability are key issues for potential users.

In the longer run, according to the study, “autonomous vehicles will have a much greater impact on new-car sales than car-sharing will,” but not until 2027.

It says self-driving cars “will change the game, erasing the distinction” between car-sharing and ride-hailing while providing users with “a significant edge in the total cost of ownership.”