Manufacturers eye profit in car sharing as driverless vehicles change the ownership landscape

19 April 2017

Manufacturers eye profit in car sharing as driverless vehicles change the ownership landscape 

19 April 2017

As autonomous technology looks set to take control of vehicles in the near future, manufacturers are exploring new profit models which may signal an increase in car sharing and a reduction in private vehicle ownership. 

Companies such as Volkswagen, Toyota, Nissan and Daimler have invested in sharing platforms in recent years as they look to exploit the technology, with Volkswagen’s Chief Financial Officer Frank Witter telling the Financial Times that by 2025 ‘a reasonable share of the company’s profits will come from sources that are not currently in its portfolio. The call for diversification comes following the latest ACEA sales figures for March 2017, showing a decline in the German marque’s European market share. 

The view is shared by the European Commission, which in a recent conference on connected and autonomous vehicles highlighted its plans for the development of urban infrastructure to cope with the increase in people able to use the vehicles. It believes that car sharing will decrease the pressure on transport networks while freeing up spaces used for parking, as vehicles are in constant use. Speakers discussed a ‘city of the future’ concept with more green space and less vehicle congestion and pollution, all thanks to the reduction in traffic as a result of different ownership models.  

Germany already went one step further on 30 March, when Parliament passed a car sharing law which gives providers a legal basis for the establishment of reserved parking spaces in public areas, known as 'station-based car sharing.' 

Willi Loose, managing director of the car sharing association said: 'Car sharing is available in 600 cities and towns in Germany. In 588 of these, they are mostly station-based services, mostly medium-sized providers. Their vehicles, unlike the fleets of the large car manufacturers, park more than 90 percent on private space. In inner cities, there are often no more spaces from which these providers can offer their services. This has to change urgently, as station-based vehicles contribute particularly strongly to traffic relief. This is where the car sharing law can help us.' 

Currently, according to various studies, vehicles are left to stand for around 95% of a week, with the average UK trip taking just 20 minutes and a vehicle making an average of 18 trips per week. Car-sharing with autonomous vehicles will reduce this amount of inactivity and therefore decrease the number of vehicles on the road at any one time. This is echoed by additional comments made by Willi Loose: 'In a residential neighbourhood close to the city centre, a station-based car-sharing vehicle already replaces up to 20 private cars. Car sharing is a great way to relieve public areas of cars and make them available to all citizens.'  

Ride-sharing applications have seen a large increase in popularity as the ability to access them through mobile apps and online systems has made such services easier to operate. For example, Daimler's car sharing unit Car2Go announced last week that the volume of their rentals increased by 23 percent to 6.2 million in the first quarter of 2017  

In addition, autonomous vehicles offer benefits to those who cannot drive a conventional vehicle, either through age or disability. This has led the SMMT to publish the report Connected and Autonomous Vehicles: Revolutionising Mobility in Society. It believes that ownership trends are already changing and manufacturers must evolve their business models to adapt.  

With a change in vehicle ownership will come an impact on dealerships and fleet sales. In addition, the insurance market will have to develop new protocols to track risk through connectivity and systems rather than driver behaviours and location. Insurers will need to deeply investigate any incidents involving autonomous vehicles to apportion blame based on system failings when a human driver was not in control. This could lead to liability falling to the manufacturer in the case of a defect or impedance of a human taking control of a vehicle.