Navigant Research Blog

Uber vs. Everyone

— September 17, 2015

Corporate_Restructuring_webRide hailing service Uber has continued on its tremendous growth trajectory in 2015, with the service now available in around 300 cities throughout 60 countries. That geographic spread easily eclipses any competitors in the space, which are more likely to be localized services, although it is likely that Uber’s success helps many competitors by increasing demand for ride hailing services overall.

But its enormous success has also made Uber an enormous target. Stories of Uber’s battles with city officials, taxi and livery companies, and regulators pop up daily in the news. It’s not surprising, given that ride hailing is so disruptive to the existing order of livery services and the long-established relationship these services have had with regulators. The biggest battle for ride hailing is over whether these companies must comply with regulations governing taxi services in each of the cities where they operate. Stories of regulators clashing with Uber are well-known, especially in cases where the company was banned outright. However, the impact that ride hailing has on traffic congestion and on the use of other mobility modes is a critical area of concern for cities. For example, New York City Mayor Bill de Blasio recently accused Uber of exacerbating congestion in Manhattan, based on an analysis showing that traffic speeds had decreased between 2010 and 2014.

Increasing Costs

Right now, it seems unlikely that the ride hailing genie can be put back in the bottle. Too many people have come to rely on the service, and it’s not just the expected demographic of those 30 or younger. What seems more likely is not that Uber or other ride hailing services will disappear, but that it will face ever increasing costs doing business. This is especially true for Uber. Having so many geographic markets means grappling with different regulations in each one, as well as dealing with different business cultures. In Germany, for example, the company launched a new service with drivers who have commercial driver’s licenses after Germany banned Uber for using private, non-licensed drivers. In Philadelphia, the city’s parking authority imposed a $300,000 fine on Uber for operating illegally in the city, although the state’s public utility commission had earlier indicated the company was operating legally. These kinds of costs will only increase in cities where Uber already operates and as the company continues to expand.

More Data, Please

Another likely outcome will be a demand for more analysis of ride hailing’s impacts on vehicle miles traveled, on congestion, and on the use of alternative modes of transportation. For example, an analysis of New York City traffic speed data came to the conclusion that ride hailing apps were not correlated with lower traffic speeds. Ride hailing companies will be increasingly pressed to supply data to help generate high-quality, objective analysis. This analysis is crucial to understand how ride hailing apps fit in to the new urban mobility landscape, and whether they support policymakers’ goals to reduce congestion.


Automotive Mapping: A New Digital World

— September 15, 2015


German automakers Audi, BMW, and Daimler have announced plans to acquire Nokia’s mapping service HERE in a move that seems part of the continued blending of the automotive and digital worlds. HERE is one of a handful of companies that supplies mapping data to a wide range of end users, competing with Google Maps and TomTom. HERE’s strengths lie in the automotive sector, as its service is the most often used in vehicle navigation systems.

It may be that the automakers simply want to secure the availability of this mapping service to ensure that Google Maps won’t be the only game in town. The same could be said for another interested party in the HERE sale: Uber, which has recently acquired mapping expertise and intellectual property from Microsoft. This was seen as partly a defensive move. It appears that Uber is trying to position itself away from Google, which has been signaling through its investment through Google Ventures a desire to launch its own ride hailing app that could compete with Uber. But Uber has also expressed an interest in autonomous vehicle technologies, declaring to Tesla that it would be prepared to buy a fleet of autonomous electric vehicles. As Navigant Research has discussed, high-quality mapping is critical to the autonomous vehicle sector.

Meanwhile, Apple has continued to make moves that suggest it may launch an electric vehicle of its own. After reports in early 2015 hinted that the company was building an electric van, speculation have only increased when the company moved to hire a former quality control executive from Fiat Chrysler Automobiles and to use BMW’s i3 electric vehicles in a trial project.

Blurred Lines

This brings us back to the story of Audi, BMW, and Daimler acquiring HERE. All of these activities demonstrate that the digital and physical worlds are now fully integrated within auto manufacturing, and that the lines between these industries will continue to blur. Auto companies are now well-established in Silicon Valley, and it is apparent to the OEMs that they will have to be more than just car manufacturers in the future, but also mobility providers. German automakers are especially far along in this realization. BMW, for example, has its own smart parking app and carsharing business. Indeed, most automakers are exploring some of these new mobility concepts. Ford’s 25 global mobility experiments include vehicle sharing, carsharing, and smart parking services, while Toyota has its electric vehicle carsharing trial programs. Other OEMs are also launching carsharing services, developments that will be discussed in Navigant Research’s upcoming Carsharing Programs report.

Acquiring mapping expertise plays into the shift from automakers to total mobility providers. What will be interesting to watch is how daring the auto companies are prepared to be in making this transition. So far, much of the OEM activity is labeled as a trial, indicating that some OEMs are still unsure about the real value of these new services. Indeed, some of the services may well be low revenue generators, but they can help automakers stake out their role in the new urban mobility landscape. This is especially the case in the mature and highly regulated car markets of North America and Western Europe, where private cars will be just one more mobility tool among many.


Are Automakers the Losers in the Vehicle-Sharing World?

— August 7, 2015

Vehicle sharing is a hot topic in the media. Reports of carsharing services as well as the always popular topic of ride-hailing company Uber and the other companies in that same market, such as Lyft, are on the rise. Vehicle sharing truly is a disruptive force, and it’s helping create a new model for transportation: on-demand mobility. There is an irresistible urge to ask who the winners or losers are in this new landscape, but some assumptions about who is going to be losing are not likely to be proven.

Winners and Losers

One of the most common questions is: Will automakers be the losers thanks to reduced demand for personal vehicles? Navigant Research has projected flattening growth of light duty vehicle (LDV) sales over the long term in certain markets, mainly North America and Europe. But carsharing is a relatively small contributor to this trend. The data on how many personal vehicles are replaced for each vehicle in a carsharing service vary, but estimates from University of California – Berkeley’s Transportation Sustainability Research Center are that each vehicle in a carsharing service replaces four to six new car purchases and postpones up to seven car purchases. Although carsharing memberships have been growing rapidly—Navigant Research estimates that global membership surpassed 3.5 million as of early 2015—the number of vehicles required to serve these members is likely to be well under 100,000. And the impact of these vehicles will be a small percentage of total LDV sales, which Navigant Research estimates will reach 88.8 million in 2015.

Staying in the Game

Automakers are still jumping on the carsharing trend, however.  BMW and Daimler have made the biggest commitments so far, with the DriveNow and car2go services, respectively. These two services alone represent over 1 million of the total global carsharing membership. But Ford, Audi, Toyota, and Renault have all been trialing limited carsharing or other vehicle-sharing services. Carsharing may not cut into their vehicles sales significantly, but the overall vehicle-sharing trend does represent a shift in how people in urban environments—a growing percentage of North Americans and Europeans—expect to get around. By offering vehicle-sharing services, automakers can identify their brand with the new world of on-demand mobility. They can also establish brand identity with the users of vehicle sharing, many of whom will become vehicle owners one day. And, they can secure new revenue streams. The vehicle-sharing market will more likely be something that automakers see as complementary to their existing business, not  a threat, and they may even be more likely to try to cooperate with the business than to resist it.


Could Privacy Concerns Inhibit Smart Mobility?

— July 6, 2015

Smart mobility is a hot topic in the media, among policymakers, and with non-governmental organizations (NGOs) and startups.  The idea that connected technology is opening up new mobility options that are more sustainable and more available is inherently appealing.  Carsharing, rideshare apps, increasingly sophisticated city mobility mapping services, and smart parking services are all part of the connected, on-demand mobility ecosystem that cities are enthusiastically embracing. In the recent report, Urban Mobility in Smart Cities, Navigant Research forecasts that revenue from smart mobility technologies, infrastructure, services, and solutions will reach $5.1 billion in 2015 and rise to $25.1 billion in 2024.

The appeal of smart mobility to cities is clear. With rising urban populations, city officials are facing pressure to ensure they have a range of readily accessible and affordable transportation options to minimize congestion and to control emissions levels. Budget constraints can make this challenging, so cities are looking to less capital-intensive ways to make transportation improvements. Ubiquitous connectivity offers the potential for crowd-sourced data collection, new transportation services like carsharing and ridesharing, and sophisticated traveler information systems that are truly multimodal. But it’s not a sure thing for all of these new offerings.

In the rush to embrace new mobility options, there is the potential to overlook some issues that could generate backlash. Privacy is at the top of this list.

Tracking Your Movements

Privacy concerns are nothing new in the world of big data, but the multitude of new data-gathering methods for transportation can raise privacy concerns among the public. These concerns can revolve around how data is being gather or how it used. For example, New York-based start-up Placemeter has officially launched its new data intelligence platform, which relies on smartphone video recordings in buildings to track pedestrian traffic. Pedestrian movements have been one of the black holes in the city’s pictures of travel patterns, so the service could prove tremendously valuable. It offers much more comprehensive data collection than current tracking methods. But will the public feel squeamish knowing that there are multiple smartphone cameras trained on them? For cities that have comprehensive security camera installations, this may seem more of the same, but it could be a concern in cities that haven’t already made that adjustment. Placemeter’s video data is anonymized, and the videos are discarded, but since pedestrian don’t opt in to being recorded, it could raise some concerns.

Opting In

Opting in is going to be the main way forward for many companies looking to use crowdsourced data. For example, Ford is unveiling a parking app that uses data from its vehicles’ driver assist sensors to track available parking spaces. Ford figures this will be less expensive than installing sensors throughout parking spots. The company has made a commitment to asking its customers to opt in to data-gathering solutions. Similarly, Uber’s new partnership with Starwood Preferred Guest program lets Uber customers opt in to sharing their data with Starwood for points.

However, these new data collection methods also require trusting companies to handle the data appropriately.  Uber was forced to beef up its internal privacy procedures after a couple of scandals involving inappropriate use of its customer data, so similar breaches could also lead to public backlash.

The reality is that many transportation services used today already rely on personal location data, so we’ve already entered this brave new world. But an incident where customer data is accidentally revealed or used inappropriately could spur the public to place more scrutiny on the how data is being collected and how it is being used.


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