Navigant Research Blog

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.

 

Do Shared Vehicles Need Standard User Interfaces?

— May 14, 2015

Personal mobility is in the early stages of the most significant transformation since the birth of the Ford Model T more than a century ago. A shift from personal ownership to shared use of vehicles is expected to accelerate as an important means of enabling mobility while alleviating the negative aspects our transportation ecosystem. Navigant Research’s report, Alternative Revenue Streams for Automakers, projects that there were will be more than 26 million members of carsharing services by 2023. Automakers recognize the threat this change represents to their business model, and they are scrambling to adapt, but what about the drivers constantly exposed to changing user interfaces every time they use a different vehicle?

As thousands of engineers from across the globe gathered in Detroit recently for the SAE 2015 World Congress, one of the more surprising topics of discussion was whether vehicles should adopt a common human-machine interface. While politicians like to point at the rise of cellphone use in vehicles as a cause of driver distraction, more fundamental design issues can be just as problematic. As more functionality comes to vehicles, controls are needed. Anyone using a new vehicle for the first time is likely to be overwhelmed trying to figure out basic functions like climate control. Manufacturer’s desire to differentiate their products just makes things worse.

Taking Action against Distraction

When Apple introduced the iPad in January 2010, late-CEO Steve Jobs said that anyone that knew how to use an iPhone already knew how to use an iPad. A big part of Apple’s success over the years has been the consistency of its user interfaces. They evolve over time, but they stay consistent enough that users can migrate from one product to another. The same cannot be said for most automobile features, which often vary widely within an individual brand’s lineup.

David Acton, managing principal of P3 North America, suggested at the congress that all vehicles should have a common user interface to help avoid the distraction. This may actually be a step too far considering the technologies available now and in the near future. For example, the Tesla Model S already features a 17-inch touch screen display in the center console for the various controls and displays with another reconfigurable display screen in the traditional instrument location ahead of the driver. As a virtual control interface, these displays can be reprogrammed to suit a driver’s needs.

Google’s Chrome browser and ChromeOS automatically save a user’s settings to the cloud, reloading bookmarks and extensions whenever that user logs in from any computer. Logging out can delete those settings from the machine. If every manufacturer were to include reconfigurable control and display surfaces in their vehicles, a driver could set preferences and then immediately save them either to a cloud account or locally on a phone they connect to the vehicle. From then on, every time they get behind the wheel of a new vehicle, they could connect their phone or log in to instantly retrieve their preferred control layout. Preferences could even include physical settings like the seat and mirror positions.

Best of all, these virtual control surfaces could be integrated into surroundings that still leave flexibility for designers to differentiate their products. The combination of virtual controls and connectivity could enable a blend of personalization and familiarity that reduces complexity for drivers as we make the transition toward a more shared transportation ecosystem that reduces urban congestion and energy use.

 

Helsinki’s Plan to Make Private Cars Obsolete

— August 12, 2014

Helsinki, Finland, has proposed a strikingly ambitious mobility on demand system that presents the logical extension of current innovations in passenger travel.  The city plans to create a subscriber service that would let users choose from, and pay for, a range of transportation options through their smartphones.  The options will include conventional public transit, carsharing, bikesharing, ferries, and an on-demand minibus service that the city’s transit authority launched in 2013.

The major innovation that makes this work will be an integrated payment system.  This part of the scheme may prove the most complicated to implement, but it is the final piece of the puzzle that makes this scheme truly transformative.  No longer forced to choose between the on-demand capability of private car ownership versus the eco-friendliness of shared transit, Helsinki residents will be able to easily get where they want to go, when they want to get there, without needing a car.

I’ve been using the phrase mobility as a service for this phenomenon, but it looks like the mobile phone companies may have claimed that moniker already.  Whatever the name, the concept is the transportation version of other businesses that are moving from selling a product to selling the service or utility the consumer wants from that product.  Planned obsolescence no longer makes good business sense, and consumers can benefit from constant improvements in technology.  This is most common in information technology (in cloud computing and storage, for instance), but it’s also happening in the energy sector – especially for clean technologies like solar, where leasing programs offer a way to overcome the upfront price premium barrier.

Share, Don’t Buy

Globally, carsharing membership has grown around 28% since 2010, with Europe as the leader in this sector.  Navigant Research’s report, Carsharing Programs, forecasts that global carsharing members will surpass 12 million in 2020.  The rise of on-demand ride services, such as Uber, Lyft, and Sidecar, are also transforming the way city dwellers use taxi services.  Taking on the highly regulated taxi business, these companies face considerable opposition, but at this point, it will be hard to put the genie back into the bottle. Bikesharing and even scooter share services are also spreading.  Today’s young urban dwellers expect to be able to use an array of transportation options to suit an array of needs, at the touch of an app.

Helsinki’s program has the potential to tie into other transportation innovations, such as the rise of electric vehicles (EVs) – more carsharing programs are deploying EVs as a selling point for their service – and autonomous vehicle technology.  Wireless charging would also support schemes like Helsinki’s by ensuring that shared EVs are recharging when parked, rather than relying on the driver to remember to plug in.

Faced with dwindling demand in mature markets like North America and Western Europe, automakers are exploring a range of new services to offset lower demand and to gain a competitive edge.  Farsighted companies will look to begin selling mobility as well as vehicles, changing transportation as much as the IT and energy sectors have changed.

 

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