Why Ridesharing Won’t Hurt Car Sales

March 21, 2016

Car sharing usage will significantly increase, particularly in urban areas among young residents, however most consumers will still opt to own their own cars and car sharing will not significantly hurt car sales, according to a new report.

Car sharing will only reduce new vehicle sales globally by about 1 percent over the next five years and less than that in the U.S., the Boston Consulting Group (BCG) claims in its report, “What’s Ahead for Car Sharing? The New Mobility and Its Impact on Vehicle Sales.”

BCG’s analysis found the greatest number of lost new car sales will be in Asia-Pacific, where they could drop 1.2 percent by 2021. Sales in the U.S. should fall by only 52,000 cars or 0.3 percent due to ridesharing.

The numbers of people opting for car sharing are likely to be greater in Europe and Asia than in North America, according to the analysis, in part because urban driving populations are larger there. In Europe, by 2021, there will be about 46 million people with a valid driver’s license in urban areas; about 14 million will be registered with a car-sharing services. In Asia-Pacific’s urban population there will be 75 million licensed drivers by 2012 and roughly 15 million will be registered with sharing services.

The North American urban population is expected to reach 50 million by 2021. Of these, 31 million people will be licensed drivers, while 6 million will be registered users of a car-sharing service, according to BCG’s forecast.

In the U.S., car sharing stands a better chance in densely populated urban centers such as New York, Boston and San Francisco than in the rest of the country where people are accustomed to driving long distances, the report says.

BCG found that car sharing usage can be influenced by local and regional traffic rules. In Europe, where municipalities discourage driving in city centers, young Europeans are more accepting of car sharing although older drivers, who buy the most new cars, are still less likely to get rid of their private vehicles.

Today, the largest car sharing market is the Asia-Pacific region with 2.3 million users, while North America has about 1.5 million users.

Together the three regions account for $936 million in revenues.

“Car sharing providers will expose new revenue pools and become increasingly relevant to a cohort of mostly younger drivers,” according to the report. “But they will not change the overall mobility market.”

BCG’s analysis seems tame compared to some others.

A Barclay’s report from last year, which took a longer view, forecast that U.S. auto sales may drop by as much as 40 percent in the next 25 years because of rising popularity of both car sharing and driverless cars. Barclays said these trends will force automakers to slash output. Author Brian Johnson wrote that vehicle ownership rates may fall by almost half as families decide to have just one car.

IHS Automotive and others believe in what is called “Peak Car” — the idea that car sales will top out at a certain point within the next decade as gridlock and pollution concerns in major urban areas force people to change their driving and car ownership habits. Also the fact that new cars last longer will affect future sales.

In the U.S., states are still grappling with insurance rules and other issues surrounding ridesharing even as more insurers — including Farmers and GEICO— expand their offerings of coverage for car owners who seek to become drivers for ridesharing services including Uber and Lyft.

Source: Boston Consulting Group


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